Introduction
The Chinese tourism industry is an important part of the country’s economy because it represents about 2.6% of the nation’s Gross Domestic Product (GDP) (Zeng 2014). Stakeholder engagement is instrumental to the future sustainability of the industry because unlike other segments of the economy, the sector thrives on culture and the environment, which can be sustainably managed (Vinodan & Meera 2018). The recent diversification of the Chinese tourism industry has prompted the creation of varied and personalised products that meet different stakeholder needs (Ma et al. 2016). This development stems from the need for tourism practitioners to respond to the demands of different interest groups because doing so is vital to the realisation of sustainable development goals in the sector (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014). However, tourism practitioners in the Chinese tourism sector have been unable to create synergy in their operations. Consequently, there has been renewed interest in the industry regarding how to balance stakeholder and sustainability goals (Qian, Shen & Law 2018).
Stakeholders’ perceptions regarding Chinese tourism play an important role in promoting sustainable development in the industry (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014). However, few researchers have bothered to understand differences in interests of each stakeholder group and they should be addressed through sustainable development. This gap in literature partly explains why some of the initiatives aimed at changing aspects of the industry to embrace sustainability have been slowly adopted (Lederer, Wallbott & Bauer 2018). Stated differently, stakeholders who do not believe that their interests will be met through sustainability are likely to sabotage ongoing efforts to embrace it (Kozak & Kozak 2016).
Against this background, this paper demonstrates differences in stakeholders’ perceptions regarding sustainability. The need to embrace new perspectives regarding sustainability in the Chinese tourism sector informs this review. Broadly, this document focuses on four main types of stakeholders: inbound tourists, government authorities, suppliers of tourism products and community residents. The tourism system model and the stakeholder theory will provide the theoretical frameworks guiding the discussions. They will also provide tools to understand the advantages and disadvantages of stakeholder engagement in the Chinese tourism sector. However, before delving into this analysis, it is important to understand the theories underpinning stakeholder engagement that will be used in this study.
Theoretical Background
Stakeholder Theory
As highlighted above, the theories and models used in this paper aim to provide contextual support for understanding stakeholders’ views on sustainability (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014). The stakeholder theory is one model that will be used in this paper to guide the investigation. It accounts for the impact of businesses on interest groups, such as communities, employees and creditors (Usadolo & Caldwel 2016). It also focuses on the morals and values that managers use to oversee the operations of an industry or organisation (Usadolo & Caldwel 2016). Kumar, Rahman and Kazmi (2016) contend that the stakeholder theory integrates aspects of resource and market-based views. One of the theory’s vital contribution is the need to prioritise stakeholders’ interests in all critical decision-making processes (Kumar, Rahman & Kazmi 2016). This theoretical basis stems from one of the theory’s focus, which is to identify key stakeholders and describe how they are treated in an organisation or economic sector (Usadolo & Caldwel 2016).
Tourism System Model
Researchers, such as Lohmann and Netto (2016) are strong proponents of the tourism system model. It has two main components: market demand and destination supply. Sotiriadis (2018) adopts a different approach of implementing this model by saying it has two main components: inner subsystem and external macro environment. In the context of the Chinese tourism sector, as a case study of this investigation, the inner subsystem comprises of local tourism resources and their allocation to realize industry goals. The external macro environment would be made up of factors that are out of the control of industry players, such as local culture, nature, economy and society. In this regard, the tourism system model highlights the importance of perceiving associated events from a holistic perspective, which includes demand and supply side functions (Sotiriadis 2018). To demonstrate its efficacy, researchers have used this model to investigate how different tenets of the tourism sector develop (Lohmann & Netto 2016).
Types of Stakeholders in the Chinese Tourism Sector
The Chinese tourism industry is one of the world’s most recognisable sources of inbound and outbound tourism (Li 2016). The industry’s boom stems from many factors but the growing middle class and the ease in restrictions of travel by Chinese authorities are some of the main catalysts of the development (Li 2016). Inbound tourists form one of the most dominant groups of stakeholders in the industry because China is among the top five most visited countries in the world (Correia, Kozak & Kim 2018). Recently, there has been an increase in the number of tourists from the United States (US) but figure 1 below provides a more comprehensive list of the top 20 sources of tourists in the Asian country.
Based on the figure above, inbound tourists emerge as a significant stakeholder group in the Chinese tourism industry. According to Lee and Yin (2017), most of them travel to the communist nation because they have a positive image of the country’s tourism potential (Incitez China 2016). Nonetheless, from a stakeholder’s perspective, the design of China’s tourism industry mostly fits the needs of inbound tourists, as is evident from the increase in the number of international hotels in the country (Zeng 2014).
The government is also another key stakeholder of the Chinese tourism sector because it is a regulator. In other words, it enforces policies, laws and regulations developed in the industry and makes sure that practitioners pay taxes accordingly. Enforcement of laws is strict in China because the government is a product of a one-party governance structure. Therefore, linked regulations could significantly influence the impact of every stakeholder on the industry. Local communities also form a vital interest group in the development of the Chinese tourism sector because they are a potential source market of tourists. Their relevance is similar in stature to other aspects of the industry’s performance, such as the prevailing legal environment in tourism planning.
Siti-Nabiha and Saad (2015) conducted a case study in Penang Island to investigate the role of stakeholder engagement in tourism planning and found out that healthy stakeholder engagement is essential in advancing the industry, while fragmented communication affects progress. The case study also pointed out that the disjointed application of law between federal, state and local authorities could have a significant impact on the manner stakeholders choose to engage with one another (Siti-Nabiha & Saad 2015).
Broadly, it is difficult to separate the development and growth of the Chinese tourism sector from stakeholder engagement. Inbound tourists, industry practitioners, suppliers of tourism products and community residents are interlinked because they are key partners in the promotion of sustainable development (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014; Lederer, Wallbott & Bauer 2018). They also play an important role in improving the industry’s competitiveness. Unlike Chinese domestic visitors, foreign tourists play a singular role in promoting the sector because they have stringent needs (Siti-Nabiha & Saad 2015). Furthermore, their perception of the industry is a product of international conceptions of it (Zeng 2014). Studies have also shown that their views of the industry are relatively more accurate and sensitive compared to domestic tourists (Lee & Yin 2017). Therefore, their interests differ from local tourists.
Stakeholder Engagement in the Chinese Tourism Sector
Usadolo and Caldwel (2016) characterise stakeholder engagement as the practice of influencing concerned parties to help realise a project’s benefits. Indeed, the successful development of project plans largely depends on how interested parties view them (Ngai & Singh 2018). According to Darnall and Aragón-Correa (2014), trust and commitment are the two main antecedents of stakeholder relationships in China. Additionally, Saffer, Yang and Taylor (2018) say that stakeholder management shares a direct correlation with a firm’s profitability and customer satisfaction standards.
Recently, China has had a robust stakeholder engagement, which has seen the country’s profile in the global tourism map improve. For example, there has been a profitable collaboration between the Chinese government and tourism practitioners, which has yielded improved infrastructure development in the sector, which has aided in the free movement of goods and services. In addition, the ease of travel restrictions by the Chinese government and its active participation in global politics has also diverted the world’s attention to China as a world power. The tourism industry has benefitted as a result.
Communities are also taking part in the development of the Chinese tourism sector because they create content and products sold to tourists. They also preserve local and indigenous cultures, which are attractions to foreign tourists (Serra-Cantallops et al. 2018). Furthermore, they engage with the government through local authorities and act as suppliers of products and labour to local hotels and other suppliers of tourism products. The preservation of great monumental sites in China, such as the Great Wall, is also a product of a partnership between local authorities, tourism players and host communities (Serra-Cantallops et al. 2018). For example, tourism players provide transportation services, such as taxis, while the government and local communities preserve historical sites and monuments.
Broadly, stakeholders in the Chinese tourism industry have engaged with each other in the past through negotiation, consultation and communication (Bratt 2018). Making compromises and nurturing existing relationships are also other strategies that stakeholders in the sector have used to improve industry outcomes (Ngai & Singh 2018). The importance of stakeholders in the implementation of project plans stems from studies, which have emphasised the need to consult all interested parties at different stages of a project’s lifecycle (Usadolo & Caldwel 2016; Zeng 2014). For example, according to figure 2 below, stakeholders should be consulted when defining a project’s scope, estimating timelines for the completion of project tasks, developing project plans and handing over programs to other agencies.
Barriers to Reconciliation of Perceptions
Discussions relating to sustainable development in the Chinese tourism industry have been centred on promoting diversification because the reliance on one product could be detrimental to the livelihoods of people who depend on the sector (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014; Lederer, Wallbott & Bauer 2018). The lack of economic appeal of Detroit city is an example of the need for diversification because the city’s economic growth was almost entirely dependent on the manufacturing sector. Therefore, when the industry collapsed, thousands of workers lost their jobs and millions of families were negatively affected by poor living conditions. Discussions about sustainability in China are cognizant of such an outcome and strive to promote the concept as a feasible operational mantra for making sure that the city’s tourism outlook remains viable even in the wake of unpredictable human and natural disasters (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014; Lederer, Wallbott & Bauer 2018).
Discussions on sustainability in China are also cognizant of the complex interplay between the industry’s products and the environment (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014). The complexity is highlighted by the fact that culture influences the creation of different tourism products (Bakir et al. 2017). Community members are most affected when there is no proper relationship between tourism stakeholders and the environment (Chen 2017). In addition, community-based groups are also the main custodians of local culture and they cooperate with other industry players in packaging tourism products and selling them to both local and international tourists. A different side of the argument is informed by the fact that economic development in China could threaten the environmental health of the country and, by extension, the tourism sector (Lederer, Wallbott & Bauer 2018). Consequently, sustainability emerges as an important concept of development that influences the industry’s future.
One barrier to stakeholder engagement in the Chinese tourism industry is the lack of proper leadership in implementing successfully negotiated projects (Sotiriadis 2018). This challenge stems from a poor attitude among some stakeholders, which makes them assume that by agreeing to undertake a project with their partners, they could simply walk away and “other people” would complete it. Conflicting interests is also another barrier to stakeholder engagement in the Chinese tourism sector because different groups of people have varied and competing interests. Whitehead (2014) says that, traditionally, industry players placed shareholders’ interests before all other considerations in the industry.
This business model was a product of past traditions and norms in commerce (Whitehead 2014). However, modern scholars have criticised the framework and attributed it to the crash of some major companies in the last decade (Sotiriadis 2018; Zeng 2014). Most of these scholars have instead proposed a balance between shareholder and consumer perspectives, with the latter gaining attention in recent academic literature (Sotiriadis 2018; Zeng 2014). Broadly, this analysis means that there is a high possibility of a conflict of interest between stakeholders who push for shareholder’s interests and those who promote consumer goals. This dilemma has been the cause of contention for most interest groups in major sectors of the Chinese economy (Sotiriadis 2018; Zeng 2014). It has also impeded efforts to promote sustainability in the sector.
The implication of Theories on the Competitiveness, Innovation and Stakeholder Engagement
The theories highlighted in this paper have an impact on competitiveness, innovation and level of stakeholder engagement in the Chinese tourism sector. In this section of the report, the effects of the theories on the above-mentioned critical areas of assessment will be mentioned from management and consumer perspectives.
Impact of Stakeholder Theory
From a management perspective, the stakeholder theory is useful in improving the competitiveness of the Chinese tourism sector because it helps to identify gaps in performance that need to be addressed to improve performance. Particularly, the theory has a significant effect on stakeholder engagement because it encourages interest groups to go beyond superficial engagement and implement their collective agreements holistically (Pham, Nghiem & Dwyer 2018). It also aids them to make follow-ups from the start to the end of negotiated projects. Notably, the theory rejects the philosophy of a “hands-off” approach in management because of its failure to promote authentic engagements among concerned parties (Pham, Nghiem & Dwyer 2018). It also rejects the idea that consultations need to occur only when one party pushes for change. Instead, it advocates for greater collaboration among all interest groups to improve the odds of success (Pham, Nghiem & Dwyer 2018; Bratt 2018). Broadly, the contribution of the stakeholder theory in management is to improve the quality of engagement among concerned parties. Relative to this assertion, the case study by Correia, Kozak and Kim (2018) highlights the importance of stakeholder engagement in the tourism sector because it demonstrates its efficacy in increasing the flow of tourists between mainland China and Hong Kong.
The importance of the theory in improving the competitiveness of the Chinese tourism industry can be explained through a case study by the World Tourism Cities Federation (2018), which sought to investigate sustainable management practices in Beijing, China. The case study showed that authorities are committed to conservation and the efficient use of resources (World Tourism Cities Federation 2018). These developments also influenced local regulations on sustainable development (World Tourism Cities Federation 2018). Engagement among all stakeholders also led to the effective implementation of appropriate laws in Beijing and the promotion of progressive principles and models of tourism management, such as the implementation of the green certification system (World Tourism Cities Federation 2018). The stakeholder theory provides the framework for undertaking such engagements. Therefore, it is a tool for managers to use in striking the best balance between accomplishing stakeholder objectives and meeting the industry’s sustainable goals (Qian, Shen & Law 2018; Chen, Huang, & Cai 2014; Lederer, Wallbott & Bauer 2018).
The stakeholder theory also has a significant implication on the innovativeness, competitiveness and level of engagement of the Chinese tourism sector. Notably, it adds the socio-political level of collaboration that is needed in making sustainability a reality in the Chinese tourism sector (Usadolo & Caldwel 2016). In other words, it proposes a paradigm shift of engagement from a resource-based to a consumer-centred view. The addition of the socio-political level to stakeholder partnerships means that there is room for consumers and other stakeholders who do not have a profit-based interest to support industry development (Usadolo & Caldwel 2016).
Impact of Tourism System Model
The tourism system model has a significant implication on innovation in the Chinese tourism industry because it involves the seamless integration of different aspects of the industry’s features (Newsome 2017). Innovation could help to improve business processes and synergies by creating linkages and differentiation areas when executing industry functions. The tourism system model explains how this process occurs by encouraging managers to look at the industry or organisational issues from both demand and supply side perspectives (Newsome 2017). Therefore, it emphasises the deliberate application of knowledge pertaining to the implementation of industry functions. This system underscores how to translate ideas into unique goods and services that improve the profile of the Chinese tourism sector.
Comparatively, the tourism system model highlights the role of the consumer in influencing policies relating to the industry (Athanasopoulos, Song & Sun 2018). It describes their position in the larger social, economic and political system of the Chinese tourism industry so that all parties understand their roles. Broadly, this theory also helps to make consumers more aware of different systemic parts of the market that may influence their purchasing experience (Athanasopoulos, Song & Sun 2018). For example, through the broad understanding of industry patterns, consumers become aware of ongoing innovations or unfair competitive behaviours they need to look out for in sustainable development.
Broadly, both the stakeholder theory and the tourism system model have a significant implication on the competitiveness of the Chinese tourism industry because they influence how the world perceives the sector’s products, based on the efforts of stakeholders make in marketing the country. Particularly, the stakeholder theory draws attention to the need to increase the quality of engagements among all concerned parties. The tourism system model also influences the competitiveness of the industry because it focuses on the development of easily replicable ideas that satisfy a specific need. Nieves and Quintana (2018) add that innovation is a revolutionary concept that involves multiple risks, especially for companies that want to create new markets by embracing innovative ideas. Broadly, the tourism system model and the stakeholder theory have a positive impact in fostering collaboration among tourism stakeholders in China.
Summary and Recommendations
Summary
Overall, this paper demonstrates the need to look at the development of sustainability in the Chinese tourism industry from a holistic perspective that includes all parties. The results are useful to the Chinese tourism industry because they support sustainable development and coordination in the sector. Both consumer and management perspectives highlight the discussions and arguments presented in this paper. The consumer perspective explains non-financial objectives of sustainable development in the tourism industry, while management perspectives relate to the allocation of industry resources to achieve desired goals. The management perspective has been more dominant in academic literature compared to the consumer view because issues relating to stakeholder engagement, such as competitiveness, innovation and nurturing stakeholder relationships, are commonly discussed in management literature.
Recommendations
There is a need for leadership engagement in the improvement of stakeholder relationships in the Chinese tourism sector. This recommendation stems from the role of leadership in improving individual and collective team performance. The need to improve this management principle is desirable because of the need to reinforce behaviours that create a good working environment for all concerned parties. In addition, there needs to be more synchrony between business and industry development goals because some tourism stakeholders are unable to work well because of conflicting interests. For example, it is difficult to merge the non-profit goals of the Chinese government and the profit-centred goals of multinational firms if there is no compromise between the two. Consequently, developing training strategies that merge profit and non-profit goals of various stakeholders in the Chinese tourism sector could be beneficial in improving responsiveness, enhancing efficiencies, increasing organisational partnerships and encouraging high levels of employee retention in the industry.
Lastly, there is a need to restructure the stakeholder engagement framework of the Chinese tourism industry and embrace one that identifies new ways of merging stakeholders’ interests. Redefining the accountability structure would play a critical role in improving the efficacy of stakeholder engagement processes. The idea of accountability addresses the challenge of embracing a “hands-off” approach to management, which undermines industry responsiveness. Relative to this recommendation, Bratt (2018) posits that the effective development of sustainable tourism largely depends on the creation of strong and integrated management systems. Collaboration is important in realising this vision and the stakeholder theory plays a vital role in fostering it.
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