Spike in Chinese tourists presents new challenges for Vietnam

By Le Hong Hiep   September 27, 2018 | 11:21 am GMT+7

Vietnam has to handle issues like new payment methods and 'zero dong tours' to actually reap the benefits of the great inflow of Chinese tourists.

Dr Le Hong Hiep, Fellow at the ISEAS  Yusof Ishak Institute.

Dr Le Hong Hiep, Fellow at the ISEAS – Yusof Ishak Institute.

Vietnam's Deputy Prime Minister Vuong Dinh Hue has recently instructed the State Bank of Vietnam, the Ministry of Finance and relevant government agencies to crack down on the use of Chinese electronic wallet services, such as WeChat Pay and AliPay, as well as illegal points of sale devices at travel hotspots frequented by Chinese tourists.

The government is concerned that the use of such payment methods, through which the transactions, conducted between Chinese bank accounts of Chinese tourists and business owners, can circumvent Vietnam’s banking system and national regulations, leading to loss of tax revenues and other potential problems.

This is one of the many challenges that Vietnamese authorities have to handle to reap the benefits of the greater inflow of Chinese tourists while minimizing any unwanted impacts that they may generate for the country in general and the economy in particular.

In the first half of 2018, 2.5 million Chinese tourists visited Vietnam, representing a 36 percent year-on-year increase and accounting for 32 percent of international arrivals in the country. However, the benefits that Chinese tourists bring the country may not be as significant as it may seem.

Various media reports point out that many of these tourists have arrived in Vietnam through so-called “zero dong tours” organized by Chinese tourist companies. During these tours, Chinese tourists stay at Chinese-run hotels, eat at Chinese restaurants, and shop at Chinese shopping outlets. They also use Chinese tour guides instead of local ones. Just like the use of Chinese e-wallet services, these problems reduce the trickle-down effect of Chinese tourists to the economy and local businesses.

The increasing inflow of Chinese tourists tends to create political problems for the Vietnamese government as well. For example, Chinese investors reportedly used Vietnamese proxies to buy land plots to build hotels to serve Chinese tourists. In certain cases, these land plots are next to military facilities, giving rise to security concerns.

In May 2018, a group of Chinese tourists wearing T-shirts with a Chinese map featuring the nine-dash line caused widespread uproar among the Vietnamese public. In 2016, the Vietnamese public was also infuriated when a Chinese tour guide reportedly told his group of tourists that the imperial city of Hue has “architecture features similar to China’s as the city used to belong to China.”

Chinese tourists are seen with others onboard during their visit in UNESCOs world heritage Ha Long Bay. Photo by Reuters/Kham

Chinese tourists are seen with others onboard during their visit in UNESCO's world heritage Ha Long Bay. Photo by Reuters/Kham

The problems that Chinese tourists present host countries are not unique to Vietnam. Similar stories can be heard across Southeast Asia and elsewhere. For example, a recent article by Cambodian scholar Pheakdey Heng reported similar problems in Cambodia. Among other issues, the author found that “Chinese residents and visitors in Cambodia buy from Chinese businesses, eat in Chinese restaurants and stay in Chinese hotels. The trickle-down effect to local businesses is minimal.” 

In certain cases, Chinese tourists can also become a strategic tool for the Chinese government to pursue its foreign policy goals. During the 2012 standoff over the Scarborough Shoal, for example, Beijing directed its tourist companies to stop sending Chinese tourists to the Philippines to mount pressure on Manila. It’s entirely possible that China will do the same to Vietnam if bilateral maritime tensions in the South China Sea escalate in the future, causing Hanoi to be further vulnerable to Beijing’s economic influence.

China’s economic success over the past four decades has led to an increasing level of wealth for its people, enabling more and more Chinese to afford overseas leisure trips. The Chinese outbound tourism boom has brought both new opportunities and challenges to host countries across the world, including Vietnam. In that sense, just like China’s rise itself, Chinese tourists, as Bloomberg put it, are indeed reshaping the world economy, for better or worse. 

*Dr Le Hong Hiep is Fellow at the ISEAS – Yusof Ishak Institute where this article was first published. The opinions expressed are his own.

 
 
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