Not-so-smooth sailing for cruise operators in China

The major international cruise firms have been keen to capitalize on the rise of China’s leisure-oriented middle class, sending as many as 10 percent of their ships to Chinese ports. But now they are planning to divert boats away from the country as the Financial Times (paywall) reports that, following several years of 70 percent annual growth, “the number of Chinese cruise passengers is set to fall for the first time next year” to 2.4 million from 2.8 million this year. Here are some reasons for the decline:

• Geopolitics was cited by one industry executive as playing a major role, particularly Beijing’s ban on Chinese tour groups visiting South Korea.
• Regulatory restrictions are pushing operators away from China. They are not allowed to sell cruises directly to passengers, and travel agents tend to offer heavy discounts that cut into profitability.
• The spending habits of the typical Chinese passenger (who tends to be older and more frugal), underdeveloped port facilities, and even the seasonal nature of the Chinese cruise industry are other factors at play.
• But in the long term, cruise operators are looking to entice millennials to increase the popularity of cruises in the Chinese market, where only 0.2 percent of the population has been on a cruise, compared with 3.5 percent in the U.S.

EARLIER THIS WEEK:

• WeChat issues official electronic Chinese identification cards

The do-everything app that nearly every Chinese citizen with a smartphone uses may soon double as an electronic ID. Residents in a district of Guangzhou, Guangdong Province, are enjoying a pilot program, after which WeChat plans to expand electronic IDs to the province, and then to the whole country.

• Hainan Province scraps local GDP targets to save beaches

The “Florida” of China was revealed last week to be struggling with environmental protection amid a tourism boom. In response, officials in 12 of the island’s 19 regions will forgo economic goals and refocus, for a time, on protecting beaches and rain forests.

• Stricter rules on mobile payments to come in April

The People’s Bank of China announced that starting on April 1, transactions worth more than 500 yuan ($76) using QR codes would be subject to additional verification. Meanwhile, merchant registration requirements will be heightened to reduce the possibility of scams, and subsidies for merchants from the likes of Alibaba and Tencent will no longer be allowed.

—Lucas Niewenhuis and Sky Canaves

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