While HK mulls limits, Taiwan welcomes China tourists

Chinese tourists take photographs at the Chiang Kai Shek Memorial Hall plaza in Taipei, Taiwan.
Jerome Favre | Bloomberg | Getty Images
Chinese tourists take photographs at the Chiang Kai Shek Memorial Hall plaza in Taipei, Taiwan.

As Hong Kong mulls restricting the number of inbound Chinese travelers, Taiwan is stepping up efforts to court rich holidaymakers from the mainland.

Both territories share similar antipathy toward China, but the fortunes and frustrations that come with the increase in mainland tourists have led the once-colonial Hong Kong and self-ruled Taiwan, which China aims to reunify, down diverging paths as of late.

HK-China animosity

Last week, embattled Hong Kong chief executive C.Y. Leung said the government may limit the number of mainland visitors following a protest in the suburban district of Yuen Long. Protestors blame affluent Chinese tourists for monopolizing resources and driving up prices of daily goods. The backlash follows the "Occupy Central" movement, which paralyzed the city's financial district for nearly three months last year as protestors campaigned for the ex-British colony's right to choose its own leader.

Read MoreHow badly will the HK protests hurt tourism?

However, the idea of limiting tourist arrivals prompted concerns in the business community, with tycoon Li Ka-shing warning that the policy would hit the retail sector and spark a 1,000-point tumble in the Hang Seng index. Still, more than half of Hongkongers polled in a recent survey say Chinese arrivals should be more strictly controlled.

While analysts believe the restriction is unlikely to materialize, a buildup in anti-China sentiment has deterred mainland travelers, who make up a huge chunk of Hong Kong's total tourist arrivals. Over the recent Lunar New Year, the volume of Chinese holidaymakers fell for the first time in 20 years, while retail sales in January posted their biggest decline since the onset of SARS in 2013.

Increasingly adventurous travel options for the well-traveled Chinese middle class are also dimming Hong Kong's appeal.

"Having been there so many times, the mainlanders are getting bored with Hong Kong and are looking at other places like Japan and even Europe," said CLSA's senior investment analyst Mariana Kou.

Taiwan rolls out welcome mat

On the other hand, Taiwan, which is fast emerging as a new playground for Chinese holidaymakers, plans to roll out a new visa, with the hope that mainland's big spenders will fuel wealth and jobs.

The program, which takes effect on April 1, will issue special visas to 5,000 mainland travelers per month, on top of Taiwan's daily quota of 5,000 visitor groups and 4,000 individual travelers from China. The ultra-wealthy traveling on the new program will get to dine at high-end restaurants, stay in four-star hotels and are required to spend a minimum of $350 per day.

"It will be a boost for Taiwan's economy, but authorities should take note to include more sightseeing and flexibility into the program so as to reap more repeat travelers," CLSA's Kou said. "A better strategy would be to screen income levels at the visa approval level, like Japan."

Read MoreThis country is profiting from China-Hong Kong spat

Japan requires mainland travelers to fulfill a "sufficient" income category, which Taiwan can replicate to keep arrival numbers in check while ensuring growth in tourism receipts, Kou added.

Thus far, Taiwan ranks high among Chinese travelers. More than 95 percent of independent tourists who visited Taiwan in the past year want to make a return trip, according to a Nielsen survey. In 2014, 3.98 million Chinese travelers visited Taiwan marking a 38 percent on-year rise.

Some reasons for the surging numbers include proximity and culture. While cross-straits relations remain nervous, Taiwan, which split ways with China during a civil war in 1949, has seen closer economic ties under the stewardship of President Ma Ying-jeou.

"The disadvantage that Taiwan used to have for disliking mainlanders, is gradually being overridden by the rising sense of unwelcome that mainland tourists feel in Hong Kong," CLSA added.