Focus

Paying the price for a Hong Kong tour

By Guo Jiaxue (China Daily)
Updated: 2010-08-12 15:20

Mainland visitors walk along a bustling Hong Kong shopping area. The city is known as a shopping paradise among mainlanders and attracts multitudes of visitors both from home and abroad. Edmond Tang / China Daily

One tour guide's outburst caught on video puts spotlight on the dark side of the city's tourism industry. Guo Jiaxue reports from Hong Kong.

As viral Internet videos go, the footage of Hong Kong tour guide Li Hau-chun berating a group of meek visitors from the Chinese mainland for not spending enough at a jewelry store is relatively mild. There is no shouting, no fighting and no swearing.

Yet, analysts say the simple 7-minute video exposes the murky underside of the city's travel industry - one that sees low-budget tour groups sold like cattle by travel agents and visitors pressured by guides into overpaying for souvenirs.

"I don't owe you, it is you who owe me, but you pay me nothing back," Li says in one of the videos. One of the 24 tourists from Anhui province secretly filmed the outburst in mid-July.

Li was reportedly angered by the fact that the group had spent only a combined HK$13,000 ($1,600) at a jewelry store.

"If you don't pay in this life, you will have to pay in the next," she adds.

The outrage that followed on the mainland was tangible, with the media and online forums awash with comments slamming travel companies running trips to China's famed "shopping paradise".

James Tien, chairman of the Hong Kong Tourism Board, issued a public apology, while the National Tourism Administration has also warned mainland firms over "forced shopping".

Li's rant is not the first time this year the practice has hit the headlines. In May, Chen Youming, a former national table tennis player from Hunan province, collapsed and died during a visit to Hong Kong after arguing with a tour guide over being forced to shop. An autopsy showed the 65-year-old suffered a fatal heart attack.

Much of the blame has been targeted at the low- and no-cost packages offered by some agents.

Research shows only 15 percent of mainland visitors pay for expensive, high-quality tours to the special administrative region (SAR), while the rest arrive on budget deals, according to the Hong Kong Tourism Board.

Companies that run low- and no-cost tours, however, rely on their clients' spending power to turn a profit, while the guides, who are poorly paid, are forced to survive on the commission they make on the tourists' purchases. This naturally results in pressure on tourists to shop.

Rita Lau, the SAR's secretary for commerce and economic development, described the issue as a "structural problem" that involves not only the entire industrial chain in Hong Kong but also the practice of "reselling" tourists by mainland agencies.

To find out more about how it works, China Daily talked to the sales manager of a travel agency in Shenzhen, Guangdong province, who would only be identified as Elaine.

"Mainland travel agencies are responsible for attracting customers and organizing groups," she explained. "After that, they don't give the groups to Hong Kong travel agencies directly but to wholesalers. The wholesalers then distribute the groups to different travel agencies in Hong Kong."

The travel agency Elaine works for is a wholesaler and "receives groups from all over the country", she continued. "Groups from areas that have strong purchasing power, such as Jiangsu or Shandong province, we pay for. (Those from) worse regions we charge. It works the same way when we resell the groups to travel agencies in Hong Kong."

Elaine argued that wholesalers ensure low prices for customers.

Holiday hell

In the pursuit of profit from selling tourists, poor farmers from the Chinese countryside who have no money to spend in Hong Kong are also being recruited onto shopping tours, said a retired city guide who refused to be identified.

"The problem starts on the mainland, although the vicious competition among Hong Kong agencies is also responsible," said the middle-aged man who now works for a group that protects the rights of tour guides. "They (agents) go to the fields to persuade people to put down their farming tools and go to Hong Kong. These people could never afford to come to Hong Kong if they didn't join a (no-cost) tour."

Hsu Chinyin, an accountant who worked for a Hong Kong travel agency for 10 years, described the business as gambling.

"Every day is a bet and every tour is a bet," he said.

An open letter highlighting some of the issues "people avoid talking about at Tourism Industry Council meetings" was sent to the tourism commission under the city's Commerce and Economic Bureau last month. It was signed: "A tourist industry veteran".

"One (shopping) tour calculated at 20 people per group is the equivalent of betting at least HK$30,000," the anonymous author wrote. "Bosses are not doing charity. The actual situation in the industry is very cruel and some tour guides are a little crazy."

After facing universal criticism on television and in the press, more than 400 Hong Kong tour guides gathered at a restaurant on July 22 to put their side of the story across and protest about the harsh conditions they face.

Many guides complained that they receive no basic salary and must even pay drivers' tips, admission fares and parking fees for agencies, which they sometimes never get back.

In the letter by the "tourism industry veteran", the author stated that travel agencies owe guides as much as HK$10 million for charges they have paid up front. This puts intense pressure on guides to wring every penny out of their clients, by fair or foul play.

"They are totally living on commission," said Wong Ka-ngai, chairman of Hong Kong Tour Guide General Union (TGGU). "So the only way they can make money is to rip off tourists."

The travel agents give guides implicit consent to "cheat" clients should take the blame, he added. "Tour guides are just scapegoats."

"Once tour guides get on the coach, companies have already lost HK$1,000 (on transport costs)," explained the retired city guide, who spent two decades working in the industry. "For companies, guides who can rip off tourists are good guides. Today, they are just salespeople."

He added that there are far more aggressive guides operating in Hong Kong than Li Qiaozhen, while some companies are famous within the industry for the dirty tactics they employ on tourists.

Getting commission on purchases can be extremely lucrative, said accountant Hsu, who revealed that, for every HK$100 spent, about HK$58 will go to the travel agency and about HK$10 to tour guides.

Wong at the TGGU said guides generally take a commission of between 1 and 7 percent, with the highest paid on jewelry items.

However, because of the need to pay commission, vendors can sell their wares at up to 11 times the cost price, read the letter by the "tourism industry veteran".

A statement issued on July 22 by Li Wah-ming, a member of the Legislative Council, said the annual revenue of 60 registered shops (all stores where guides take tourists must register with the Tourism Industry Council) is about HK$20 billion.

To ensure great professionalism, tourism board chairman Tien suggested tour guides be licensed by the government, rather than by the industry's regulating body, the Tourism Industry Council. He also questioned the current level of supervision.

Taking a cut

The mainland has already banned travel agencies from organizing tours for prices less than the cost, deeming it "unfair competition that disrupts the market", according to Shao Qiwei, director of the National Tourism Administration. However, Hong Kong has yet to rule against the practice.

Economic development chief Lau has stressed more than once in recent weeks that the SAR government has no intention of intervening with travel agency pricing, based on the principle of free market.

However, five agreements finalized on July 31 between the mainland and the SAR include strengthening the management of tours, increasing transparency and providing better information to tourists, and enhancing the process of passenger complaints.

Shenzhen travel agency manager Elaine said she believes it will be very hard to change the current situation.

"These tours are still running," she said. "Nothing has changed (since the video came to light). Our company still has about 20 tour groups heading to Hong Kong every day. There are sellers and there are buyers. That's how the market works. There will always be people who would prefer to spend just 600 yuan ($90) visiting Hong Kong instead of 4,000 yuan."

She added that on top of the fact many people are poor, some Chinese still see traveling as simply taking pictures to prove they have been somewhere.

Song Haiyan, associate director of the Hong Kong Polytechnic University's school of hotel and tourism management, said the demand for zero-cost packages, which began in the late 1980s, shows the outbound market's relative immaturity.

"Income levels vary on the mainland," he said. "Low-income people also want to travel and some think that if they just keep on insisting that they will not buy they'll be fine."

He added that he is confident the poorer tours will disappear as the market matures and salaries continue to grow.

As a compromise to banning low- and no-cost tours, the TGGU has suggested the government reinstate the Aug 1 Agreement, which was signed in 2006 and ensures tour guides get basic salaries and a service fee of HK$25 per tourist per day.

"The complaints about forced shopping dropped to almost none until the first half of 2008," said Wong. "But after that about 90 percent of (the city's) travel agencies dropped it. The agreement was not legally binding."

"In a healthy industry, tour guides should promote goods and not do the hard sell. Commission should just be an added bonus," he added.

Li Hau-chun, a Hong Kong tour guide, who was filmed berating a group of mainland visitors for failing to spend enough at a jewellery store. She has since apologised for her outburst. Edmond Tang / China Daily