Hordes of Chinese tourists descend upon an idyllic island paradise. Their boisterous and noisy nature scares away their more “cultured” Western counterparts. For all the resources spent on attracting them to visit, the local tourism industry makes very little from their spending.

This is the bane of “zero-dollar tourism” run by Chinese operators. Travel agencies in China offer free or very cheap tour packages, which cover meals and accommodation. Chinese tourists are attracted to the low cost and the notion that all their needs will be taken care of without having to speak a foreign language.

Part of the requirement is to follow schedules set by the agencies. This includes compulsory shopping stops. This practice is not uncommon among tour operators in many countries. Prices of packaged tours are often subsidised by retail stores. In Hong Kong, they are known as “forced shopping” tours.

It is not uncommon for tourists to be “trapped” in showrooms for hours. Often, tourists are told their tour fares would be increased if they refuse to enter these shops.

The Chinese zero-dollar operators have refined this practice to an art. Most of the stores are directly connected to the tour operators. They are operated via local proxies to satisfy local laws. Products in these shops are sold at higher-than-market prices.

Since they control the entire supply chain and share the revenue among themselves, very little of the tourists’ spending actually trickles down to the local economy, apart from hoteliers and restaurateurs. The government is also deprived of tax revenue.

Tourists are often subject to high pressure to buy goods at designated retail shops. The Chinese government banned this practice in Hong Kong and Macau in 2013 but this ban is often disregarded. In October 2015, a 53-year-old tourist from Heilongjiang, China, was beaten to death by four men at a Hong Kong jewellery shop when he tried to intervene in an argument that started when another tourist refused to buy anything.

Chinese tourists in ASEAN

In 2016, the Thai government decided to stamp out zero-dollar tourism, estimating losses of US$2 billion each year in tax revenue. Three companies were shut down, 2,155 buses were seized and several people were arrested for money laundering and operating illegal low-quality tours.

Chinese tourist arrivals dropped for the last quarter of 2016 by 12 percent year-on-year. The tour operators simply went elsewhere. Countries such as Vietnam experienced a boom in China tourist arrivals. Cambodia is eyeing more tourist arrivals from China, setting itself a target of two million by 2020. The Philippines, Malaysia and even Lao PDR are also keen to attract more Chinese tourist dollars to their respective countries.

Source: China Tourism Academy, Ctrip.com

Despite the “low quality” of zero-dollar tourism to host nations, the in-flux of foreign tourists still provides business for airlines, hotels and restaurants. Chinese tourists account for more than 20 percent of money spent by international travellers, said the United Nations World Tourism Organization (UNWTO). The average Chinese tourist spends twice as much per day as the average non-Chinese tourist.

The Thai government received a setback when the Thai Criminal Court acquitted seven people and six companies of charges related to zero-dollar tours. It ruled that the defendants did not breach any tour service guidelines as they merely rented buses and sold products. It also said zero-dollar tours were marketing strategies in a competitive industry.

In the Phuket boat disaster last July, Thai Deputy Prime Minister, Prawit Wongsuwan, vented his frustration at how Thailand had to bear the consequences of actions by Chinese operators who circumvent his nation’s laws. His remarks that the incident was “totally Chinese people harming Chinese people” led to the cancellation of thousands of hotel bookings in Phuket.

The Vietnamese government is pushing back against zero-dollar tourism as well. Like Thailand, it is concerned that low service quality and a poor experience will tarnish the country’s image. In March 2017, when the Prime Minister called on local authorities in Quang Ninh province to confirm press reports of low service quality, some 15 “secret stores” (as these zero-dollar shops are called and where locals are not allowed to enter), were closed.

Zero-dollar tourism may persist due to the sheer number of potential tourists in China who are unaware of its pitfalls. However, an increasing number of Chinese tourists are becoming more sophisticated and preferring to travel independently.

According to a study by the Chinese Tourism Academy and travel portal Ctrip.com, a growing number of Chinese travellers are making their own bookings online and travelling alone. They are not dependent on travel agencies.

Related stories:

Enhancing the tourism industry in ASEAN

Ferry accidents: Not so gently down the stream