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SCMP Reporter

Red chip China Travel International Investment (CTII) has become the first foreign-invested firm approved to set up a wholly-owned travel agency in the mainland.

Beijing granted CTII the licence despite regulations barring the setting up of wholly foreign-owned travel agencies in the country.

The licence will allow the red chip to receive the same treatment enjoyed by domestic travel agencies.

CTII will set up the wholly-owned China Travel International in Beijing with a registered capital of 50 million yuan (about HK$46.86 million) as part of its plan to tap the mainland market.

China Travel Service (Holdings) Hong Kong (CTSHK) chairman Che Shujian said the new company would be CTII's vehicle to acquire or merge with other mainland travel agencies.

'The new travel agency will try to build a nationwide network by acquiring or co-operating with other domestic travel agencies,' Mr Che said.

CTSHK is the parent of CTII.

CTII managing director Shen Zhuying said the licence would make it convenient for his firm to develop new tourist destinations in the mainland.

The new travel agency would seek to float in the mainland stock market once it achieved an 'economy of scale'.

It will be able to operate overseas tours for locals and inbound tours for foreigners.

The company will also organise tours to Hong Kong and Macau for mainland nationals under Beijing's strict quota system rules.

Sino-foreign joint ventures are restricted to bringing tourists to China and offering package tours within the country.

Beijing began allowing foreign investment in domestic travel agencies in the form of joint ventures in 1998.

Present rules ban a foreign partner from holding a controlling stake in the joint venture.

Two other Hong Kong-based travel agencies Hong Thai Citizens Travel Services and Ananda Wing On Travel had earlier formed joint ventures with mainland travel agencies but were subject to the 50 per cent ceiling for the foreign stake.

The move to grant CTII the licence is thought to be part of the mainland's further liberalisation of foreign investment in domestic travel agencies, in line with rules of the World Trade Organisation, which the country will join later this year.

Foreign investors have been demanding unrestricted access to China's market, especially to the service sector.

Last year, mainlanders spent 317.55 billion yuan on tours within the country, 12.1 per cent more than in 1999.

Outbound tours grew 13.43 per cent to more than 10 million visits.

China also registered 83.44 million visits by foreign tourists last year, a rise of 14.6 per cent from the previous year.

Meanwhile, Beijing is studying measures to prepare domestic travel agencies for the onslaught of foreign competition.

Possible moves include allowing some domestic travel agencies to float on the stock market, setting up industry funds and encouraging businesses other than state-owned enterprises to enter the sector.

In a tourism and investment promotion campaign in Hong Kong yesterday, a top official with the Yunnan province's tourism bureau said two travel agencies in the southwestern province were seeking to float on the domestic stock market.



Red chip will be first foreign-invested venture to set up a wholly-owned agency in mainland