Martin Snedden: Easing visas will unlock Chinese market

China Southern is well placed to help fill capacity opened by the FTA. Photo / Supplied

Group travel to NZ leaves too much profit with off-shore operators and not enough with Kiwi businesses.

I suspect it would have been difficult for the general public to understand the importance of the Government's decision to relax visa restrictions for China Southern "Pearl" frequent-flyer members.

In short, this decision was made within the context of a wider Government strategy designed to better optimise the opportunities presented by our fastest-growing visitor market.

Over the past 12 months, New Zealand has received 187,000 visitors from China, numbers that will likely double over the next five years. While numbers are growing fast, average length of stay and average spend are in gentle decline.

For the past three months, a public-private sector group has been working intensively to identify initiatives that will underpin Chinese visitor growth and improve both quality of that visitor experience and spend. Recommendations from this China Market Review team will shortly be presented to Government.

One area receiving strong focus from the team has been our visa processes.

Currently visitors from China have two NZ visa options. The first is to be part of a group whose visa obligations are taken care of by an Approved Destination Status agent. About 60 per cent of Chinese visitors travel on these group visas and they are governed by a pre-approved, tightly-controlled itinerary.

The second is for individuals or groups who don't wish to use this option. The requirements are much more challenging but movement in New Zealand is far less restrictive.

These well-intended visa processes have unwittingly created a major impediment to the potential from the China market being fully realised. Because the second option is much more challenging, many choose the approved-destination route. The nub is that shopping consortiums have effectively gained control over the arrangements and payments for the majority of these tours, restricting yields and undermining the quality of the visitor experience.

Profits from these shopping trips are too much being retained by off-shore operators and not enough by New Zealand-based businesses. Of the $550 million spent by Chinese visitors to New Zealand in the past year, it is estimated only 30 per cent was spent by those 60 per cent travelling on approved-destination visas.

Part of the solution to this problem rests with adjusting our visa processes to make the other visa option more user-friendly.

This is easier said than done. Immigration NZ is understandably worried about border security. Although citizens of 57 different countries who want to holiday in New Zealand can turn up at our airports and be issued with on-the-spot visas, Chinese visitors cannot. Immigration NZ has assessed the risk of criminal activity or absconding as being too high. But this risk attaches to only a very small number of Chinese visitors, so Immigration NZ is continually looking to adjust its screening processes to ease the way for visitors who fit within a high-value, low-risk profile.

It makes perfect sense for our country to prioritise this visa liberalisation strategy, just as we liberalised our trade relationship when New Zealand became the first country to sign a Free Trade Agreement with China in 2008. International research on China demonstrates a strong link between visa liberalisation and visitor growth.

Our China FTA has opened up new, direct air capacity with China. The challenge now is to help Air New Zealand, China Southern, and others to fill that available capacity.

The China Southern agreement fits beautifully with this visa-liberalisation strategy. It will encourage much greater use of non-approved destination visas. It should result in visitors staying longer, enjoying a better visitor experience and spending more in our economy.

And it is a low risk option for Immigration NZ. It is not a visa waiver.

These visitors still have to meet criteria much more stringent than for most visitors. On arrival, they are still subject to the same border security processes as every other arriving passenger.

The profile of these Pearl cardholders is seasoned international travellers, generally in sound economic health, with strong ties to their homeland, and who, in the course of their international travels, will have successfully passed through many visa and security processes.

They are part of a fast expanding upper and middle class in China who are travelling in greater numbers and with greater frequency than ever before.

New Zealand has strong international competition for these potential visitors.

This China Southern initiative should not be stand-alone. The principles of this agreement can, and should, be applied in a number of other high value, low risk target areas. These visa-related initiatives, combined with others, will help New Zealand nail our China opportunity.

Some in this country will always see something sinister in anything to do with China, but those of us in tourism are congratulating Immigration Minister Nathan Guy and Immigration NZ on this positive decision.

Martin Snedden is chief executive of the Tourism Industry Association of NZ.