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Is China taking over the world's cruise ship industry?

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Is China taking over the world's cruise ship industry?
Apr 07, 2014

China will become the Asia-Pacific region's largest cruise market by 2020. Some Chinese domestic operators are already digging for the industry's gold.

There will be 4.5 million cruise travelers in China by the end of the decade, representing 33 percent annual growth from 2013, according to a guidance of the Ministry of Transport on March 18.

Bohai Ferry Co Ltd, a listed shipper based in China's Shandong province, established a subsidiary for cruise operations in February.

Its first liner, to be re-christened Zhonghua Taishan (Chinese Mount Tai), was delivered at end-March and cost $43.68 million. It was bought from Italy's Costa Crociere SpA and arrives in China in May.

The 24,000 gross tonnage, mid-size, liner has 1,000 seats and was built in Germany in 2000. Its main work on nearby routes will include South Korea, Japan and Southeast Asian countries.

China to lead Asian cruise industry

China's cruise market grew rapidly in recent years. Statistics from the China Cruise and Yacht Industry Association show people made 1.4 million trips on cruise liners last year compared with about 10,000 in 2005.
China is poised to lead Asian's cruise industry.

A operator, HNA Tourism Holding (Group) Co Ltd, saw the passenger load factor of its first domestic vessel, the Henna, rise to 75 percent this winter from 60 percent at the start of 2013.

Winter is seen as the industry's off-season. Load factor measures capacity usage.

The Henna has worked four routes since January 2013 and new ones, including Xiamen-Taiwan and Tianjin-Japan are planned.

Some tour companies - seeing just two domestic cruise operators and the high level of investment needed to enter the industry - are seeking ways to get a slice of the market.

Almost 10 percent of Chinese cruise travel was booked through Ctrip.com, the country's largest online travel agency, in 2013. It will launch 15 exclusive cruise trips this year, catering to about 40,000 travelers.

Ctrip.com invested more than 200 million yuan ($32.45 million) in its cruise operations this year, director of its cruise business Yang Lei, said.

Other travel agencies, such as Beijing UTour International Travel Service and China International Travel Service Co Ltd, also invested.

The China's cruise industry still faces challenges as it's at an early stage of development, some experts said.

This year, only two liners out of eight operating in China had domestic owners, the Henna and Zhonghua Taishan, Zheng at the industry association said.

Chinese companies have capital to buy vessels but a downfall is the lack talent and operational experience.

International operators also have management systems from ticket selling and onboard service, but no Chinese company has.

The low-price strategy usually taken by Chinese companies, saying it's not a long-term policy where high quality, not just price, is important. At the same time, few options for routes are also limiting industry development, he said.

The transport ministry guidance identified Northeast and Southeast Asia, the Taiwan Strait and South China Sea islands as the main areas for the country's cruise industry by 2020.



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