China-to-North Korea Tourism: A Leisure Business on a Tense Peninsula

IntroductionChina maintains a special relationship with North Korea, because of the traditional friendship that was first established by Mao Zedong and Kim Il-sung during the Korean War in the 1950s. Although North Korea's first nuclear test in 2006 caused uncertainty regarding bilateral relations, high-level official visits continued (see Table 1). Table 1 shows the mutual visits by top leaders between North Korea and China since 2006. Every year for the past seven years, there has been at least one ministerial-level visit from one side to the other. On the Chinese side, former Prime Minister Wen Jiabao, current Prime Minister Li Keqiang (vice prime minister at the time of the visit), current President Xi Jinping (vice president at the time of the visit) and current Vice President Li Yuanchao have all paid visits to North Korea. Despite fluctuating tension between North Korea and South Korea, relations between China and North Korea have entered a different stage, especially noticeable when new leaders came into power in both countries. Xi Jinping was elected president of China during the 18th Plenary Conference of Chinese Communist Party (CCP) on November 15, 2012. After the death of his father, Kim Jong-il, in December of 2011, Kim Jong-un became the 1st Chief of Committee of National Defense Committee on April 13, 2012.Since 2006, the United Nations has authorized four rounds of sanctions on North Korea, which mainly limit the import of nuclear- and missile-related equipment and technologies.1 As a result, trade between North Korea and the rest of the world has been affected. The trading of goods and services that were excluded from the sanctions still continue between North Korea and the outside world, including China. Tourism is also an important sector that has not been stopped by the sanctions.From the demand side, China is the neighbor of North Korea, and being a large market, China's economic environment provides a sound basis for tourism. China's per capita GDP reached about 6,000 USD at the official exchange rate and about 9,000 USD in purchasing power parity in 2012. According to empirical research, the tourism and leisure industry of a country will have strong growth when per capita GDP reaches 3,000-5,000 USD. Consequently, customers will have high expectations of service quality.2As more Chinese citizens travel abroad for sightseeing, more destinations are being approved by the Chinese government, after examination of mutual diplomatic relations and the security situation in those destinations. A destination must have unique value to offer to tourists. Several aspects of North Korea are attractive to Chinese tourists. The war in the 1950s left a deep impression on many Chinese, as well as on their relatives and friends, particularly those who served as voluntary soldiers. These individuals go to North Korea hoping to revisit former battlefields to see how they have changed.Members of the younger generation, born after the 1970s, grew up during the fast economic development and all around policy reform that has taken place across China in recent decades. The outlook of China changed, or became modernized, greatly after the 1980s. This makes it hard for members of the younger generation, especially those living in urban areas, to understand China's past, as they cannot find tangible elements or memories from China's history. North Korea's slow change and growth since the 1950s, plus its isolationist policies, make it a showpiece which resembles China's history. For younger Chinese, North Korea is an ideal place to learn about China's past, due to its centrally planned economy, egalitarianism, and strictly managed society. For these individuals, the main attraction is related to the spiritual, rather than the material, side. On the other hand, some Chinese investors are trying to find business opportunities in North Korea and they also join tours of the country.Curiosity will drive people to tour new destinations. …