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COVID-19 has dealt a huge blow to social and economic development worldwide. Since it is highly sensitive to the environment, the cruise industry has been hit hard. It’s among the industries suffering the most serious and direct losses in this pandemic. With market value shrinking by RMB 600 billion, Carnival Corporation & Plc, Royal Caribbean Cruises and Norwegian Cruise Line have to raise funds, cut jobs and pay, sell retired ships and cancel or delay new ship orders. As the global pandemic response made notable progress and mass vaccination programs were underway, cruise companies made efforts to push for faster reopening of sailings by reducing passenger capacity, improving the itinerary design and tightening health and safety protocols. In the second half of 2020, cruise companies tried to resume the operation of part of their cruises. The Explorer Dream cruise ship of Dream Cruises first resumed sailings at the Port of Keelung, Taiwan, China in July 2020. The World Dream of Dream Cruises reopened its itineraries in Singapore in November 2020. In December 2020, the Quantum of the Seas of Royal Caribbean Cruises commenced operation in Singapore. The Genting Dream cruise ship of Dream Cruises resumed sailings in Hong Kong, China on July 30, 2021. Since the position of the Chinese market in the global cruise market is improving, we should support building industrial ecosystems covering independent cruise design, building, operation, management, maintenance and services, to create more opportunities for the development of Chinese cruise companies.

Situations of Chinese Cruise Companies

While Global Cruise Market Resumption Speeds Up, the Chinese Cruise Market Remains Closed

Recently, European and North American cruise markets have been opened. In August 2021, there had been 190 cruises under 65 brands back on voyages. Carnival Corporation & Plc announced the resumption of sailings of seven cruise brands, including AIDA Cruises, Costa Cruises and Princess Cruises, in Europe and the Caribbean. According to Carnival’s plan, 63 ships will resume operations by the end of 2021, accounting for approximately 75% of its total capacity. Royal Caribbean Cruises announced that all its 25 cruises would be back on voyages by the spring of 2022. Yet as the second cruise tourist source and largest emerging cruise market globally, the Chinese cruise market is still suspended, and the Shenzhen-Sanyan coastal itinerary for Cruise to Nowhere and China Merchants Yidun, the first five-star red flag cruise of China, has to prolong the suspension due to the change of the pandemic situation. The Chinese market is the first to suspend cruise operations due to COVID-19. It attained the “zero imported cases, zero exported cases, and zero infections” achievement, offering a pandemic response benchmark for the global cruise industry. Since April 2020, all stakeholders have been making active efforts to resume the Chinese cruise market. But in contrast to global cruise markets that are being resumed, the Chinese cruise market is still at a standstill (Table 9.1).

Table 9.1 Resumption plans of cruise companies
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The Development of Cruise Industry Supported by the 14th Five-year Plan

The Outline of the 14th Five-Year Plan (2021–2025) for National Economic and Social Development and Vision 2035 of the People's Republic of China sets forth the requirement to adopt better policies for the development of cruises. In the 14th Five-Year Plan for the Development of Cultural and Tourism Sectors, the Ministry of Culture and Tourism calls for an integrated multimodal transportation pattern covering railways, cruises, RV campgrounds and self-driving tours, for the development of marine and coastal tourism, and for the construction of cruise tourism demonstration (experimental) areas of China.

The 14th Five-Year Plan of Shanghai, the Plan of Shanghai on Deepening the Construction of A World Famous Tourist City during the 14th Five-Year Plan Period, the 14th Five-Year Plan for Developing Shanghai into an International Shipping Center, the 14th Five-Year Plan of Shanghai for Comprehensive Transportation Development propose to accelerate the building of cruise industry chains, construct international first-class cruise ports, establish sound management systems for cruise berthing and cruise tourist passing, improve the strategies and standards for cruise public health emergency response, actively apply for the pilot operation of Cruise to Nowhere itineraries, optimize the comprehensive transportation system of cruise ports, further develop into a world-famous tourist city, and advance the construction of Baoshan Cruise Tourist Resort. Plans of other provinces and cities: Tianjin: To Intensively Invest in the Cruise Tourism Industry; Hainan: To Develop and Grow the Cruise Tourism Industry; Dalian: To Grow the Cruise Economy; Qingdao: To Make the International Cruise Home Port Bigger and Stronger; Jiangsu: To Support the Development of Cruise & Yacht Tourism; Fujian: To Grow a Distinctive Cruise Tourism Industry; Guangdong: To Develop the International Cruise Home Port; Zhejiang: To Promote the Construction of International Cruise Ports with Positive Efforts.

Significant Expansion of Fleets of Chinese Cruise Companies

Recently, major SOEs like the CSSC, China Merchants Group, China Tourism Group, COSCO SHIPPING and China Communications Construction have been accelerating business development in the cruise industry by building domestic cruise fleets and furthering the business at cruise ports. The development of domestic cruise brands is of strategic significance to the development of the Chinese cruise industry. More support should be given to domestic cruise brands and building domestic cruise fleets is the foundation of taking the lead in the future development of the cruise industry. China Merchants Shekou Holdings and Viking Cruises cooperate on offering medium-sized luxury cruises serving higher-class Chinese guests through a joint venture, which is the first cruise operator to own the five-star red flag cruise fleet. China Merchants Viking Cruises Co., Ltd. was incorporated in December 2020. The existing Chinese cruises include the Chinese Taishan, Blue Dream Star, Costa Atlantica, Costa Mediterranea, Piano Land, MV Charming, Century Harmony and Zhao Shang Yi Dun. It’s anticipated that there will be one mega home-made cruise entering service each year from 2023 to 2025, a total of three. Moreover, four to five more cruises are anticipated to be bought by China Communications Construction, China Merchants Group and COSCO SHIPPING, and there would be about 15 Chinese cruises by 2025. The first mega home-made cruise was designed and built by CSSC Cruise Technology Development Co., Ltd. and Shanghai Waigaoqiao Shipbuilding Co., Ltd, with a tonnage of 135,000 tons. The first cruise is estimated to be delivered on September 30, 2023, and the second in December 2024.

Analysis on International Competitiveness of Chinese Cruise Companies

Globalized Competition of International Cruise Companies Intensified

North America is the largest cruise tourist source, cruise consumer and cruise tourist destination globally and is one of the maturest cruise markets. It takes up more than half of the global market. In terms of cruise tourism consumption in North America, Carnival Corporation & Plc, Royal Caribbean Cruises, and Norwegian Cruise Line dominated 89.1% of the market shares together, almost monopolizing this market. Among them, Carnival Corporation & Plc takes up 50% and is in a monopoly position. It was followed by Royal Caribbean Cruises with a market share of 30.9%. The third largest player in this region is the Norwegian Cruise Line, with a market share of 15.8%. Europe is the second cruise tourist destination and consumer market next to North America. Presently, the three leaders in this market are Carnival Corporation & Plc, MSC Cruises and Germany based TUI AG, jointly taking up more than 80% of the market shares. Plus their long-term shipbuilding plans, the “Rule of Three” situation of the European cruise tourist market has been stable. Itinerary globalization is the main feature of cruise markets. The Princess Cruises sails along the Caribbean, Alaska, the Panama Canal, Europe, Mexico, South America, Australia/New Zealand, the South Pacific, Hawaii, Tahiti/French Polynesia, Asia, India, Africa, Canada/the New England Region and world cruise.

Globalization Strategy Advantages of Chinese Cruise Companies

Economic globalization is still considered an inevitable trend in the future. Countries will need to cooperate for mutual benefits in the long run. We should stay committed to opening up to promote reform, development and innovation, and maintain a high-level opening-up. In the last two decades, China invested in or undertook 101 overseas ports, covering 55 constructed, 14 acquired, 21 invested, six aided and five rented. These ports are distributed on all continents and regions of the world.

For example, Piraeus Port, acquired by COSCO SHIPPING, serves as a critical hub on the twenty-first century Maritime Silk Road. In 2016, after the consolidation and restructuring, COSCO SHIPPING acquired 67% stakes in Piraeus Port Authority, becoming the holding shareholder of the authority. It’s the first time a Chinese enterprise to take over a whole overseas port. COSCO SHIPPING commenced the operation of the port in August of the same year. In February 2020, the cruise terminal expansion project within Piraeus Port began. It's planned to build two deep-water cruise berths, which could berth the 360-m and 6,000-passenger cruise, the largest cruise in the world now. Seen from regions along the twenty-first century Maritime Silk Road, Southeast Asia is densely populated and rich in coastal resources, so it is well-positioned to develop international maritime trade. Given the infrastructure investment capacities and port management and operation measures, and capacities of different countries, Southeast Asia is hopefully a hot region of cruise port investment for Chinese enterprises.

Bottlenecks Facing Chinese Cruise Companies in Implementing Globalized Strategies

Chinese cruise companies are doing well in financing by cooperating with foreign cruise companies and financial capital service providers, but lag behind international cruise companies in management. Besides, it’s an important development path for Chinese cruises to set up cruise operation companies with their shipping or tourism resources, such as HNA Cruises backed by the tourism resources of HNA Tourism Group, Astro Ocean Cruise supported by the tourism resources of China Tourism Group and the shipping experiences of COSCO SHIPPING, and Bohai Cruises enjoying the shipping experiences of Bohai Ferry Group. Most Chinese cruise companies buy cruises with their own funds. Despite their absolute operation control, they lack operation experience and face high market risks.

When it comes to brand positioning, Chinese cruise companies highlight local features. Chinese cruise brands cannot compete with international cruise companies in marketing due to the age of their cruise, the ordinariness of cruise equipment and the lack of international service personnel and product innovation. But they offer favorable prices and cooperate with traditional local travel agencies. For instance, SkySea Cruise Line distributes on ctrip.com and Diamond Cruise does so on szthly.com.

Strategic Path of Chinese Cruise Companies toward Globalization

Promoting the Global Operation of Themed Cruise Ships

For different target consumer markets, the themes of cruise design and building are different. To design and build differentiated and featured cruises to meet the varied needs of cruise tourists on the basis of the target consumer markets is a major development direction for Chinese players to independently design and build cruises in the following five to ten years. First, they need to design theme cruises that meet the needs of young consumers. Through subtle combinations of unconventional entertainment facilities, entertainment activities and art and by highlighting the features and differences, they could stimulate young people to spend and develop special and featured consumer markets for young people. Second, they need to design theme cruises that meet the needs of child consumers. When designing and building cruises, they should well consider the psychological development stages of children and their needs for entertainment facilities, as well as the consumption needs of their guardians. By adopting a children-focused strategy, they could win family guests. Third, they need to design theme cruises that meet the needs of senior consumers. The elderly are the main consumer of global cruise tourism and is the main consumer market to be developed in China in the coming five to ten years. China would remain the largest cruise tourist source in the Asia–Pacific in the following decade. Therefore, when designing and building cruises, Chinese companies should fully consider the psychological consumption needs of the elderly. Their focus should be on creating a tranquil, serene and peaceful interior environment for cruise ships. Besides, it would be more considerate to decorate guest rooms with things manifesting the elderly’s happy memories after obtaining approval from their families. Such a heart-warming act could help to attract tourists back in the future. Fourth, they need to design and build other theme cruises that meet the needs of other consumers.

Globalized Operation of Cruise Tourist Destinations

Many overseas cruise companies have acquired private islands for developing new-type tourist destinations, such as Royal Caribbean Cruises. Cruise companies often directly buy or rent private islands for their operations. Through the integration of cruise tourism resources for Asian-Pacific cruise tourism regions, plus the abundant featured international cruise tourism resources, they are building tourism regions both sharing common characteristics and having uniqueness. The innovative cruise tourism cooperation mechanisms of Asian countries provide them with both the opportunities to cooperate on building cruise tourist destinations with international influence and promote the outbound cruise tourism market based on the featured tourism resources of each other, and the chances to stimulate their inbound tourism markets, increase the contribution of cruise tourism to the local economy and create cruise tourist destinations attractive for global tourists. By establishing sound mechanisms to manage the cooperation of cruise tourist brands and enhance the attractiveness and influence of the Asian cruise tourism markets, we could better boost the development of the world cruise tourism market, expand the market and raise the economic output and employment contribution of the market.

Accelerating the Building of the Northeast Asian Cruise Tourism Circle

Northeast Asia is an early region where China develops cruise tourism. China, Japan and South Korea are close geographically and culturally, and have frequent economic and trade exchanges, thus making Northeast Asia a hot region for China and even other Asian countries to develop cruise tourism. To this end, it’s suggested to set up major transnational cruise groups, innovate the marketing modes of cruise tourism, integrate and build cruise brands and adopt market transactions as the basic transaction form. During the course of developing the Northeast Asian cruise tourism circle, we should keep enhancing the attractiveness of popular cruise destinations in Japan and South Korea, launch differentiated cruise tourist destinations based on the unique coastal tourism resources of both countries, actively persuade the DPRK to open coastal ports for cruises and develop cruise ports of call, and increase itineraries to these ports. Moreover, coastal port cities in North China should make active efforts to prepare scenic coastal areas around the port, develop attractive shoreside tourism products, and further invest in marketing in Japan and South Korea to attract inbound tourists. In such a way, we could eventually develop Dalian, Tianjin and Qingdao into hot cruise tourist destinations in Northeast Asia and win our cruise tourists back.

Supporting the Building of the Pan-South China Sea Cruise Tourism Circle

In the early stage of building the tourism circle, the government should play a dominant role, and the cooperation mechanism “led by government, participated by enterprises, supported by people, and driven by tourists” should be adopted, thus advancing the development of this circle effectively. Such a mechanism highlights the labor division among the stakeholders, complementary resource advantage and the coexistence of markets. For instance, the governments of countries within the Pan-South China Sea cruise tourism circle could make long-term cruise tourism development plans, policies on the development of the cruise industry, financial insurance systems for cruise tourism and regional management and emergency collaboration mechanisms. Cruise tourism companies could establish mutual tourist recommendation, talent training and fund guarantee mechanisms. The folk society could adopt information and resource-sharing mechanisms.

The conclusion of RCEP offers an implementation path for the development of the FTAAP and works for further lifting the position of the Asia–Pacific in the world. Based on RCEP, it's hopeful for the region accounting for one-third of the global economy to form a giant integrated market. RCEP also ensures Chinese cruises precious chances and a broad market to “go global” to participate in international markets. To this end, in the coming five to ten years, domestic cruise companies should make the best of tourism, using it as the forerunner industry for the integration of regional markets. They should take the initiative to develop cruise tourism into mobile cultural bonds among RCEP member countries, drive domestic to “go global” with RCEP as the backup force and carry out cruise industry construction projects.

Participating in the Operation of Overseas Cruise Ports

Chinese cruise enterprises need close cooperation with domestic port operators on “going global” to participate in the integration of free trade, on the construction of cruise ports in the Pan-South China Sea cruise tourism circle, and on operation in the Asian-Pacific cruise tourism market. It’s suggested to cooperate with the cruise ports of countries in the Pan-South China Sea region. To be specific, Chinese players could build, operate, manage cruises and develop shoreside destinations based on the transfer of land ownership and land use rights, port leasing and port concession. Cruise itineraries with Chinese ports and cruise ports of countries in the Pan-South China Sea region as mutual home ports could be launched, and the itineraries could be differentiated given the different market needs. The investment could be made in ports along the Belt and Road and globally, to prepare both the Belt and Road cruise itineraries and Chinese-funded ports of call or home ports for global operation for Chinese cruises, such as Piraeus Port invested by COSCO SHIPPING, Genoa and Venice ports, Italy by China Communications Construction, the Port of Newcastle by China Merchants Group, the Port of Moresby by CSCEC and the Port of Melbourne by CIC Capital.

Building Domestic Cruise Tourism Brands with Global Influence

Efforts should be made to integrate cruise tourism resources to form the Asian-Pacific cruise travel region, drive to establish a harmonious and symbiotic area for cruise tourism based on the cruise tourism resources of each of those countries with some similarities and distinct features, increase the complementarity of cruise tourism development and build more harmonious development spaces. Establishing effective cooperation mechanisms in the Asian cruise tourism market helps to highlight the advantages and differentiated advantages of each of those areas, innovate Asian cruise tourism, open up better and innovative cooperation paths and create resource advantages for the development of the Asian cruise tourism market. In such a way, we could not only offer a solid development foundation for enhancing the attractiveness of Asian cruise tourist destinations but also build golden destination brands with global influence. And in the long run, doing so could attract tourists from European and American and other developed regions to Asian-Pacific cruise tourist destinations, and eventually create the brand effect of the “One Road and Two Circles” cruise tourist destinations. Domestic cruise brands should strengthen brand management and aim higher in brand management positioning. Instead of paying excessive attention to cost performance and localization, they should be more internationalized, and invest more in brand management to raise brand awareness.

Cultivating the Differentiated Competitiveness of Domestic Cruises

Domestic enterprises win over foreign competitors in their good understanding of oriental cultures. In particular, Star Cruises have introduced the luxury cruise brand Dream Cruises of Asia, especially for Chinese tourists. It’s a good model for domestic cruise companies to learn from. Meanwhile, the competition strategies of some other regional cruise companies also are useful references for domestic cruise companies to try high-quality cruise brands in different market segments. Certainly, there isn’t much overlap between the potential tourists of domestic companies and international tourists, and outbound cruise tourism has its particularity. Even itineraries to Japan and South Korea take about five days, and that's the reason why most Chinese cruise tourists are elderly. Young people don’t have much time for outbound cruise tourism. And it’s very convenient to have a lovely journey along the coast on domestic cruises. Without the need to apply for passports, it’s as convenient as taking a high-speed train, and tourists could choose to buy tickets for a certain section. Cruise companies could cooperate with shoreside hotels, scenic areas, taxis to offer one-stop services, which hold much appeal for young people.