China opens tourism market to outside world

December 2, 2003 was a milestone date for China's tourism sector. On that day, the first wholly foreign-funded tourist company, JALPAK International China Co. Ltd. (JALPAKICC), was founded in Beijing.

The JALPAKICC, set up with registered capital of 5 million yuan ($605,000) by JALPAK, a company that executes overseas tourist business for Japan Airline Corp., serves as an agency that organizes Japanese to tour China. It is the first foreign tourist company approved to establish itself on the Chinese mainland, after new regulations, jointly issued by the China National Tourism Administration (CNTA) and the Ministry of Commerce and entering into effect on July 12, 2003, loosened restrictions on foreign and joint-venture tourist companies.

According to China's commitment to the World Trade Organization (WTO), the country must open its tourism market to wholly foreign-funded tourist companies before December 31, 2005. The establishment of JALPAKICC comes two years ahead of the schedule.

Foreign tourist agencies started business in China in 1998, mainly in the form of joint venture. As of today, Sino-foreign joint venture tourist companies in China total 11. Now that China has opened its tourism market so early, many foreign tourist agencies are primed to invest in this nascent market.

Statistics from the CNTA show that 91.66 million people from abroad visited China in 2003, generating about $17.4 billion in revenue.

One day before the establishment of the JALPAKICC, China Travel Service (CTS) Head Office and European tourism giant TUI announced the establishment of their joint-venture tourist company TUI China Travel Co. Ltd. (TUI China) in Beijing.

As the Germany-based TUI and MB (China) jointly hold a stake of 75 percent of TUI China, it is China's first Sino-foreign tourism joint venture controlled by foreign investors. TUI separately holds 51 percent of interest in the company. The three above-mentioned tourist companies have invested a total of $15.5 million in TUI China, whose registered capital is $6.1 million.

Source: Yearbook 2004