Media reports last week said that the nation’s first tour operator that specifically catered to Chinese tour groups had filed for bankruptcy. There are concerns that the incident might set off a domino effect, triggering a sense insecurity within the industry. As a result, the industry has appealed for 10,000 workers to take to the streets to put pressure on the government. However, there a few problems with this approach.
First, although the number of Chinese tour groups has been reduced since President Tsai Ing-wen (蔡英文) took office, for a company to go bust in just three months suggests that it might not have been in the best shape in the first place and needed to review its business model.
Second, if 100,000 jobs across the nation are at risk simply because of there are fewer Chinese groups visiting, does that not mean the tourism industry is far too reliant on Chinese tourists? Moreover, if the industry really is hanging on by a thread, does this not show that it has problems and needs to immediately adjust its strategy? And when the Chinese tour groups do not come, is it only Taiwanese that lose out financially?
A friend who runs a travel agency in Hualien and Taipei told me that he never accepts Chinese tour groups.
When I asked why, he said: “I cannot make any money [if I do].”
To secure deals from Chinese tour groups, Taiwanese tour operators are invariably forced to slash prices, with some incurring losses as a result.
Some tour operators rely on the commission they make as guides to Chinese tour groups to make money. However, sometimes the Chinese side runs into debt and is unable to pay.
It is very difficult to operate profitably under such circumstances and this is the main reason that a tour operator can go into receivership in only three months.
Furthermore, although some local governments have repeatedly denied that Chinese investors have infiltrated the local economy, my friend told me that the primary source of capital for a large number of travel agencies, hotels, tour bus operators and even shops comes from Chinese investors. This is the so-called “one dragon” business model — Chinese companies organizing the transportation, shopping, meals, accommodation and other services catering to Chinese tour groups — makes it very difficult for Taiwanese businesses to make money.
For these reasons, my friend does not do business with Chinese tour groups, but instead focuses on the domestic, Japanese, South Korean and Hong Kong markets, which allows for a stable profit.
My friend added that with fewer Chinese tour groups visiting this summer holiday, the quality of tourism in Hualien has improved. Domestic tourist numbers have made a marked recovery, directly benefiting Taiwanese businesses.
This begs the question who has actually lost out the most from the shrinking number of Chinese tourists. It is those businesses that make use of Chinese funds through the “one dragon” business model that are currently licking their wounds.
By reducing the number of Chinese tour groups visiting Taiwan in an attempt to put pressure on the government, Beijing gave Taiwanese an opportunity to reflect on how to improve quality and reform tourism strategy to make the industry more flexible and robust. Putting all your eggs in one basket is not a clever or healthy thing to do.
If Taiwan becomes totally dependent on China, its industries will, like drug addicts, become addicted to Chinese opiate. If one day the drug supply is cut off, it will be curtains for Taiwan.
Hsu Yu-fang is a professor of Chinese literature at National Dong Hwa University.
Translated by Edward Jones
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