Six major industries

An overview

This chapter provides in-depth analysis of the six focus industries - tourism and hospitality, retail, healthcare, education, security and energy (including oil, gas and renewables) - operating across the region. The business dynamism and complexity of each particular industry are reviewed, as are competitive advantages and their significance for the region's economies and the rest of the world (ROW).

Keywords

Asia Pacific; tourism and hospitality; retail; healthcare; education; security and energy

Introduction

In Chapter 1 we discussed the significance of the region. In this chapter we take a closer look at the six focus industries: tourism and hospitality, retail, healthcare, education, security and energy (including oil, gas and renewables). The 17 regional economies we consider are Australia, Cambodia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Myanmar (Burma), New Zealand, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam. The business dynamism and complexity of each particular industry along with competitive advantages and their significance on the region's economies and the rest of the world (ROW) are reviewed in the following sections.

Tourism and hospitality industry

According to the United Nation's World Tourism Organization (WTO), 'Tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes' (WTO, 1993). Tourism is one of the most important industries in the world and is growing at a rapid pace. In 2012 the industry recorded one billion international tourist arrivals for the first time in history. WTO records indicate that tourism contributes 9 per cent to world GDP and US$1.3 trillion to exports. One in eleven jobs globally is in tourism. Interestingly, the region is one of the fastest growing in the world in terms of tourism, recording 16 million more tourists in 2012 (WTO, 2013). Tourism is a highly resource base-dependent industry and environmental quality is of utmost significance when tourists choose a destination. Fennell (1999) describes sustainable tourism development as needing to: (i) develop greater awareness and understanding of tourism's significant contributions to the environment and the economy; (ii) promote equity and development; (iii) improve host communities' quality of life; (iv) provide high-quality experience for visitors; (v) maintain environmental quality.

Apart from briefly describing country-specific issues and challenges, we provide four broad parameters of the total contribution made by the industry over time (2009-13): (a) employment, the number of jobs generated directly plus indirect and induced contributions; (b) GDP, that generated directly plus indirect and induced contributions including capital investment spending; (c) capital investment, spending by all sectors directly involved in the industry and investment spending by other industries on specific tourism assets such as visitor accommodation and leisure facilities; (d) domestic spending, as carried out within a country by its residents for both business and leisure trips.

Tourism and hospitality industry: Australia

In Australia, tourism ranks among the most significant industries and contributes heavily to the economy. Natural landscapes, the indigenous culture and heritage make Australia an interesting tourist destination. 'There's nothing like Australia' is Tourism Australia's (the Australian government agency responsible for promotion of the industry) global consumer marketing campaign. Recent records note that every dollar spent on tourism generates an additional 91 cents in other parts of the economy. In 2013 the industry contributed over US$150 billion to GDP. With almost 280,000 enterprises operating within the industry, it is a major creator of jobs (Table 2.1). Tourism is also the largest service export industry. However, high Australian dollar rates and competition from other global markets are two key challenges.

Table 2.1

Travel and tourism total contribution: Australia

Source: WTTC, 2014a.

To cope with these challenges and sustain growth, Tourism Australia has recently devised a strategy called 'Tourism 2020'. It is a whole government approach to improving the industry's productive capacity and is devised to increase the return from the industry. It has identified six strategic areas that need to be focussed on: (i) growing demand from Asia; (ii) building competitive digital capability; (iii) encouraging investment and implementing the regulatory reform agenda; (iv) ensuring the environmental impact of tourism transport supports growth; (v) increasing the supply of labour, skills and indigenous participation (currently the industry has a labour shortage of 36,000); (vi) building industry resilience, productivity and quality (Tourism Australia, 2011; WTTC, 2014a).

Tourism and hospitality industry: Cambodia

Tourism is Cambodia's third largest industry. Known for its decades of civil war and armed conflicts, the country is regaining its past glory in terms of travel and tourism (Table 2.2). Promoted by its Tourism Department as the 'Kingdom of Wonder', Cambodia is home to over 1800 ancient temples, including one built in the twelfth century. It is a destination for ecological and cultural tourism. With improving flight connectivity, visa exemptions and brand promotion, international tourist arrivals have increased remarkably from 118,183 in 1993 to 2,015,128 in 2007 to 4,200,000 in 2013. Vietnam, China, South Korea, Laos and Thailand are the main sources of tourists. Despite generating US$2.6 billion in revenues in 2013, the OECD (2013, p. 9) notes that there is plenty of room for improvement in certain areas to ensure sustainable tourism. These areas include tourism infrastructure, accommodation, and financial facilities such as automated teller machines (ATMs) that accept Visa cards (Cambodia Herald, 2014; Chheang, 2008, 2009; Rodas, 2012).

Table 2.2

Travel and tourism total contribution: Cambodia

Source: WTTC, 2014a.

Tourism and hospitality industry: China

Owing to China's rapidly growing economy, increases in disposable income and consequent growth in domestic tourism, the World Travel and Tourism Council (WTTC) predicts that China is poised to become the world's second largest travel and tourism economy in the world by 2015.

The WTO estimates that 100 million Chinese tourists will travel abroad by 2016. In 2012, Chinese tourists became the world's top international tourism spenders. Recent trend analysis notes that while most Chinese used to travel for shopping now they travel abroad to discover other cultures and learn more about them (Radio Australia, 2014). Known for its contrast between the ancient and modern, China also attracts huge numbers of tourists, with arrivals in 2011 reaching 57.6 million (WTTC, 2014a; Worldwatch Institute, 2013). Chinese tourists are not just going abroad, many are travelling within their own country. Recent records indicate a huge swell in domestic tourism in China. It has reached a point where tourist destinations are experiencing such high inflows - especially during holiday seasons - that they run the risk of becoming uncontrollable, disrupting essential services and having negative impacts on the natural environment, as evidenced by overcrowded tourist spots (Table...