Sustainability, Tourism and China

Sustainability is often defined as a managing process companies use to manage their financial, social and environmental risks, obligations and opportunities. The three impacts are often referred as profits, people and planet. Several practises what help organisations move along the path from laggards to leaders are stakeholder engagement, environmental management systems and life cycle analysis. Corporate social responsibility, also known as CSR, refers to business practises involving initiatives that benefit society. It not only will benefit the people and planet, but also the business itself as companies can use business skills to do social goods. 

Importance of CSR principles

The Corporate Social Responsibility is based on several principles which makes a company as active according to CSR as possible. The five important principles are 1) legal compliance principle, 2) adherence to customary international laws principle, 3) respecting related stakeholders principle, 4) transparency principle, 5) respect for human principle. Together with these five principles, there are three major dimensions for social responsibility, to wit: the economic, social and environmental dimension (SSIF, 2010). 

Think environmentally or financially?

The term of economic dimension respective to social responsibility does not refer to profitability. Alternatively, it refers to commitment to ethical practices inside companies, like corporate governance, preventing bribery and corruption, protecting consumers, and ethical investment. The social dimension consists of participating in achieving the welfare of the society, and in improving and caring for the affairs of its employees. This should positively reflect on increasing a company’s productivity, developing the technical abilities, and providing professional and employment security, besides health and social care. The dimension which is defined as the companies obligation towards covering the environmental effects is known as the environmental dimension. These environmental effects result from its operations and products, eliminating wastes, achieving maximum efficiency and productivity depending on available resources, and decreasing practices which may negatively affect the country and next generations’ enjoyment of resources.

Compatibility tourism and CSR 

For the past twenty or more years, sustainable development has been at the forefront of many government agendas. Concluded has that sustainability should be adopted as the way forward to preserve ecosystems and biodiversity. Tourism has been put forth as a way to gain income and provide access to market opportunities for small and medium size enterprises, especially in low income countries. Dodds and Joppe (2005) mentioned that sustainable tourism can help overcome many of the negative impacts associated with tourism development. Based on their research it is clear that guidelines alone are not strong enough to overcome the short-term profit motive of many operators, governments and destinations. 

Will sustainable tourism be possible?

The way the tourism sector is able to be sustainable will be according the drafted guidelines. The guidelines are divided by the dimensions for social responsibility. The economic dimension will be sustainable by supporting the local community, employing local residents, monitoring economic contribution to the local environment. The social dimension can be found sustainable by stakeholders and other parties by have good labour conditions, have migrant workers, have impact on local communities and services, have involvement in local community and have for example good food safety. The third dimension, environmental, can be sustainable by sourcing standards for cleaning products according health and safety, sourcing standards for food and beverages, managing plastic use, managing the energy consumption and managing the water consumption. A mix of all the guidelines for being sustainable will help businesses be (even) more sustainable (GRI, n.d.). 

Sustainability hospitality industry China

With the rise of China’s middle class and the growing potential for international travel, China’s travel and tourism industry will continue to expand for many years in the upcoming future. To provide sufficient accommodations for the growing number of visitors, China’s hotel industry is growing nationwide. Cornell University (2016) believes that the nation’s planners are aware that the increased number of hotels can have a disadvantageous impact on China’s already stressed environmental resources. Therefore Chinese hotels can adopt the sustainability standards already promulgated by their government, what can help positioning the hotel industry for future growth. By implementing best practices in environmental sustainability measures in each stage of the hotel planning and development process, China’s hotels can become a good standard. According WTTC (n.d.) the most common indicators hotels reported for being sustainable are community assessment, diversity, programmes to avoid serious diseases and skills development and performance reviews. The most uncommon indicators mentioned are water recycling, wage rations versus local minimum wage and weight of transported hazardous waste. 

In response to the sustainability in the tourism sector and China, a lot of businesses can be more sustainable, components are supporting the local community (economically), having good labour conditions (socially) and managing plastic use (environmentally). Will the hospitality and tourism industry be sustainable? Are hotels willing to change and make it more sustainable? What will China do in order to make the hospitality industry more sustainable?

References

Cornell University (2016). Environmental Implications of Hotel Growth in China: Integrating Sustainability with Hotel Development. [Retrieved from http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1012&context=chrreports on the 13th of October 2016]

Dodds, R. & Joppe, M. (2005). CSR in the Tourism Industry? The Status of and Potential for Certification, Codes of Conduct and Guidelines. [Retrieved from http://siteresources.worldbank.org/INTEXPCOMNET/Resources/CSR_in_tourism_2005.pdf on the 13th of October]

GRI (n.d.). 40 – Hotels, Restaurants and Leisure, and Tourism Services. [Retrieved from https://www.globalreporting.org/resourcelibrary/40-Hotels.pdf on the 13th of October 2016]

SSIF (2010). Corporate Social Responsibility (CSR) Principles, Dimensions and Requirements. [Retrieved from http://www.ssif.gov.jo/EN/EN/CorporateSocialResponsibility/CSRGuide/CorporateSocialResponsibilityCSRPrinciples/tabid/233/Default.aspx on the 13th of October]

WTTC (n.d.). Environmental, Social & Governance Reporting in Travel & Tourism: Trends, Outlook and Guidance. [Retrieved from https://www.wttc.org/-/media/files/reports/policy-research/esg-main-report---web.pdf on the 13th of October 2016]

Trade risks of doing business with China

As doing business with China, like all cross border commercial activities, carries certain risks that businesses might not be aware of, should businesses investigate the market and the culture before establishing business relationships. 

Business risks

The possibility of inadequate profits or even losses due to uncertainties or some unforeseen events in the future, can cause businesses to fail. In order to be aware of the business risks the businesses should be aware of certain risks, which include commercial fraud, breaches of contract, intellectual property infringement and theft, bullying, intimidation and threats to physical safety, restrictions on movement and criminal charges for engaging in activities that may not constitute crimes under their own country’s law. 

China's corruption

Legal and regulatory risks

Regulatory risk in China is considered to be high. Although many sectors of China’s economy have become more market oriented, numerous restrictions and a massive bureaucracy still hinder full implementation of regulations and make the approval process unpredictable. Foreign-invested enterprises that plan to operate or invest in China or partner with a Chinese company need to understand how the regulations apply to them before entering into any agreements. 

Social and cultural risks

The concept of business ethics is still fairly new in China. In China’s changing economy, material gain, with little regard for how it is acquired, is often the measuring stick of individual success. Also, in many privately owned Chinese companies, one individual is still the only person responsible for all corporate governance issues. To prevent ethical breaches, companies should institute ethics training programs and perform due diligence on partners, vendors, and investment targets (US-China Business Council, 2006). Besides the business ethics itself, the legal system is ill-equipped to keep pace with this tide of misdirected entrepreneurship. Extraterritorial compliance regimes aggravate the risk for foreign companies operating in China. 

Minimising risks and difficulties for external companies

Australian Trade and Investment Commission (2016) mentions that the risk of doing business with China can be managed, as long as the knowledge about doing business with China is provided. There are a several ideas which should be thought of, to name; seek professional legal advice, undertake due diligence checks, seek trial shipments and arrange pre-export inspections, be aware of local business practices and be sensitive towards them.

Minimize the business risks

As they are all important, the third one will be one of the best solutions to make sure the shipments and transportations will be correct, as you will be able to ensure that the goods you ordered meet the quality requirements and that the business you are dealing with is a legitimate one. Employing a good local agent to consolidate, sample and verify goods prior to export can also help to ensure that what you have ordered is what you get.

References
Australian Trade and Investment Commission (2016). Minimising Risks. Exports markets – China. [Retrieved from https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Doing-business/Minimising-risks on the 7th of October 2016]

US-China Business Council (2016). Managing Business Risks. [Retrieved from http://www.chinabusinessreview.com/managing-business-risks/ on the 7th of October 2016]

Consumer behaviour of Chinese

To understand the buyer decision making process the elements from psychology, sociology, cultural anthropology and economics should be defined. Answering these four elements shows of when, how, why and where people do or do not buy a product. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand peoples wants and needs. Consumer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer (Sensagent, 2012). A major question to understand consumer behaviour can be: ‘why is the study of consumer behaviour important?’. Studying consumer behaviour will help businesses to identify consumers’ needs and satisfy them more effectively than competitors. It makes a business’ marketing consumer-oriented, which is a key to succeed. Knowledge of consumer behaviour is not only useful for the company, but equally useful for middleman and salesman to perform their tasks effectively in meeting consumers wants and needs more successful.

Economic growth

To understand the sales, China will be compared with the United States. The sales in the example will be divided to retail sales and e-commerce sales. Retail sales are collected data of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. The e-commerce sales are all purchases made of goods and services over an electronic network, primarily the internet. Both sales methods are operating in all four market segments: business to business, business to consumer, consumer to consumer and consumer to business. In the figure below (figure 1), the retail sales and e-commerce sales are shown. 

Figure 1 Retail and e-commerce sales from China and USA in 2015

Visible is that the retail sales of China, compared with the United States, is more than U.S. $1,5 billion below. But since China’s opening up, China’s growth percentage reached an average of 13,2 percent from 2010 until 2016. Since China’s sales are still growing very fast, the e-commerce sales will representing a high-growth sector. Forbes (2016) is mentioning that the volume of online sales in China now exceeds that in the U.S., as shown in the figure above, and online sales are expected to grow 20 percent annually by 2020. Now China’s e-commerce sales will be growing fast, it will be important for other businesses to pay attention to the Chinese businesses as China’s new marketplace sellers are expanding internationally, leveraging their direct access to Chinese workshops and original equipment manufacturer (OEM) factories. Global consumer-goods players should be ready to face competition from Chinese small and midsize enterprises and microbusinesses selling directly through marketplaces in emerging economies.

Consumers in China

In the past decades, Chinese consumers’ shopping habits have changed dramatically, as indicated earlier. Their incomes have risen and new concepts and products have entered China’s market. The habits continue to evolve every day, and examining generations of consumers can reveal specific trends. Though increased wealth can change some preferences, most Chinese consumers’ habits are identified by their objective living conditions and limited earnings. The current Chinese consumer population can be separated into several groups with distinguishing characteristics, for example the ‘wealthy retired’ and the ‘new generation’. 

China's urbanization

As incomes seem to increase and the young generation becomes the main population of consumers, the Chinese will gradually turn from buying only the basics necessities to leading comfortable, high-quality lifestyles. US-China Business Council (2011) indicates that the following product categories will expand rapidly in the upcoming 5 to 10 years: toys, convenience foods, pet products, personal care products, wine and whisky, snack foods, health food and products, baby products, auto products and products for the elderly. 

Consumer behaviour Chinese outbound tourists

As the Chinese consumers income is increasing, they also find the possibility to travel abroad. Indicated is that the number of Chinese tourists travelling abroad is constantly growing and could be doubled in 2020 to reach 234 million of tourists, which means 100 million more than the year 2015. This new tourism wave will have several characteristics that can be listed. The new generation of tourists will not be travelling in groups; they want to travel independently. According the boom in the digital era in China, the tourism shape will shape China with an infatuation for booking their trips on internet through mobile, which is already 53 percent of the Chinese tourist travelling abroad. As they book their trip online, they also prepare their trip online. The most common platforms are WeChat and Weibo. Besides the developments according the increase of income, China’s government’s effort increases as well, as the government has developed all the means to attempt changing the behaviour of Chinese, to be adapted to other countries. The government appears to support its citizens to travel more abroad (Marketing China, 2016).

References
eMarketer Inc. (2016). US Retail Sales to Near $5 Trillion in 2016. [Retrieved from http://www.emarketer.com/Article/US-Retail-Sales-Near-5-Trillion-2016/1013368 on the 2nd of October 2016]

Forbes (2016). China’s E-commerce addiction has serious market potential. [Retrieved from http://www.forbes.com/sites/sarahsu/2016/07/16/chinas-growing-e-commerce-addiction/#7427205a3b01 on the 2nd of October 2016]

Marketing China (2016). Top 5 trends of Chinese outbound travel market for 2016. [Retrieved from http://marketingtochina.com/top-5-trends-chinese-outbound-travel-market-2016/ on the 2nd of October 2016]

Sensagent (2012). Consumer behaviour. [Retrieved from http://dictionary.sensagent.com/CONSUMER%20BEHAVIOUR/en-en/ on the 29th of September 2016]

Statista (n.d.). Retail e-commerce sales in China from 2014 to 2018 (in billion U.S. dollars). [Retrieved from https://www.statista.com/statistics/289734/china-retail-e-commerce-sales/ on the 2nd of October 2016]

Statista (n.d.). Retail sales in China from 2009 to 2016 (in billion U.S. dollar). [Retrieved from https://www.statista.com/statistics/295540/china-retail-sales/ on the 2nd of October 2016]

US-China Business Council (2011). Understanding Chinese Consumers. [Retrieved from http://www.chinabusinessreview.com/understanding-chinese-consumers/ on the 2nd of October 2016]

Vertical Web Media (2016). U.S. e-commerce grows 14.6% in 2015. [Retrieved from https://www.internetretailer.com/2016/02/17/us-e-commerce-grows-146-2015 on the 2nd of October 2016]