China to open up to foreign travel agencies

BEIJING – China is to fully open its market to foreign travel agencies from July 1, about four months ahead of the November 11 deadline set by the World Trade Organisation (WTO).

Foreign-funded travel agencies will then be able to set up subsidiaries in China without restrictions, and requirements on the registered capital of foreign-funded travel agencies will also be eased.

Shao Qiwei, head of the China National Tourism Administration, told China Daily the full opening-up of China’s tourism industry would further boost the industry’s overall quality and improve its competitiveness in the world.

“We welcome the entry of the world’s big tourism companies and well-known brand names into China. It will help enhance the competitiveness of Chinese tourism enterprises,” he said.

Although as agreed with the WTO, joint venture and solely foreign-funded agencies cannot operate outbound tours, the full opening-up is still good news for overseas investors. China has the largest domestic tourism market and is the world’s fourth most popular destination.

Official statistics show the number of domestic travellers last year was 1.39 billion, and the administration forecasts the number will be

Yao Yuecan, president of the China International Travel Service head office, told China Daily the further opening-up “will not influence our business”.

“The profit that travel agencies in China make is rather limited. It will not be easy for foreign-funded travel agencies to survive in China’s market,” he said.

To register a travel agency in China to operate domestic tours costs only 300,000 yuan (US$39,000), and there are many small agencies that cut prices to compete against the State-owned agencies.

This sort of competition has restricted the development of large travel agencies.

Yao said he believes the entry of foreign investors might be able to curb the “unruly” competition, since foreign agencies might merge or take over the smaller local ones.

China is likely to replace the United States as the world’s third most popular tourism destination next year, a United Nations World Tourism Organisation (UNWTO) official said.

At present, China ranks fourth, after France, Spain and the United States.

Last year, China accounted for 5.8% of the global tourism market, a growth of 0.3 percent compared with two years ago.
Xu Jing, regional representative for Asia and the Pacific of UNWTO, said the market share percentages of China and the U.S. last year were very close.

“I am confident China will overtake the US next year,” he said at the 2007 China (Qingdao) International Olympics & Tourism Forum.

UNWTO forecast last year that China would become the most popular destination by the year 2020. At the beginning of this year, it revised its forecast to 2015.

Xu said the forecast was revised because of the rapid development of the country’s tourism industry.

The number of overseas travelers to China has increased from 10.5 million in 1996 to 49 million in 2006. The 2008 Summer Olympics in Beijing and the 2010 World Expo in Shanghai, will further boost China’s tourism market.