Proprietary research by brokerage Sanford C. Bernstein Ltd indicates significant differences from city to city and province to province in mainland China in the timetable for granting Individual Visit Scheme (IVS) visas. Such travel permits are used by many mainland Chinese to visit Macau to gamble.
“Beijing, Shanghai and Chongqing administratively allow IVS application as frequently as one wishes,” wrote senior analyst Vitaly Umansky and his team Simon Zhang and Bo Wen.
“Most other provinces allow IVS application once every three months,” added Sanford Bernstein.
Japanese brokerage Nomura said in a note in March that Guangdong – the Chinese province next door to Macau – was limiting its eligible residents to one IVS application every two months.
Sanford Bernstein’s own research has the same conclusion regarding Guangdong.
“Currently Guangdong allows IVS application once every two months,” said Mr Umansky and his team.
Investors pay attention to trends and developments in the administration of the IVS system because the spending power of IVS visitors is thought generally to be higher than that of mainland Chinese visitors arriving on package tours. They are thought to spend more at casino tables and slots in Macau.
Guangdong IVS permit holders contributed 1.49 million visits – or approximately 70.8 percent – of the nearly 2.11 million visits to Macau by mainlanders under the IVS scheme in the second quarter of this year, show data from Macau’s Statistics and Census Service.
Beijing, Shanghai and Chongqing together contributed 186,045 visits under IVS to Macau in the second quarter, or 8.8 percent of all IVS visits in the period.
However the rate of quarter-on-quarter decline in IVS arrivals from those cities was higher than the 16.9 percent quarter-on-quarter decline recorded for IVS arrivals from Guangdong.
Beijing and Shanghai are considered by marketing professionals as “tier one” cities in China judged by factors including economic development, local gross domestic product, advanced transportation systems and infrastructure, as well as for historical and cultural significance. Chongqing – like Beijing and Shanghai, a direct-controlled municipality in its own right – is a leading “tier two” city in southwest China.
Sanford Bernstein notes that long haul visitors from more distant Chinese provinces or cities “tend to stay overnight in Macau compared to Guangdong domiciled visitors who tend to make day trips. We believe overnight customers are more valuable to Macau as they generally tend to spend five times more than day trippers”.
Data from Macau’s statistics service on visitor spending – excluding money spent on gambling – for the first quarter of 2015, the most recent numbers available, indicated the total average spending of overnight visitors (including non-mainland Chinese) was MOP10,397 (US$1,302) – approximately 3.5 times more than the MOP2,962 spent on average by same-day visitors.
Sanford Bernstein said its research indicates that the IVS issuance practices of Beijing, Shanghai and Chongqing don’t represent a change of policy but rather “a less stringent process in terms of timetables” compared to other local governments.
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"If the [Macau casino] concessions are put up for bid, there will also be a lot of giant Chinese companies, some having nothing to do with gaming, which would like to take over these enormously successful casinos”
Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau