According to the just released annual Report of Outbound Tourism Development by the China Tourism Academy, a think tank that operates under the auspices of the China National Tourism Administration, the USA last year received almost six percent of China’s short-haul and long-haul international travelers, or 2.2 percent of all travel outside mainland China. When put into perspective it seems clear that the United States is the favorite long-haul destination of travelers from China, who now comprise the world’s largest international travel source market. While there are other international markets that rank above the USA in their numbers of Chinese visitors, they are regional destinations—not that far from China’s mainland. Some highlights from the Tourism Academy report:

 

Top International Tourism Destinations of

Chinese Travelers outside Greater China

Thailand

South Korea

Japan

Vietnam

USA

Singapore

Russia

Australia

Indonesia

Malaysia

 

Other Survey/Report Highlights:

—When asked to rank their largest expenditures on overseas trips, 85.9 percent of tourists answered shopping.

—More than 60 percent of tourists said their budget for one trip was more than 10,000 yuan ($1,500), the outbound tourist report said.

—More than 30 percent said they would spend 5,000 to 10,000 yuan ($750-$1,500) for one trip. Only 8 percent said their budget was below 5,000 yuan ($750).

—About 61 percent chose fees paid to travel agencies and local organizers.

—More than 58 percent chose dining.

—Beijing province, Shanghai province, Guangdong province, Jiangsu province and Zhejiang province were the top five source markets for China’s booming outbound tourism industry.

—In 2015, Beijing sent out 5.3 million citizens to travel overseas, a year-on-year increase of 29.7 percent.

—Average overseas spending was 5,000 to 15,000 yuan ($750-$2,250).

In this recently published article, which appeared on Lexology.com, attorney Feynman Zhiwen Liand, who is with the Guangzhou-based Jiaquan law firm (it specializes in intellectual property matters), details how Macy’s, one of the most recognizable global brands in shopping and a major player in the tourism industry, fought off a Chinese cyber squatter.

###

Recently, Beijing IP Court issued a judgment in favor of Macy’s West Stores, Inc. (hereafter referred as “Macy’s”) against Beijing Guowang Information Co., Ltd. (“Guowang”).

 

 

 

A. Overview

Macy’s is the trademark owner of 9 Chinese trademarks (registered in 1994) and over 100 trademarks of “Macy’s” all over the world. Macy’s discovered that Guowang has registered the domain names of “macys.com.cn” and “macys.cn” in 1999 and 2003 but it has never put the domain name in real use. Macy’s then filed a complaint before Beijing IP Court on trademark infringement and unfair competition of Guowang. In the complaint, Macy’s pleaded the court order Guomao to transfer the domain name back to Macy’s and pay damages of CNY 200,000 (USD 29,000).

In the judgment, the court rules from the following two aspects:

trademark infringement

Guowang has never put the domain name into use and therefore it does not infringe the exclusive right of trademark of Macy’s.

unfair competition

Guowang’s act has led to confusion among Chinese public and cause harm to the fair environment of competition, constituting unfair competition.

Guowang is ordered by the Court to transfer the domain name back to Macy’s and pay damages of CNY 40,000 (USD 5,900).

B. Analysis

In China, if the domain name is registered by another entity, the proprietor may obtain the domain name back through different alternatives. Besides domain name dispute proceedings of ASIAN DOMAIN NAME DISPUTE RESOLUTION CENTRE in Beijing, proprietor may seek relief through civil litigation on unfair competition

According to Anti Unfair Competition Law of P. R. China

Article 2.2 

“Unfair competition”, in this Law, means activities made by managers who damage the others’ legal rights and interests, disturb the order of social economy and violate the provisions of this Law. 

The Anti Unfair Competition law stipulates that any act damaging the legal rights and interest of the other in violation of the provisions of this law constitutes unfair competition.

According to “Judicial Interpretation on Several Issues Concerning Application of Law in Trial of Civil Dispute Case related to Domain Name” by Supreme People’s Court of P. R. China

Article 4 When People’s court hears domain name dispute case, if the following conditions are met, the court should hold that registering and using of domain name by the defendant constitute infringement or unfair competition: 

(1) The civil right of plaintiff seeking for protect is legitimate and valid; 

(2) The disputed domain name or its main portion is copy, imitation, translation or interpretation of well known trademark of the plaintiff; or the disputed domain name or its main portion is identical or similar to the registered trademark and domain name, leading to confusion among public; 

(3) The defendant does not have legitimate right of the domain name or its main portion and it does not have proper reason of registering or using the domain name; 

(4) The defendant has bad faith in registering and using the domain name. 

“Judicial Interpretation on Several Issues Concerning Application of Law in Trial of Civil Dispute Case related to Domain Name” further set forth that the domain name registering meeting the conditions above constitute unfair competition.

In this case, first of all, Macy’s is the legitimate owner of the trademark, trade name and domain name which is registered or generated before the registration date of the disputed domain names of “macys.cn” and “macys.com.cn”.

Secondly, the distinctive portion of the disputed domain name is identical to the trade name and trademarks of Macy’s. Evidence provided by Macy’s indicates the mark and the trade name is well known to Chinese public and the Chinese public knows that the marks and the trade name enjoy worldwide fame. When the Chinese public encounters the disputed domain names, he would naturally associate the domain names to Macy’s and lead to confusion.

Thirdly, the registration of the disputed domain names of “macys.cn” and “macys.com.cn” is lack of reasonable basis.

Last but not the least, Guowang has bad faith in registering and using the domain name.

According to “Judicial Interpretation on Several Issues Concerning Application of Law in Trial of Civil Dispute Case related to Domain Name” by Supreme People’s Court of P. R. China

Article 5 The People’s Court should hold the defendant has bad faith if any of the following conditions is met: 

(4) After the registration, the registrant does not use the domain name and he has never prepared to use it. In addition, he purposely block the proprietor from registering the domain name

After registration, Guowang has never used the disputed domain name and its registration has blocked Macy’s from registering and using the domain names. Therefore, Guowang’s act is lack of proper purpose and carries bad faith.

In conclusion, Guowang’s act has met all the four conditions of the Judicial Interpretation and constitutes unfair competition.

 

Shanghai-based Ctrip, China’s largest online travel company, has formed a partnership with U.S. private equity firm General Atlantic that will target onshore and global travel businesses. Greenwich, Conn.-based General Atlantic includes two former senior officials of Washington, D.C.-based Carlyle Group, which has been one of the most aggressive private equity investors in the tour and travel industry in recent years.

Known as Ocean Link, the new partnership represents a $400 million fund that will join what has become a fiercely competitive market. According to data from Dealogic, reports the Financial Times, Chinese companies have announced $2.4 billion in hotel deals year-to-date in 2016.

Ocean Link, which will continue fundraising for the next six to 12 months, has both a local currency fund and a dollar-denominated fund. It has already invested in German-based hotel chain Ruby Hotels and Mind Education, which is a China-based summer camp for students, called Mind Education.

“Most of the products they offer are domestic tours but it’s becoming clear that students or parents are demanding more overseas products,” said Tony Jiang, a partner at the fund and a former Carlyle executive, who told the Financial Times that the fund could invest in foreign companies to expand the business abroad.

Last year, Ctrip acquired its competitor, Qunar, creating China’s largest online travel company. See Inbound Report, July 20, 2016: “Will Ctrip End up as China’s Only Online Travel Agency?”https://www.inboundreport.com/2016/07/20/will-ctrip-end-up-as-chinas-only-online-travel-agency/

 

China’s appetite for travel and spending for travel are producing numbers and trends not known just five years ago. For instance, the Economic Information Daily reported last week:

—Chinese outbound consumption reached $226.15 billion in 2015—about half this was spent on shopping, according to China’s Ministry of Commerce.

—Middle-income and high-income Chinese accounted for a large part of the number of Chinese shoppers abroad. Their presence has resulted in a shift away from luxury brands and high-end products to high-quality, cost-effective goods suitable for daily consumption.

—Visa-free policy offers more convenience, a Ctrip official told the publication.

—There were 75 new direct flights between China and the USA that launched in the last year—up more than 30 percent from the previous year, according the online travel agency Qunar.

—The number of travelers in China’s international aviation market grew to 50.07 million last year from 31.92 million in 2014.

—Most Chinese have never been abroad, with less than 10 percent of them holding passports, Shi Yuduan, chief marketing officer of Ctrip’s tourism business told the Economic Information Daily. This market still has big potential and will retain its growth trend in long term.

Chinese Carriers Experiencing Pilot Shortage: Chinese airlines need to hire almost 100 pilots a week for the next 20 years to meet skyrocketing travel demand, Bloomberg News has reported. As a result, some carriers, especially newer airlines or regional Asian airlines not known internationally, are making lucrative offers to attract pilots. Some other highlights from the article:

—The number of airlines in China has increased 28 percent to 55 in the past five years.

—A former United Airlines pilot told Bloomberg that he’s being bombarded every week with offers to fly Airbus A320s in China. Regional carrier Qingdao Airlines promises as much as $318,000 a year. Sichuan Airlines, which flies to Canada and Australia, is pitching $302,000. Both airlines say they’ll also cover his income- tax bill in China.

—A big paycheck is the only option for the newest carriers because they have minimal brand recognition and a limited performance record, said Liz Loveridge, who’s responsible for China recruitment at Rishworth Aviation in Auckland. Chinese airlines are paying as much as five times more than some Asia rivals for new hires, she said.

—About 30,000 pilots fly for Air China, China Eastern Airlines and their many competitors, while about 2,200 foreign pilots have transport licenses, according to the government’s Annual Report of Chinese Pilot Development. South Korea, the U.S. and Mexico contribute the most expatriates.

U.S. destinations and travel suppliers who promote their products to China now have another filter to help them target their efforts more efficiently—the five Chinese traveler personas. The latter are discussed in some detail in the recently released Chinese International Travel Monitor (CITM). Sponsored by Hotels.com, this year’s CITM 2016 is an analysis of data revealing that Chinese travelers can be divided into five distinct personas depending on their background, travel attitudes, preferences and behaviors. This is the first time this analysis has been included in CITM, which is generally regarded in the U.S. inbound tour and travel industry as the most authoritative, non-proprietary source of information on the Chinese travel market.

A quick preface for those wondering how the five categories configure with other key numbers: Even if the percentage of China’s population that is middle class and “travel capable” is small, about 8 percent—it still means, in raw numbers, that China’s middle class is now the biggest in the world, and growing much faster than that of the USA, according to research by Credit Suisse. There are 109 million Chinese with wealth of between $50,000 and $500,000. Since 2000, twice as many Chinese as Americans have joined the middle class. (Credit Suisse measured wealth rather than income to avoid temporary changes caused by unemployment, for example.) These aforementioned figures suggest that there a millions of travelers personas to be cultivated, marketed to, and sold to. More detailed profiles of the five personas follow.

 

1. Detailed explorers: A quarter of travelers fall into this category, making it one of the two largest groups. People in this category respond positively to statements like “One should never be content but constantly explore new ideas” (innovation); “It’s important to push the limits and reach new heights” (ambition) and “I understand the power and potential of free thinking” (independence).

Detailed explorers see travel as a necessary element of life, a journey of learning and exploring and an exhilarating experience.

 

Their preference is for free and easy travel and semi packaged tours. Shopping and sightseeing are their favorite activities. Their source of travel information tends to be online travel and review sites, and travel magazines. They particularly value safety, easy access to transport and hotel services.

 

2. Cautious connectors: This group makes up 25 percent of travelers, the largest group along with detailed explorers. They respond positively to statements like “I am safe and play within the rules” (integrity); “I am making more effort to reduce my impact on society and the environment” (responsibility); and “balance of different aspects of life is the true sign of my success” (wholesome lifestyle). They were born mainly in the 60s and 70s. Their proportion of annual travel spending to income is one of the highest, at 31 percent.

 

For cautious connectors, travel is more than anything about joyful moments with friends and golden moments with family. Theme tours and eco-tours particularly appeal to this group. Dining and shopping are their most popular activities. They tend to get their travel information from a combination of online review sites, social media, travel magazines and newspapers.

 

When it comes to selecting accommodation, these travelers particularly consider easy access to transport, reviews by previous travelers, free Wi-Fi, free breakfast, and eco-friendly.

 

3. Experience Seekers: At 17 percent, this is the second smallest group. They tend to be young millennials. Their daily holiday spending is the second highest at $459. People in this group respond positively to statements like “I think I am right, I don’t worry about what other people think” (individuality); “I am willing to take risks because I believe in myself” (ambition); and “I have my own way of seeing the world – and feel the need to go  my own way” (independence).

 

Traveling for them is exhilarating and an escape from reality. They prefer free and easy travel, private luxury tours and theme tours. Their main activities are local tours, backpacking and attending events like theaters and concerts. Experience seekers get their travel information primarily from travel guides and magazines and promotions/deals. When booking accommodation, they look particularly at room size, design and newness.

 

4. Indulgers: Indulgers form only 12 percent of all travelers and therefore the smallest segment.

They respond positively to statements like “I value being recognized as someone accomplished with leadership power and influence” (power and influence); “Being able to fully indulge myself is a sign of my success and superiority over others” (indulgence); and “Success comes to those who show dedication  and hard work” (perseverance).

 

They tend to be millennials and their biggest interest in travel is stepping out of their comfort zone. They go for theme tours and private luxury tours. Their main activities are local tours and taking part in sports.  Friends and colleagues, travel guides and family are their main sources of travel information.

When selecting accommodation abroad, they particularly consider comfort/star rating/facilities, hotel services and room size. Their average daily spend of $474 is the highest of all the traveler types, reflecting the fact that as a group they are affluent.

 

Mostly born in the 80s, they travel to indulge themselves and to demonstrate their power. They stay at higher-star hotels and go on adventurous local tours.

 

5. Basic Pleasure Seekers: This group makes up 21 percent of travelers. Unlike the other types, which consist pretty much equally of men and women, 57 percent of this group is female. They tend to be young millennials, born in the 90s. They respond positively to statements like “Slowing down my life pace makes me the happiest” (simplicity); “For me how things look is just as important as what they can do” (aesthetics); and “Comfort is knowing one has made the right decision” (contentment).

 

The proportion of their expenditure on travel to income is the highest of all the personas at a massive 37 percent. Travel to basic pleasure seekers is an escape from reality and their comfort zone, and to seek golden family moments. Their main preferences are for group and semi-packaged tours and their favorite activities are attending events and taking part in sports. They tend to get their travel information from friends, colleagues and family. The principal factors they consider when selecting accommodation are reputation/brand, reviews by previous travelers, friends, family and colleagues and review sites.

 

Notes: Ipsos determined the personas by using factor analysis to detect patterns in the responses of the travelers to a number of questions about their values. The result: vivid portraits of five different types of Chinese traveler. By taking into account these very different types of Chinese traveler, and particularly which segment is growing fastest, the industry will be well-placed to plan for the future.

The situation is dynamic. For instance, the largest segments are currently Detailed Explorers and Cautious Connectors, but the segment with the highest predicted growth, and therefore the one to watch, is Experience Seekers. This is a high-yield group, with high spending.