• China Merchants Group Chairman Fu Yuning.

China Merchants Group Chairman Fu Yuning. (Photo : Reuters)

Cruise operator Carnival Corp. sent a direct correspondence to the Reuters news agency on Tuesday to provide an update on the talks it initiated with the state-owned entity China Merchants Group Ltd. (CMG).

The U.S. company is proposing a new cruise line for the Chinese market, as the cruise-ship population is expected to further embrace the relatively new holiday option.

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The Carnival name has already dipped its proverbial toe in the Chinese business environment, as it signed a memorandum of understanding (MOU) with China State Shipbuilding Corporation (CSSC), who will build China's first luxury cruise vessel as part of the arrangement.

Ultimately, Carnival wants to bring Italy's Fincantieri SpA into the equation so that a new cruise-travel joint venture is ready to compete in the lucrative Chinese tourism market.

At the time of Carnival's correspondence, the Chinese cruise-travel market underpinned revenue worth $6.8 billion in 2013, while this is expected to grow to $11.5 billion by 2018, if the data from the Euromonitor research firm is accurate.

Alan Buckelew, the chief operating officer of the American cruise company, told Reuters that Carnival is relying upon CMG's experience and local influence to facilitate a smooth expansion into China.

Buckelew explained: "We are working with a strategic partner that can help us explore immediate ways to impact cruise growth in China, including the possibility of a new Chinese cruise brand and new destinations."

Carnival's decision is now considered best practice for overseas firms attempting to tap into China's massive consumer base through a localization process. Carnival essentially has two avenues it could proceed down: It could operate its own cruise ships within China, using vessels designed and built in China; or Carnival would develop cruise terminals in China, as well as throughout the north Asian region.