Foreign companies can now set up share-holding joint-venture agencies, and sole ownership will also be allowed under some conditions, officials said.

According to World Trade Organization regulations, China is to open up the travel market to foreign investment over the next three to five years.

"By January 1, 2003, China will allow foreign companies to open joint-venture agencies and by December 31 of that year, foreign companies will be able to solely own agencies," said Yin Mingfa, an official at Shanghai Municipal Tourism Administrative Commission.

"Shanghai hopes to realize the promise ahead of the deadline, but currently we are giving priority to large foreign companies in Europe, the United States and Japan, where there are the greatest number of potential visitors to China."

Business travellers

Since 2001, eight jointly-owned travel agencies have been launched in Beijing, Guangdong and Yunnan provinces. Only one of them co-operated with the European Accor Group, one signed with American Express, and the others with Hong Kong or Malaysian partners.

"We discussed the possibility of a joint venture several years ago with an American company, but we finally decided against it, feeling China's travel market was not mature enough at that time," said Hu Yuguang, official of Shanghai China International Travel Services Group.

"Now Shanghai has become a worldwide attraction and the tourism industry is booming."

Future joint ventures will focus on expanding services for business travellers, according to Hu.

"Business for odd tourists and groups has been well-developed in China and domestic agencies have good experience in the trade, where there is also fierce competition and small profits," he said.

With the city's growing profile on the world stage, and the local economy booming, more foreign businessman are expected to flow into the city along with Western tourists interested in visiting Shanghai.

"These co-operative ventures will introduce rich experience from Western countries to the closed Chinese market, especially in the area of management," said Zhang Shangzhi, from the Acoor Group's Beijing Office, which set up a joint-venture agency with Beijing Tourism Group in May 2001.

"Services can be diversified based on local agencies' experience in the domestic market and that of western partners in their own markets," Zhang said.

Most of them will set up booking and service networks. "We will arrange every procedure ahead of time when foreign business travellers come to attend conferences in the city," Hu said. The current opening up is mainly aimed at attracting foreign travellers to the country. However, freer travel for Chinese nationals to more destinations is still not predicted at present.

"The joint-venture agencies have no right to transact out-of-country trips for domestic customers at present, which may change after 2005 when China enters new WTO negotiations on this subject," Yin said.

So far, only 14 countries were opened as destination countries and Malta will be opened on March 1.

Yin predicted that all the 130-odd countries in the WTO may become destination countries to Chinese travellers gradually after 2005.

"The government takes a neutral attitude for Chinese going aboard for fear of capital flowing to other countries," Hu said.

Nevertheless, Zhang said the entry of foreign travel agencies will certainly improve the average service level in China, which will also benefit domestic customers.

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