Chinese tourists are the largest and highest-spending international traveller group in the world.
But instead of rolling out the red carpet to entice them to our shores, as many countries around the world are increasingly doing, Australia's complicated and red-tape heavy visa policy regarding Chinese tourists is placing the country at significant disadvantage.
The Chinese tourist market profile
According to official data released by the China's National Tourism Administration, around 97 million Chinese tourists travelled overseas in 2013, spending a total of $114 billion.
The world's biggest-spenders ahead of tourists from Germany and the United States, the Chinese are known for spending a higher percentage of their budget on shopping compared to flights and accommodation. They are also a significant purchaser of luxury goods, with most making large purchases overseas to avoid high tariffs at home which can reach up to 20 per cent.
Australia's current position in the market for Chinese tourists reveals a real need for change. Australia sits at the top of the Chinese tourists' wish lists, but it was only the 11th most visited country in 2013, receiving a mere 4.8 billion share of the 114 billion market, according to a survey by Hotels.com.
Tourism Australia's managing director John O'Sullivan identified the fierce competition from other countries and the distance between Australia and China as a few of the barriers preventing Chinese tourists wishing to visit the Australia from actually stepping on a plane.
However, upon further examination, Australia is found to be lagging behind in another area where its competitors are racing forward – visa policy.
There are four countries placed above Australia in the most visited countries list that would require similar long-haul travel – the UK, France, Italy, and the US. With distance, economy, culture and status comparable to Australia's, they can be identified as the major competitors Australia needs to surpass in the race to attract Chinese tourists.
In 2014, all four countries, plus the EU in general, announced their strategies or intention to relax visa policy for Chinese tourists:
France – new visa regime came into force on January 27 which will see visa request from Chinese tourists processed within 48 hours;
Italy – announced measure to trim average visa processing time for Chinese citizens from 5 days to 36 hours;
US – considering more relaxed visa policy for Chinese tourists, including a potential visa waiver for repeat visitors, says Arne Sorenson, a member of the President's Export Council;
UK – launched a 24-hour express processing program for Chinese tourists for Ł600;
EU – announced launch of a multi-entry visa valid for 3-5 years by 19th of May, 2015.
In comparison, Australia's tourist visa process appears a lot less welcoming. Currently, the Australian tourist visa requires applicants to fill in a 16-page application form in English and prepare additional evidence of employment, assets and income, leave approval and other relevant documents. Once the application forms and supporting evidence are completed, the documents need to be submitted via a confusing chain of visa service centres in China before they are ultimately processed by the Australian Embassy in China.
Furthermore, if application is submitted by post, it needs to be posted to a specific application centre according to the applicant's area of residence. For example, if applying by post, Beijing applicants are required to post applications to Shanghai, despite Beijing application centre being able to accept applications made in person. The applications are then passed on to the Australian Embassy in China for processing.
The current standard processing time for a Visitor Visa (subclass 600) advised on the Australian Embassy in China's website is 15 working days. The application process has no online components and must be completed entirely in English. It is a time-consuming and complicated process that can discourage many potential Chinese visitors from applying for a visa to Australia and instead choose another destination that allows faster and easier visa applications such as the European countries mentioned previously.
Approved Destination Scheme and Free and Independent Travel
Another factor compelling the call for ease in tourist visa policy for Chinese visitors is the shift in Chinese tourists' preference from group travel to Free and Independent Travel (FIT).
Australia is highly reliant on its Approved Destination Scheme (ADS) tourist visa to attract Chinese tourists. Applicants are only eligible for the ADS visa if they travel as part of a group organised by an authorised travel agent. The travel agent applies for the groups' visas on behalf of the applicants, relieving some of the stress from having to actively organise the application themselves. Currently, most Chinese tourists visiting Australia travel as part of a tour group under the ADS.
However, tour groups generally produce lower yield for businesses than FIT travellers.
When travelling as part of a group under ADS, Chinese tourists are not allowed to deviate from the pre-approved itinerary. They are not allowed to do independent shopping outside of the allocated free-roaming time.
This restriction significantly limits their options to make impromptu purchases of goods and activities, and consequently prevents Australian businesses from tapping into Chinese tourists' full spending potential.
Tour groups also enjoy many discounts from transport and accommodation deals with local operators, causing significant amount of profit to be absorbed by the Chinese travel agencies instead of flowing into Australian tourism operators.
Following the introduction of a new Tourism Law in China on 1 October 2013, the price gap between group travel and FIT has narrowed, prompting more Chinese tourist to choose independent travel.
In addition, according to Tourism Australia's report, while first time visitors might prefer to travel in a group, as Chinese tourists become more experienced, they like to enjoy more flexibility as an FIT traveller.
In the wake of rapid FIT growth, non-ADS tourist visa streams need to be revisited to ensure Australian businesses gain complete access to this emerging, high-quality market.
Risk of visa non-compliance
When considering easing visa policies, a major concern is the risk of visa non-compliance, such as people illegally remaining in Australia after their visa expires.
The Department of Immigration and Border Protection (DIBP) uses Modified Non-Return Rate (MNRR) as an indicator for visa compliance. MNRR is a statistics showing the percentage of passport holders from each country who fails to leave Australia before their visa expires.
The most recent MNRR report lists China's MNRR as 0.29, lower than some countries to which Australia offers express visa processing such as US (0.51), UK (0.58) and Malaysia (1.01). China's MNRR has been steadily declining over the last 4 years despite the increase in the number of tourist visa granted. Visa non-compliance is no longer significant enough to justify the rigid visa requirements currently imposed on Chinese tourists.
A timely call for visa policy update
In order for Australian economy to fully enjoy the benefits from the lucrative Chinese tourist trade, the government needs to take positive steps in making Australia more accessible by easing visa restrictions for Chinese travellers. Introducing online applications, Mandarin capabilities and express processing channel for repeat visitors are just a few starting points in improving efficiency and streamlining processing.
Delaying action will lead to missed opportunities Australia simply cannot afford, without changes to the current tourist visa policy, Australia stands little chance in gaining a competitive advantage over other destinations such as Europe and the US.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.