An Analysis of the Impact of Chinese Tourism Ban to Taiwan

Did Taiwan Manage to Diversify Sources of Tourists Fast Enough?

Introduction

Opening up to Chinese tourists was a big part of the economy policy hailed by the pro-China Nationalist Party of Taiwan in the 2008 and 2012 presidential elections (they won both). When the less pro-China Democratic Progressive Party won the 2016 presidential election, China quickly responded by decreasing the flow of tour groups to Taiwan as a punitive measure. Furthermore, there are reports recently claiming that China is considering escalating the tourism ban to the level seen in the 2017 South Korea travel ban.

There are plenty of narratives on this subject. Some claims the tourism ban has destroyed the Taiwan tourism industry. Some says the decrease of Chinese tourists has improved the quality of travel in Taiwan, hence the increase of tourists from other countries. A counterargument to the previous claim is that the increase of foreign tourist is a trend that exists long before the tourism ban.

Whose narrative is more accurate? In this report we’ll try to answer this by looking at the actual data. We’ll focus on the two big questions:

  1. Has Taiwanese tourism industry been devastated by the tourism ban? (If so, the data should show a big drop in the number of tourists overall.)
  2. Does the increase of foreign(excl. Chinese) tourists has something to do with the tourism ban?

(Note: the current state of the Chinese policy is more of a quasi-tourism ban. “Tourism throttling” is probably more accurate. But we’ll continue to use the term “tourism ban” in this post for simplicity.

Annual Statistics

The First Question

Taiwan had almost 11 million international visitors in 2017. To put this number in perspective, let’s consider another popular travel destination: Japan. Japan had almost 29 million international visitors in 2017, and had a population of 126.8 million. The population of Taiwan (23.58 million) is less than one fifth of Japan’s, but the its international visitors is more than a third of Japan’s. (The number of visitors to Japan is rapidly expanding, though.)

We can see that there is a big jump from 2013 to 2014, after that the growth has stagnated. But no drops in number were seen in 2016 nor 2017.

There were more than 4 million visitors from China in 2015, and quickly decreased to less than 3 millions in 2017. Although Taiwan had lost more than 25% of the visitors from China, the total number of visitors is still larger than it had in 2012. It’s arguably not really a total disaster.

However, as some business are specifically opened for Chineses tourists, those who expanded their business from 2013 to 2015 to accomodate the growing demand most likely took the brunt of the tourism ban, and had to scale back to the 2012 level.

On the other hand, the number of visitors from other countries has been growing fast, compensating the lose of the Chinese tourist. This explains the continuous, albeit small, growth of the overall number despite of the tourism ban.

If we look at the Chinese visitors’ share of visitors, we’ll see a more dramatic change. Only around 25% of the international visitors were from China in 2017 and 2018, the lowest point since 2011. It’s more impressive considering only three years ago Chinese was dominating the tourism market by a 40% share.

In conclusion, we can clearly see that the tourism ban does have a significant impact on the Taiwanese tourism industry. We cannot be sure whether the stagnation of the growth is caused by the ban, as the growth had already showed signs of slowing in 2014–2015 period. But the source of the visitors definitely has been quite different from before 2016. Although we have not looked at other data such as income from tourism, the total number of visitors tells a much brighter story than it was told by some pro-China media. The claim of Taiwanese tourism industry being “destroyed” by the ban is very unlikely to be true.

The Second Question

The growths of visitors from China and from other countries are correlated before 2016. 2014 was a particular good year for Taiwan tourism, with 39% increase from China and 15% increase from other countries. I haven’t been able to find a good explanation to this phenomenon yet. In contrast, the next year (2015) was has the lowest growth since 2012.

What’s interesting is the growths of visitors from other countries in 2016 and 2017. They were both above the 10% mark, while before 2016 only a fourth of the time it had this kind of growth. We’ll have to dig further into the data to explain where the growths came from. But one thing is for sure: the international tourist did not find Taiwan a less attractive destination as the tourism industry being hammered by the ban.

As for the “the increase of foreign tourist is a trend that exists long before the tourism ban” claim, we cannot find any evidence in the data to support this claim. The growth of foreign tourist actually slowed in 2015.

Monthly Statistics

We can see some seasonality from the plot. January is usually the weakest month. December, March, and April are usually the strongest.

The most popular months for Chinese visitors were March and April from 2011 to 2014, then switched to February in 2015. After the tourism ban was put in effect after President Tsai sworn in, the number of visitors took a dive to around 2 million people per month. The number has become hard to read after that. In the later part of 2017 the number started to increase, hinting the Chinese government might have loosen the tourism ban, but in 2018 the trend seems to have stopped.

The most popular months for foreigners to visit Taiwan are December and (quite surprisingly) March.

The growth seems to have slowed in 2018. This is a bad sign especially when the Chinese government is tinkering with the idea of escalating to a full tourism ban. If the ban is put in place and the current growth trend continues, we may finally see a decline in the number of visitors to Taiwan.

Fin

Thank you for reading. This is the first part of the series. We only grossed over the overall statistics, without exploring the number of visitors from specific countries except ones from China. Please stay tune for more in-depth analysis.

20181108 Update

(I tried to respond to a few comments on Kaggle suggesting that “consumption level of every tourists” should be considered. The following paragraphs are copied from my response on Kaggle)

I’d like to address a point that has been raised several times in comments, about “consumption level of tourists”.

Unfortunately, I cannot find data of that. The closest thing is this data of foreign exchange earnings from tourism which has only been updated to 2016. It’s hard to keep track of how tourists spend their money, not to mention privacy concerns. Foreign exchange earnings from tourism as a proxy indicator shows that in 2016 the average earning per person is at a level between 2014 and 2015 if you convert it to local currency (the form in which they were spent). (A lot of reports I’ve read failed to mention the influence of exchange rates.)

IMO, it becomes really complicated if you drill down to the “consumption” level. One dollar spent can have dramatically different consequences in different situations. For example, $10k spent on luxury goods are not the same as $10k spent on foods. Therefore it’s hard to draw any meaningful conclusions without conducting more surveys and research.

Headcounts (the numbers of visitors) are simple and accurate. Yes, they can oversimplify things, hence the big caveat: we should always mention the uncertainties involved. The continuously growing number of visitors suggests that the “Taiwan tourism industry has been destroyed” is very unlikely to be true, as there appears to be a growing number of foreigners see Taiwan as a suitable destination. This does not mean there are any casualties in this ban; as I wrote in the report, the business which over-rely on Chinese tourists are likely to lose a lot of their income due to the ban.

It’s very important to be clear about the question being asked here. If the question were “is this claim true? — the Taiwanese business with 50+% of their customers being Chinese tourist have been destroyed by the tourism ban”, I would have said that I cannot find any evidence in data that it’s not true.

For those who are interests, this is the average daily expenditures per visitors by residence in 2016. You can see that Chinese tourists spend almost 50% of their budget on shopping, while their expenditures on hotels are actually the lowest in all the countries listed.