At this time of the year in Beijing, as summer gives way to autumn and the Chinese offer mooncakes to the Lady of the Moon, there’s a change in the direction of the wind that blows through the city.
From one day to the next, when I was there last week, a hot, humid summer day gave way to cool, blustery autumn winds.
I feel the same change in wind direction taking place in China’s travel market.
Perhaps it all started two years ago with the hosting of the world’s largest sporting event which it did with spectacular style.
Perhaps it’s to do with hosting the world’s largest World Expo which it is doing with spectacular scale.
Or perhaps it’s just the fact that it’s now the world’s second largest economy in the world and is driving the global economic recovery and what it does with its currency matters so much to the rest of the world.
I sense a new-found confidence in its people. In one generation, I have seen the change from a nation that was looking to learn all it could from the outside world to one that now knows it has much to offer the outside world and that it can pick and choose from those who would teach it.
Within my own family, I see it. My relatives in Haikou, Hainan, no longer depend on their overseas brethren for handouts; they have more – and beyond materialistic goods, they have a deep sense of rootedness which my father gave up in search of a better life abroad.
This shift in sentiment was clear at the China Travel Distribution Summit in Beijing last week.
The unscheduled "nuclear" remarks made by Larry Liang, general manager, airline solutions of TravelSky, prompted by the opening comments of PhoCuswright’s Ram Badrinathan, whose presentation was by the way immediately followed by that of David Jones, CEO of Amadeus, was a case in point.
Okay, the comparison to nuclear weapons was unfortunate at a travel conference but there’s a younger generation of Chinese who are more vocal and prepared to speak up and defend their own interests.
Liang’s comments were picked up again by Michael Chen, vice president of Jinling Hotels & Resorts Corporation, during a panel discussion on channel distribution versus direct sales, a session which happened to be moderated by Liang.
Talking about the entry of foreign companies into China, Chen said many found it hard to make it.
China, he says, should have “nuclear weapons”. It’s a big market, bigger than Europe, and if you want to cooperate with the China market, you have to recognize that this is the trend, he said.
He notes that while China’s hotels were weak in the past when it came to direct distribution – which explains why Ctrip is so successful in online hotel sales – this was changing.
Chinese hotel groups such as Jinling were getting bigger and more advanced, he says. And, he adds, do not apply the foreign model to China - we will not play with you.
Listening to a foreign view, however, was what got Min Fan, CEO of Ctrip, started on his road to success.
At a market cap of approximately US$5 billion, Ctrip is now the world’s third largest online travel agency, after Expedia and Priceline.
In an interview session at the conference, Fan recalls his first job working as a management trainee in a hotel. He asked the foreign general manager how he would differentiate the hotel.
The answer was, location, location, location.
At that time, he thought it was too simple an answer but now he sees the sense of it and applies a similar concept to what he does at Ctrip – service, service, service.
“If you can guarantee your service level, the customer will look for you and book from you,” he says, adding his key preoccupation was how to improve service.
It sounds like an empty idea, he says, but when you sell on the Internet, service is even more crucial. From the moment the customer books to the time of delivery, there are roughly 20 touch points and the company applies 61 assessment targets to identify areas for improvement.
Even as he works on service improvements internally, Fan is also looking to expand Ctrip’s business outside China.
Last year, it acquired ezTravel in Taiwan and Wing On Travel in Hong Kong.
In choosing companies to acquire, he says it was about “how you can transfer your experience and interface your technology”.
He uses three criteria to evaluate acquisitions – will it effectively expand its product line, will it add value to its core product line and growth potential is not limited to China but Asia and worldwide, and value. “If it’s too expensive, we cannot afford it.”
He says he had a lot to learn from Glenn Fogel, executive vice president, corporate development, of Priceline (who had presented earlier) who he says had been very successful in his acquisitions.
For Chinese companies, going abroad is a challenge, he said, citing limited international experience. This explains why his first acquisitions have been in greater China because of the culture and language.
He says he has also learnt a lot from Japan, although the country's travel companies tend to invest more in local sites rather than acquire foreign companies.
It thus appears the wind blows both directions – even as foreign companies are still scrambling to enter China, Chinese companies are now venturing abroad. And both have much to learn from each other.
And it seems that what we should do is bury the “nuclear weapons” talk and smoke the peace pipe – that is, after all, what tourism is all about.
Indeed, a good blend of globalization and localization is just what the Lady of the Moon would approve of – my favourite mooncake, for example, is snow skin mooncake with champagne truffle and ganache.