Prospects remain clouded with the mainland outbound travel market off-limits to overseas investors

PUBLISHED : Monday, 10 December, 2007, 12:00am
UPDATED : Monday, 10 December, 2007, 12:00am

It is still unclear when the mainland will open the outbound travel market to overseas players.

Beijing is soliciting opinions on a revised travel agent regulation in accordance with its World Trade Organisation commitments, which would allow the establishment of solely owned foreign agencies and lift minimum restrictions on registered capital that now stands at less than four million yuan for joint ventures.

Prevailing travel agent regulations, effective since 1996, do not allow the establishment of solely owned foreign agencies. But under a 2003 temporary rule issued by the Ministry of Commerce, overseas agents with at least US$500 million in annual turnover are qualified to set up solely owned agents on the mainland.

The outbound travel business remains off-limits to foreign players. Beijing did not promise to open the sector when it joined the WTO. There are concerns that domestic travel agents would be beaten badly by their foreign counterparts, which have better access to resources and management expertise.

However, some industry insiders predict restrictions may be lifted soon.

CTS Holdings Corp of China was merged with China Travel Service (Holdings) Hong Kong in August, transforming the domestic player into a foreign travel agent. If restrictions are not lifted, the company will be unable to operate its outbound travel business.

There are 25 overseas agents on the mainland, including Japan-based Jalpak International, Gullivers Travel Associates of the United States and Switzerland's Kuoni Travel. Media reports say almost all foreign players posted losses in the past few years.

Pinning high hopes on the outbound travel market, some have been seeking closer co-operation with mainland counterparts, and some have setting up branches in Hong Kong to do the business indirectly.