Challenges and Issues of China Tourism Industry

Subject: Political
Type: Exploratory Essay
Pages: 11
Word count: 2811
Topics: Government, China, International Business, Management, Tourism


The Chinese tourism industry has gained widespread popularity, following the economic reform that transformed the Chinese economy from a planned to a market based economy. The open market economy promoted business expansion with foreign countries and the government took advantage of this to promote inbound tourism in China. The domestic tourism is also very popular and the Chinese government promoted it by motivating the citizens to travel by providing them with holidays. However, there are certain issues and challenges that resulted in creating negative impression about Chinese tourism industry. This paper discusses in detail regarding the present challenges of tourism industry and the probable solutions to deal with the identified issues. The research is completely based on qualitative case study methodology, where previous research theories are analysed to draw conclusions for the research undertaken. The major challenges identified from the previous literature theories mainly are comprised of the aggressive strategies adopted by the government to promote tourism. It resulted in rapid emergence of a large number of hotels without considering the present demand of the market. The country lacks proper infrastructure to satisfy the quality requirements of the tourists. The present environmental issues of the country also resulted in creating a negative impression regarding the Chinese tourism market.

Keywords- tourism, political, economic, government, challenges, environmental, social


The Chinese tourism industry saw a vivid expansion due to the increase in the disposable income of the middleclass people (Tsang & Hsu, 2011). The newly emerged middle class is highly known for its spending habits in the tourism sector. China is widely known for both its inbound and domestic tourism markets and is considered as one of the most visited tourist places of the world (Nyiri, 2006). The political and economic factors of the country largely affected the development of tourism industry in China and it showed a significant distinction from that of the other countries (Zhang, Pine, & Lam, 2005). The Chinese tourism industry transformed from a political activity to an economic phenomenon due to the huge transition that took place in the country’s economy (Tsang & Hsu, 2011). Initially, the planned Chinese economy perceived the tourism business as a diplomatic affair with no profit associated with it. The economic reform that took place in the country changed the entire scenario, and tourism is now considered as the most profitable business of China (Jackson, 2006). 

The main purpose of this research paper is to discuss in detail the present issues and challenges faced by the Chinese tourism industry. It considers the major political, economic, social and environmental challenges and their consequences on the tourism industry of the country. The paper also discusses how China can overcome the identified risks and challenges of the tourism industry and therefore, increase its level of competitive advantage in the tourism sector over other countries.

Literature Review

The following section focusses on the previous studies conducted on this topic regarding the influence of the political, economic and social aspects of the country on the development of the tourism industry and the present trend of the Chinese tourism industry.

Development of the Chinese Tourism Industry

The economic benefits associated with the tourism industry came into prominence, when the developing nations of the world started embracing tourism business as a method of their economic development (Rosentraub & Joo, 2009). The Chinese economy saw a drastic increase in the popularity of tourism industry from 1978 to 2015 and thus considered tourism as one of the major contributing factors of the country’s economy (Luo, Chau, & Shen, 2017). The development of the tourism industry is highly influenced by the political laws and regulations of the country along with the social and economic factors.

Political Impact

The government played a significant role in promoting tourism industry in China by reducing the number of working days, thus motivating the people to explore and travel the other parts of the country (Su & Teo, 2009). The political motive behind this decision was to promote the domestic tourism industry of China. Travelling became one of the most important activities for the people of China as the government went on increasing the number of national holidays. It directly boosted the domestic tourism industry of China (Causevic and Lynch, 2013).

The economic reform that took place in Chinese economy prompted the government to expand its trade relation with the foreign countries (Causevic and Lynch, 2013). The transformation of the Chinese economy directly influenced the growth of service industry, the prominent one being the tourism industry (Zhang, Pine, & Lam, 2005). The main aim of promoting inbound tourism in China by the government was to establish and increase its business relationship with the foreign countries (Chen & Huang, 2006). The government considered tourism industry as one of the important sectors that would help in enriching the country’s economic condition. Therefore, it adopted aggressive strategies to ensure development and promotion of the Chinese tourism industry (Nunkoo, 2015).

Economic Impact

The increase in disposable income of the middle class largely influenced the growth of tourism industry in China. According to Tianlong and Sisi (2016), the disposable income of the urban population of China increased from 7,702.8 to 21,809.8 Yuan in between 2002 to 2012. The country also witnessed a significant increase in the number of domestic tourists from 878 million to 2,641million (Tianlong & Sisi, 2016). Therefore, it is quite evident that the increase in earning capacity of the people has largely influenced the development of the tourism industry in China.

Per Capita Disposable Income of Urban Residents and the Number of Visitors

Fig. 1. Per Capita Disposable Income of Urban Residents and the Number of Visitors

(Source: Tianlong & Sisi, 2016)

The economic reform that took place in China largely influenced the growth of tourism industry in the country by opening its door for foreign visitors for expanding overseas business relations. The political motive of the business expansion together with the increased spending habits of the people on leisure and entertainment related activities contributed largely to the development of the Chinese tourism industry (Rosentraub & Joo, 2009). 

Social Impact

The improved economic condition of the country resulted in the rise of disposable income of the people of China (Chen & Chiou-Wei, 2009). It directly influenced their spending and consumption habits on leisure and entertainment related activities. The people of China, therefore, started spending more on tourism (Tsang & Hsu, 2011). The government took full advantage of this situation by offering more holidays to the people of China, thereby motivating them to utilise the holidays on domestic tourism of China. 

The government initiatives along with the scenic beauty of China have contributed to the success of the Chinese tourism industry (Zhang, Pine & Lam, 2005). The country’s economy was highly benefitted from the revenue collected from both domestic and inbound tourisms. The Chinese tourism industry saw a drastic increase in the number of tourists from 1,212 million to 33,611 million from 2005 to 2014 and the total revenue earned by China saw a dramatic increase by 25,026 billion Yuan (Tianlong & Sisi, 2016). 

Changes in China’s Domestic Tourism Market from 2005 to 2014

Fig. 2. Changes in China’s Domestic Tourism Market from 2005 to 2014

(Source: Tianlong & Sisi, 2016)

Present Trend of Chinese Tourism Industry

China has emerged as the most visited tourist destination of the world after France and the United States (Zhang, Pine, & Lam, 2005). It is highly favoured by the people from all over the world due to its scenic beauty, multicultural people and increased rate of modernisation. China is widely known for its business expanded all over the globe. Thus, the country serves as an excellent place for the foreign business travellers (Zhang, Pine, & Lam, 2005).

The government of the country has adopted several measures to promote both domestic and inbound tourisms of the country (Causevic and Lynch, 2013). This together with the surplus spending habit of the Chinese people and the availability of ample amount of time to travel made the Chinese tourism industry the major source of income for the government. However, the growing demand for tourism has resulted in the emergence of certain critical issues and challenges (Causevic and Lynch, 2013).

The rapid expansion of the hotel industry due to the growing tourism business in China posed serious threats to the environment. Moreover, the hotels were constructed without giving much attention to the present market demand, which, resulted in dissatisfaction among the foreign tourists (Zhang, Pine, & Lam, 2005). The Chinese tourism industry also lacks in terms of its capacity and infrastructure to provide quality service to the tourists (Avci, Madanoglu, & Okumus, 2011). The problem is mainly due to the increased pressure from the government to promote and encourage the growth of Chinese tourism industry, as it served as one of the major sources of revenue for the economy.


The research methodology is the process, by which a researcher analyses the objective of the research undertaken. It serves as the path of conclusive and insightful interpretation of the research objective (Creswell & Poth, 2017). This section of the research paper describes the research design, strategy, research philosophy and the approach undertaken by the researcher to accomplish the aim of the paper. It also represents the procedure adopted by the researcher for the purpose of data collection and data analysis (Kumar & Phrommathed, 2005). The research is conducted in China to determine the major issues and challenges that are causing hindrance to the development of the tourism industry.

The research onion defines the different stages in detail that the researcher must follow to discuss the purpose of the research undertaken (Saunders, Lewis, & Thornhill, 2011). It provides various options available, from which the researcher needs to select the appropriate process to successfully accomplish the objectives of the project undertaken.

Research Onion

Fig. 3. Research Onion

(Source: Saunders, Lewis & Thornhill, 2011)

The research philosophy clearly depicts the theoretical belief relating to the method of collection and analysis of data required for the research (Mackenzie & Knipe, 2006). Research philosophies are classified into positivism, realism, interpretivism and pragmatism. They mainly differ in research design and data collection methods (Kumar & Phrommathed, 2005). This research will use positivism to identify the major issues and challenges of Chinese tourism development. The positivism research philosophy mainly focusses on analysing the present scenario through quantitative research approach and thus identifies the main attributes responsible for prompting the topic of the research undertaken (Marczyk, DeMatteo, & Festinger, 2005).

The research approach gives a detail description regarding the process to be followed to accomplish the purpose of the research undertaken and determine the influence of the previous theories related to the research (Taylor, Bogdan, & DeVault, 2015). In this research, the deductive form of research will be used to validate the existing theoretical literature to determine meaningful conclusions to the research topic along with relevant and related findings (Saunders, Lewis & Thornhill, 2011). The explanatory research design is used for this research, as it mainly focusses on qualitative form of case study analysis to draw conclusion to the research objective of identifying the major challenges and issues, being faced by the tourism industry of China. The explanatory research design helps to understand the causal relations, affecting the different events and is predominantly used in the qualitative form of research (Creswell, 2013).

The qualitative form of research design allows the researcher to use the previous literature review and theoretical study conducted by other people to analyse the objective of the present research undertaken (Davies & Hughes, 2014). The researcher for this research has used the qualitative case study methodology.

Results and Discussion

An open market economy like China is highly vulnerable to the political instability prevailing in the country. The development of tourism industry in China is highly affected by the present political disturbances prevailing in the country (Causevic and Lynch, 2013). It showed a steep decline in the tourism from Mainland China due to the growing tension with the adjacent countries. The political instability between these two places increased as the government imposed orders to the travel agents of the country to restrict island-bound travel (Zhang, Pine, & Lam, 2005). The government is actively trying to promote domestic tourism and as a result, it has imposed new laws and regulation to enhance the quality of local tourism in China. The new rules, though imposed to improve tourism, resulted in having a negative impact on the people of China (Song, Gartner, & Tasci, 2012).

The rules and regulations imposed on the tourism industry made the process of obtaining visa for inbound tourism more critical (Li & Song, 2013). Thus, the visa restrictions directly influenced the tourism market in China by limiting the number of inbound tourists (Liu & McKercher, 2016).

The hotel industry in China saw a rapid development with the emergence of both domestic and inbound tourisms in the country (Zhang, Pine, & Lam, 2005). However, the construction took place without taking the present demand for any new hotel in the market into account. This resulted in an increased number of hotels in the rural areas, which resulted in high level of dissatisfaction among the tourists due to the lack of proper infrastructure and capability of the country to provide quality service to the people (Gursoy & Sandstrom, 2016)). 

The high degree of service quality helps China to attract a large number of tourists. However, lately the Chinese tourism industry is facing complaints regarding its hospitality service (Zhang, Pine, & Lam, 2005). This is because; the country went on constructing new hotels without giving much importance to its lack of infrastructure to provide quality service. There are large number of hotels to provide accommodation to the tourists, but they suffer from lack of proper amenities and infrastructure to attract people (Zhang, Pine & Lam, 2005). This is of prime importance, because word of mouth advertising plays a significant role in marketing the country’s tourism business. Therefore, it is essential for China to develop infrastructure that would ensure high level of customer satisfaction (Zhang, Pin,e & Lam, 2005).

The issues related to the environment of the country such as high level of air and water pollution resulted in a decrease in the number of foreign tourists in China (Nyaupane, Morais, & Dowler, 2006). Therefore, the tourism industry saw a huge decline in the number of inbound tourists, because of these environmental issues. China lacks adequate human resource with linguistic proficiency and thus fails to fulfil its commitment of enhanced customer satisfaction to the foreign tourists. Therefore, it is essential for the tourist companies to adopt the latest technological advancements in order to deal with the growing tourist market (Nyaupane, Morais, & Dowler, 2006).

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In China, tourism has transformed initially from luxury to a necessity due to the initiatives adopted by the government to promote tourism in the country. The development of the tourism industry in China resulted in earning huge amount of revenue. Both domestic and inbound tourisms gained their popularity as the government promoted tourism to expand business relationship with the overseas countries as well as gave ample number of national holidays to the people of China to explore their country. The tourism industry in China became a huge success and it is considered as one of the most attractive tourist destinations of the world. However, there are certain issues and challenges identified in the current tourism market of China. It is essential for the country to deal with these issues to regain its popularity as a tourist destination among the tourists across the globe. The government of China should employ new tourism law and regulations to transform the present situation of the country’s tourism growth and development. China needs to improve its existing infrastructure in order to improve its quality of service provided to the tourists. The Chinese hotel industry should keep in mind the market demand as well as the quality of service offered to the tourists. Therefore, it is necessary for the government to reform its existing policy regarding the tourism industry.

The tourism industry of China needs to strengthen its policy, practices, planning in order to establish a sustainable tourism management in the country. The principles of sustainability ensure that the industry complies with the laws and regulations relating to the safety and security of the environment. The present environmental conditions in China resulted in a high level of dissatisfaction among the tourists and it directly resulted in creating a negative feeling among them regarding China.


It would not have been possible to conduct this research without the help, guidance and support of my parents, family, friends and professors. Their support, love and guidance have motivated me to achieve my goals successfully. They serve as the ultimate role model to my life.

I would like to thank every person who acted as torchbearers in successfully accomplishing the research objectives. Their cooperation and guidance helped me in successfully accomplishing the objectives of my research.

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