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UNCTAD – Silk Road Investment Opportunities

Investment opportunities in destination China

Tourism is one of the world’s largest growth industries, and the Silk Road economies are just beginning to tap into it. International tourist arrivals are generally rising in the Silk Road as a whole, but the level of tourists is still low in some of the countries.

Silk road1

Revenues generated from international tourism have fluctuated in most Silk Road economies for which data are available between 2000 and 2005 (see Table 28). As a result, tourism comprises a very low percentage of total GDP in all five countries. In China, tourism accounts for over 1.3 per cent of GDP, in Kyrgyzstan, the figure was 3.1 per cent in 2004, and in Kazakhstan it was only 1.2 per cent in 2005.

The Silk Road has the potential to become one of the world’s unique tourism destinations, and the distribution of interrelated tourism sites across the five countries makes it ideal for cross-border or regional investment opportunities. All of the Silk Road countries have prioritized tourism for attracting foreign investment. At present, the Silk Road’s greatest tourism potential lies in developing cultural and historical attractions and eco-tourism. The ancient Silk Road left a legacy of fascinating structures and monuments. Ancient mosques, other Islamic buildings, emperors’ tombs and relics can be found throughout the region.
For instance, Samarkand’s Registan Square in Uzbekistan, an ensemble of three Madrassahs (Islamic colleges), is considered one of the greatest Islamic monuments in the world. Xi’an (Shaanxi) has the world famous terra cotta warriors. The Mogao Caves in Gansu Province were started in 366 A.D. and have 491 caves preserved with 2,400 sculptures and 45,000 square metres of mural paintings.

Kazakhstan has its State Programme on Restoration of the Historic Centres of the Silk Road, Preservation and Development of the Cultural Heritage of Turkic States, and Building an Infrastructure for Tourism. Phase 1 runs from 1998 to 2007 and focuses on restoring ancient towns and routes. Phase 2 runs from 2003 to 2012, covers 28 sites and includes road reconstruction. It is expected that 70 per cent of the financing for this programme will come from domestic and foreign investors.

Silk road 3The other high-potential regional tourism subsector is eco-tourism. The Silk Road contains some of the most scenic landscapes in Asia, and the low population density in much of the region leaves ample space for excellent nature and other outdoor tourism activities. Diverse landscapes featuring high mountains, glaciers, caves, lakes, rivers, hot springs and steppes can be found throughout the region. Kyrgyzstan is frequently referred to as the “Switzerland of Central Asia” because of its high mountain valleys that are suitable for mountain climbing, white-water rafting and hiking. In addition, Lake Issyk-Kul, the second largest alpine lake in the world, and its surrounding area offer potential for a variety of recreational activities.

Tajikistan’s National Park is one of the largest and most diverse parks in Central Asia.
Shaanxi’s Mount Huashan is one of five sacred mountains in China and draws large numbers of domestic tourists and others. Xinjiang and Gansu are among the top regions in China for nature reserves. Key natural attractions are mountains, glaciers and lakes (including Lake Bosten in Xinjiang, which is the largest freshwater lake in China), which are suitable for adventure tourism. The last example presented here is perhaps one of the most innovative tourism products developed in a desert: Shapotou in Ningxia is labelled as the “world’s sand capital” because a vast sand dune was transformed into an amusement park-like atmosphere with tourists coming to slide down the dune.

The historical, cultural and natural attractions of the Silk Road are all in place, but the supporting infrastructure and tourism services are where the opportunities exist for prospective investors. Throughout much of the Silk Road, there is insufficient transport infrastructure, tourist and business class hotels, communications systems, resorts, camping and other facilities, and these shortages largely explain why the Silk Road tourism potential remains untapped.
Many of the tourist facilities – such as hotels, resorts, spas, sanatoriums and camps – were built during the Soviet Union days, and these facilities need major renovations or replacement by new, modern construction. This is especially the case outside of capital cities. Affordable and well-run tourist class (medium-priced) hotels are needed throughout the region. Many of the newer hotels springing up tend to be geared for the business and luxury travellers, and combined with the high cost of airfares into Central Asia, the region is less competitive compared to South-East Asia and other popular destinations.

The Tourism Sector of China’s Silk Road Provinces & Autonomous Regions
Despite low-cost labour, western provinces are expected to be less attractive to manufacturing because of its lower industrial capacity, its inferior infrastructure and the fact that there is still abundant room for growth in eastern industrial clusters. The tourism and hospitality sector, on the other hand, benefits from the area’s unique environmental, cultural and historical characteristics. The broadest and most marketable of these is the presence of the famous and often romanticized Silk Road. The provinces are rich in tourism resources, and the sector is thought to have great competitive advantages as an FDI destination. China is already a major and continually expanding international tourist destination with an exceptionally rich diversity of sites. The expectation of greatly increased flows of international tourist arrivals in China along with increasing internal demand makes the potential for an expanding tourism industry in western China exceptionally large.

The UN World Tourism Organization has forecast that world tourism arrivals will triple to 15 billion by 2020. Though the various countries each have their unique characteristics and natural environments, thus requiring individually tailored solutions, there are two main tourism themes along the Silk Road – cultural tourism and ecotourism.

Cultural tourism has grown by 15% worldwide every year for the past decade (UNWTO). Ecotourism emphasizes environmental and social sustainability through: conservation, community involvement, interpretation, education and environmental management.

In order to consolidate the region’s overall competitiveness in the global tourism market, there are movements towards the creation of a ‘Silk Road Multiple Entry Visa’ for multi-destination travel along the old trade route. Other initiatives include the identification of selected cities as UN Silk Road Cities based on long-term plans to protect cultural assets, raise tourist standards and other related factors.

One of the biggest attractions of the Silk Road is its well-known name and students of history will recognize many city names along it. This identification supports investors in choosing to build and capture the increasing numbers of tourism arrivals, but there are many additional strengths of the Silk Road and each province has its own unique tourism attractions to offer:

In the Shaanxi Province first, Xi’an, its capital, has already a very sophisticated tourism industry, with many opportunities for hoteliers to develop new properties and tourism attraction operators to add new performance venues and restaurants. The city, which is one of the Four Great Ancient Capitals of China, is particularly famous for the Terracotta warriors it houses, but it also offers other great attractions such as the Goose Pagodas of the Tang Civilization, the Bell and Drum Towers and the Ming city walls, in addition with excellent museums. It also serves as a good base from which to explore many outlying attractions such as the Famen Temple or the Xingjao Temple within a day’s drive of the city.
Other excursions in the Shaanxi Province include Luoyang, home to the Baima temple, once thought to be the centre of the universe, as well as to the nearby famous Longmen caves, one of the China’s three most famous ancient sculptural sites. Shaolin Si, where Kung Fu began, and the isolated Yan-an, whe re the Long March led Mao in 1937, are other examples of the many historic and cultural attractions the Shaanxi Province has to offer. An IPA can direct new investments to appropriate places in and around Xi’an to continue and expand the success of that destination.

The Gansu Province has a remarkable geography, including the Yellow River flowing through Lanzhou, the capital, and the mountains and deserts of the Hexi Corridor, which formed the main passageway of Silk Road caravans for over 1000 years. It has fascinating desert oasis, beautiful grasslands and the World Heritage Sites of Crescent Moon Lake and the singing Sand Dunes.
Gansu is also home to captivating historical sites such as the Mogao Caves at Dunhang or the country’s largest reclining Buddha at Zhangye, and traces can be found of many different civilizations and cultures in the towns of Wuwei, Hezuo and others.
New roads have been build in an attempt to make the tourism attractions more accessible and most cross-country train services to China’s west passes through the Hexi Corridor, bringing tourists to some of the more remote attractions in Gansu.

The Xinjiang Uygur Autonomous Region is a vast and extraordinary part of China.
Sparsely populated, it is an isolated region composed largely of desert and grassland surrounded by some of the highest mountains in the world. Touring highlights include the Tian Shan Mountain pastures where Heaven Lake is located and where one can stay with Kazakhs in their Yurts, and the fascinating Silk Road oasis cities of Turpan and Kashgar. There are many other, smaller towns that were significant in the days of the Silk Road, and they could potentially be made into exciting tourism destinations in their own right, with proper investment and tourism development activities.

Finally the Ningxia Hui Autonomous Region’s rural scenery provides great charm as the Yellow River passes through, creating a very green and hilly southern part of the province. The capital Yinchuan and, not far from it, Zhongwei and Shapotou are pleasant and interesting towns to visit. Ningxia has been promoting the desirability of investment there, with a trend towards ecotourism, rural and cultural tourism. The railway and highway infrastructures are considered to be good and the domestic flights in and out Ningxia province include a direct flight from Yinchuan to Hong Kong. Although new hotels and resorts have been build, there are currently not enough rooms in Yinchuan during the peak summer season, which indicates an opportunity for additional investment in this sector.

Silk road 2The geography of the Silk Road is extraordinary, with a vast territory that has existed in relative isolation. Relative to geographic beauty and natural history, this is a great asset.
However, the remoteness of the region makes it difficult for tourists to reach. The transportation infrastructure that does exist is newer and more modern than in other Central Asian countries which host portions of the Silk Road, but parts of the region (especially in Xinjiang) are extremely remote and still lack good connections to transportation networks.

With the exception of Xi’an, the Silk Road Provinces’ major destinations are in need of more hotel rooms, a higher standard of service, better quality hotels, better and more frequent air service, and increased and improved transportation infrastructure. Local service providers need greater marketing and better service training. Additional investment in infrastructure will attract additional investment in hotels and other tourism enterprises. In addition, better interpretive signage, greater foreign language capacity, higher quality tourism maps, and better mar kings for tourism routes and attractions on the roads are needed throughout the region.

Source: UNCTAD, Investment Promotion Strategy for the Tourism Sector of China’s Silk Road Provinces and Autonomous Regions.

This article is quoted from Tourism ROY Newsletter published on 2010-01-29.
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This article is uploaded by Majbritt Thomsen, administrator on ‘Views On Tourism’.

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Posted in Best practice, China, Cooperation and network, Development, Performance and management, Sustainability.

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