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China is opening its tourism market ahead of schedule under its WTO commitments. The country's first foreign-controlled travel agency joint venture and first foreign-owned travel agency has been launched recently. What will be the impact of foreign participation on China's tourism industry? And how will the local travel agencies view the new competition?
TUI China Travel Company, a joint venture between German-based TUI Group and China Travel Service, is the first overseas-controlled joint venture in China's tourism industry. With a total investment of 11.5 million US dollars, and a registered capital of over Six million US dollars, the joint venture plans to offer a wide range of travel services, except the overseas tours targeted at local tourists. This sector is currently off- limits to foreign invested travel agencies.
With an annual income of 22 billion euros in 2002, TUI Group is considered to be the biggest player in the world's tourism industry. The German giant believes the China market has a huge potential with fantastic prospects.
"The Chinese tourism is the future. In 10 to 15 years, China tourism will be the No.1 in the world," said TUI.
China Travel Service or CTS, is an old name in the domestic tourism industry. Facing the new market environment brought about by the opening of the country's tourism industry, CTS has been seeking ways to maintain its leading position. Joining hands with TUI is considered a good choice that will bring substantial benefits to the company.
Chinese travel agencies as a whole are still facing many problems for further development. Their biggest headache is the lack of customer resources, putting them in a disadvantage, compared to their global counterparts. CTS aims to solve the problem by utilizing the strengths of TUI in this area.
"One major consideration for our cooperation with TUI is that we are determined to solve the problem of client resources. TUI's services cover the whole of Europe. It takes either the first or second place in the tourism business in almost all European countries. By utilizing such advantages of TUI, we will be able to solve the problem of customer shortage, in terms of overall product structure and client resources organization," said COO of TUI China Travel Co. Li Huiyang.
TUI's entry is also considered a substantial enhancement for CTS' operations in many other areas.
"The construction of a wide and powerful network, which is a goal we have aimed for many years, is expected to be realized under our joint efforts with TUI. We will also soon be able to step into new areas of business which we had no experience before, such as the organization of leisure tours and business trips. In terms of corporate management and operations, we are confident that we can narrow the gap between the international standards and us, with the help of TUI," said Mr. Li.
Currently there are 13 Sino-foreign joint ventures and one foreign-owned travel agency in China. Industry insiders indicate the involvement of international players is a symbol of a big step forward for China's tourism industry.
(CCTV.com October 21, 2003)
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