China’s Thailand Scam

Thailand, a country known for its pristine beaches, enchanting landscapes and tourism-friendly services, had been facing a dire financial and reputational threat from the Chinese tour operators. These Chinese operators follow the illicit practice of enticing Chinese tourists to low-cost packages and later force them to shop at inflated prices from their allied shops in Thailand. The latter then share the profits with the operators in form of commissions. This practice is termed as “Zero-dollar tourism.”

Owing to the factors, such as Chinese entertainment industry’s portrayal of Thailand as an idyllic tourist destination, burgeoning Chinese middle class with high aspirations to travel, cheap visa policies, and favourable exchange rate between the two strong Asian economies, Thailand is seen as an attractive travel location for Chinese. The availability of zero-dollar tour options and the convenience of language with such tour options have added to the increase in Chinese tourists to Thailand.

However, these tours are fraught with repercussions that led to hardships to all the stakeholders. The2016 boat tragedy, which caused the death of 47 Chinese tourists and injured over 60, caught a lot of global attention; thereby, tarnishing Thailand’s image as a safe travel haven. Later, when the incident was thoroughly investigated by the Thai authorities, they found that the tour guides and the operators were Chinese, who did not follow the mandatory basic safety standards.

Following this incident, the Thai authorities cracked down on zero-dollar tourismby busting 2,150 tour buses and releasing arrest warrants against 29 such operators. The high number of arrests was due to the fact that crackdown coincided with the “Golden Week”, a period which witnesses peak of Chinese tourists in Thailand.In addition to these arrests, the Police also found cases of identity theft by Chinesezero-dollar business owners pretending to be Thais. To effectively deter such fraudulence, the Police requested the Ministry to cancel their Thai ID cards, licences to run companies and tour business licences.

Taking a more sustainable measure to mitigate the issue, Thai Government imposed arrival and day fees on such zero-dollar tours. Consequently, the influx of Chinese tourists reduced significantly. To this effect, Thai Government decided to aim for quality over quantity. They want the tourists to have a safe and enjoyable time in Thailand, and not takeaway a tainted picture of the country. Moreover, favouring quality of tourists ensure that these free, independent travellers don’t fall prey to the zero-dollar tourism scams, but actually get to experience the indigenous culture, streets, shops, restaurants, hotels, tours, and adventure sports; thus, contributing to the Thai economy while travelling.

Besides the myriad issues raised against the zero-dollar tourism above, such a sinister practice has disastrous effects on the Thai economyby not letting it benefit from the surging Chinese tourists in the country. The owners of the shops and restaurants, that the operators tie-up with, are largely owned by Chinese through their Thai proxies. As a result, an economy that thrives on tourism, with 10% of the GDP depending on this sector, loses out on the key revenue possibilities.

It is noteworthy that the prices of these tour packages are oftentimes in violation of the minimum price agreed by the Thai and Chinese authorities. In 2016, the two countries had jointly signed an MoU establishing ‘standard package prices’ for such tours. Thai Government also put a two-fold demand before Chinese officials; one, Chinese authorities must examine the itineraries of the operators; and two, these zero-dollar tour packages can be purchased only in the territory of China. The tourists, thus, will be refrained from any activity not explicitly mentioned in the itinerary under this agreement. Before the true effect of this agreement could be seen, the COVID-19 pandemic had hit the world closing down international travel, especially for leisure, entirely. Since the virus had affected China before any other country, Thailand had witnessed a 99% drop in arrival bookings from China in the first quarter of 2020 itself.

With the worldwide situation still grave and travel industry severely impacted, many hoteliers and accommodation owners are converting their properties into luxury quarantine centres. With plans to open international travel from October 2020 for long-stays only by non-residents, these luxury quarantine facilities seem to be the new way of travelling, akin to the emerging trend of ‘staycations’. This shift definitely raises hope that the perilous zero dollar and other low-budget tours would take a backseat in the new crisis economy.