Rising incomes have sparked a travel boom in China, but they have also raised expectations, says Shen Zhuying Shen Zhuying could not be more pleased with his bountiful catch during a fishing excursion Down Under last month, even though he doesn't like fishing. Mr Shen's Australian fishing expedition was no ordinary holiday. As general manager and vice-chairman of China Travel International Investment (CTII), Mr Shen is a fisher of tourists. He was on assignment, scouting for fishing spots to feature in a series of specialised tour packages the agency wanted to market. Excursions like these are commanding much of Mr Shen's time as a new generation of mainland tourists demands more from its travel agents. 'There were some excellent spots,' says Mr Shen. 'The travel business is getting tougher - you need to cater to different tastes. We need new gimmicks.' Tried and tested gimmicks include the Chinese tourist cheerleading teams CTII organised for the Athens Olympics over the summer, selling packages to 4,000 mainland sports fans. A unit of the State Council's Overseas Chinese Affairs Office, CTII is one of the nation's biggest travel conglomerates. Closer to home, the company has also organised adventure and exploration tours to China's Wild West - in Xinjiang - and brought foreign race-car enthusiasts and their vehicles to the mainland. Such specialised tours, Mr Shen explains, deliver higher margins and illustrate CTII's renewed focus on its core business after an ill-conceived bout of diversification in the heady days of the mid-1990s. Along with other red chips, CTII was a stock-market darling in the run-up to Hong Kong's return to Chinese rule. Its subsequent fall was as fast as its rise, the glow dampened by the Asian financial crisis and the financial troubles of government-backed companies such as Guangdong International Trust and Investment Corp. CTII, Mr Shen recalls, lost its focus, and lost it badly. From reckless lending to other companies and unsound investments in properties and golf courses, its financial difficulties multiplied. Lending to third parties at high rates of interest backfired, with CTII forced to make a provision for failed loans in 1997. By early 1999 the company's own borrowing was under the spotlight, as it negotiated new loan-repayment schedules with its creditors. So too did investments into infrastructure projects including power plants, which it hoped would deliver steady returns and help pull it out of the red. The coup de grace, however, came with the news that the company's chairman, Zhu Yuening, was the subject of a graft investigation. In 2001 Mr Zhu, who had been earlier demoted to vice-chairman and replaced as chairman by a State Council-appointed graft investigator, was recalled to Beijing to assist investigators. Former deputy general manager Xu Shiquan was also charged last year in a Shenzhen court with accepting bribes at CTII and while working as a banker in Hainan. Mr Shen had also been with CTII from 1992 to 1997, leaving after a falling out with Mr Zhu, Mr Xu and others that to this day he refuses to discuss. In October 2000, he was parachuted back in to help clean up the mess and oversee the effort to refocus the company on its core business and implement internal controls designed to prevent the scandals that had put it under a cloud. 'After 2000, the company was clear - travel was our main business and we needed to strengthen our network,' Mr Shen says. The restructuring could not have come at a better time, as it coincided with a surge in interest in overseas travel by newly affluent mainlanders. The central government projects 26 million mainlanders will travel overseas this year - compared with 20.2 million last year - while the UN World Tourism Organisation predicts 100 million overseas trips a year by 2020. Another 100 million Chinese are expected to visit domestic destinations this year. And then there is travel to China by foreigners. 'By 2020, China is going to be both the biggest tourism destination and the biggest source of tourists,' Mr Shen predicts. CTII's mission is to capitalise on these flows through its network of wholly owned travel agents and joint ventures across the country. Overseas and in Hong Kong, it is selling tours to China. At present, catering to Chinese citizens travelling abroad accounts for one-third of CTII's business, while foreigners travelling the other way make up the remainder. CTII expects this split to even out at 50-50 within three years. 'China has a big population. Even if the proportion of affluent people is small, the absolute number is still huge,' Mr Shen says, adding that his company's extensive network and a burgeoning online business give it an edge over the competition. There are currently more than 10,000 travel agents, most of them small and focused on providing traditional ticket and hotel booking services. Large-scale operations such as CTII are few and far between, but the competition between them is cut-throat. And it has intensified since July last year when the government allowed foreign players to take majority stakes in mainland agencies and establish wholly owned operations. 'The foreign players are all Big Macs,' Mr Shen says. 'For us, expansion and innovation are key.' Mr Shen reckons he spends about a quarter of his time worrying about how his customers think - hence his Aussie fishing trip - and reckons CTII is not doing enough to cater to the young or the elderly. Ironically for an industry that entertains so many people, Mr Shen says, the work involved in it - like fishing - is not that enjoyable. Biography Shen Zhuying, 56, has been vice-chairman and general manager of red-chip China Travel International Investment (CTII) since December last year. He was managing director of the company from 1992 to 1997. Mr Shen is a director of CTII's parent company, CTS (Holdings), and holds directorships in other CTS subsidiaries and units. A native of Fujian province and former government official there, Mr Shen joined the CTS group in 1984 and three years later was made a group director and deputy general manager. In 1995, he took a one-year sabbatical to study International Finance at Tsinghua University in Beijing.