Cruise lines return to China amid high expectations for domestic sector
Published: May 12, 2023 12:55 AM
The sailing ceremony of a cruise ship “China Merchants Aden” is held in Shanghai on March 26, 2023, as the city again becomes a regular location for home port cruises. The ship, China’s first high-end cruise vessel with independent operation, heads for Shenzhen, leading guests to explore the natural scenery of the country’s coastal cities. Photo: VCG

The sailing ceremony of a cruise ship “China Merchants Aden” is held in Shanghai on March 26, 2023, as the city again becomes a regular location for home port cruises. The ship, China’s first high-end cruise vessel with independent operation, heads for Shenzhen, leading guests to explore the natural scenery of the country’s coastal cities. Photo: VCG

A cruise liner traveling along China’s coast departed from a port in Shanghai in mid-April, marking an end to a suspension of more than 1,000 days for cruise tourism in China.

Royal Caribbean Cruises revealed that it will restart international cruise services in China from the first half of 2024 in its earnings call on May 4. It is the first international cruise line to announce its return to the Chinese market.

In April, CM-Viking announced that it will launch a 15-day round-trip route to Japan with Shenzhen or Shanghai as its home port, becoming the first domestic cruise company to announce the resumption of international routes departing from a home port in the Chinese mainland.

From June, tourists are expected to be able to take cruises for international travel from Shanghai's two major cruise ports, Shanghai’s transport department said recently.
In late-April, Shanghai conducted comprehensive emergency drills to prepare for the upcoming resumption of international cruise services.

The return of cruise travel in China shows the recovery of the cultural and travel market, as well as rising demand and consumption power among more affluent tourists, Huang Tao, a public relations analyst, told the Global Times on Wednesday.

“Cruise travel can play a positive role in promoting consumption, cultural exchange, and social and economic development,” said Huang.

China is recognized as the world's most promising origin and destination market for international cruise tourism, industry insiders revealed.

As China's middle class grows, so does the potential of the cruise travel market, Zhang Xuefeng, an independent financial commentator, told the Global Times on Tuesday.
By 2035, China's cruise market will see 14 million passenger trips a year, according to guidelines released in 2018 by the Ministry of Transport for promoting the cruise economy.

According to a report by the China Cruise & Yacht Industry Association (CCYIA) in September 2022, cruise ships are expected to contribute nearly 550 billion yuan ($79.3 billion) to China's overall economy by 2035, of which 15 percent will come from new shipbuilding and ship maintenance.

In 2019, international cruise ships contributed 35.8 billion yuan to China's overall economy.

According to industry insiders, from 2006 to 2019, the international cruise industry successively deployed 23 cruise ships in China, with an average annual marketing investment of up to 3.6 billion yuan in the Chinese market.

China's cruise market, which accounts for nearly 50 percent of the Asian cruise market and ranks eighth globally, has maintained a growth rate of 45 percent in the past five years, according to the Study on Traffic in the Guangdong-Hong Kong-Macao Greater Bay Area (2023) released in March.

Cruise products include hotels, ships, transportation, entertainment and other composite products, which are capital-intensive, talent-intensive and technology-intensive industries with particularly high requirements in all aspects, read the study.

Cruise tourism is an important aspect of China's tourism consumption transformation and upgrading. It offers a one-stop service integrating food, accommodation, transport, tourism, shopping and entertainment and is an important way to meet people's desire for a better life, an industry insider surnamed Xu from a leading shipping company, told the Global Times on the condition of anonymity.

Cruise tourism has been included in China’s guidelines on expanding domestic demand, released in December 2022, with long-term goals extending to 2035.

From the demand-side, the international cruise tourism market is in the most high-end part of the global tourism market. Its core target customers tend to be the most economically powerful group among global tourists, which means the rebound in the sector can be faster than the recovery of the global real economy, Chen Jia, an independent analyst of global strategy, told the Global Times on Wednesday.

Catching up
It usually takes 12-18 months to prepare for the resumption of international cruise ships based on relevant water transport policies and the operation permit of the home port in China. If relevant permits are granted by the end of February, international cruise ships can return to China by the end of 2023 at the earliest, said Xu.

The large cruise ships currently in service are all foreign-made, but that will soon change.

“China's domestic cruise ships are expected to be put into use by the end of the year, which means our own cruise ships will join the competition with foreign counterparts,” said Xu.

The first domestically built large cruise liner is scheduled to be docked at the end of May. After leaving the dock, two trial runs will be carried out in July and August to fully verify the mechanical properties and comfort of the cruise ship, laying a solid foundation for delivery and operation by the end of 2023, media reports said.

“Construction of the first domestic large cruise liner has been completed and it is expected to be delivered in 2023. It will travel on international routes in East Asia and Southeast Asia from ports in Shanghai,” Chen Ranfeng, CEO of CSSC Carnival Cruise Shipping, the constructor of the first built-in-China large cruise ship, said in a recent interview with the media in January.

It can accommodate up to 5,246 passengers and has 2,125 rooms, said Chen.

Yang Guobing, chairman of CSSC Carnival Cruise Shipping, said that the building of large cruise ships in China reflects the strength of the country's shipbuilding industry and its technology, and a strong commitment to contributing to the development of the local cruise industry and to the economy.

Due to the extremely difficult design and construction, large cruise ships, together with large liquefied natural gas carriers and aircraft carriers, reflect a country's equipment construction capability and comprehensive scientific and technological level, according to Xu.

“Large cruise ships cost more than $1 billion to build, and their supporting supply chains involve more than 100 strategic suppliers and more than 8,000 professional suppliers, covering 120 types of complete equipment and 20 million parts, 10 times that of large aircraft and 50 times that of high-speed trains,” said Yang.

Over the past century, only a few European shipyards have been able to design and build large cruise ships.

The arrival of domestic cruise ships will make China the fifth country in the world capable of building large cruise ships, after Germany, France, Italy and Finland, Zheng Weihang, executive vice president and secretary general of CCYIA, told the Global Times.

“This will enable China's cruise industry to shift from downstream tourism services to upstream cruise manufacturing, developing the whole industry chain,” said Zheng.
By 2030, the number of Chinese cruise tourists will probably reach 10 million. Such a market size needs dozens of cruise ships, and by then Chinese-built large cruise ships will be further integrated into the supply chain of the international cruise industry, Zheng noted.

Xu also said that in the future, international cruise lines are expected to order large Chinese-built ships.

Challenges remain
But challenges remain in building a competitive cruise tourism market in China. 

The development of cruise ports across regions is not balanced, and some cruise ports and cities cannot yet attract cruise ships, read a draft document on the establishment of a national cruise tourism development demonstration (experimental) zone released by CCYIA in April.

According to the document, the imbalance is due to insufficient development of the passenger market and low popularity of cruise tourism, as well as low cruise tourism service standards, such as cruise port infrastructure construction and port supporting service quality, which cannot fully meet the requirements of cruise berthing services and tourists.

“China's cruise tourism faces competition from other forms of tourism, such as group tours and VIP private tours,” said Zhang.

Huang also noted that cruise travel has an off-peak season, and high-end tourism groups in the international market are limited, which means competition is fierce for cruise liners.