Introduction to Foreign Investment in Travel Agencies

In accordance with China's commitments to the WTO in the travel agency industry, the restrictions of foreign capital's proportion in joint ventures will be abolished step by step.Foreign investors will be allowed to play the role as shareholders in joint venture agencies by the end of 2003 and wholly foreign-owned travel agencies will be permitted to set up by the end of 2005.

Travel agency is the weakest field in the travel industry in terms of opening up.The business volume of the largest travel agencies lag far behind of those well-known international travel agencies.

According to the China National Tourism Administration, experimental joint venture units have been established in travel agency sector. There are 9 joint venture travel agencies across China at present, four of which are in Beijing, 2 in Guangdong, 1 in Yunnan, Tianjin and Gansu. Experts estimate that foreign investors will enter the travel agency sector in the forthcoming future.

First, they will establish strategic cooperation with big local travel agencies, and then turn to establish wholly owned travel agencies to get a big market share in the travel agency market in China.

By the end of 2002, 10 joint venture travel agencies had been approved by the Chinese government, five of which are in Beijing, 2 in Guangdong, 1 in Yunnan, Tianjin and Jiangsu Province. The total investment is US$8.47 million. Among them, three investors came from Hongkong, and two came from Japan, and two came from USA, and the last three came from Switzerland, France and Singapore. The total revenue of these 10 joint venture travel agencies makes up 1.3 percent of the global travel agencies.

According to the "Provisional Regulations on the Establishment of Foreign-controlled and Wholly Foreign-owned Enterprises", foreign-controlled and wholly foreign-owned enterprises can be set up in the national travel vocational zones and the other five cities including Beijing, Shanghai, Guangzhou, Shenzhen and Xian.

[Source:China National Tourism Administration]