Wang Chaoyao, vice-director of the bureau's Planning and Development Department, said his bureau has approved the establishment of eight Sino-foreign joint venture travel agencies.

"It is a sign that we have decided to beef up the sector's opening to overseas investment," Wang said.

Travel agencies are the final sector of the tourism industry to open up to foreign participation.

Although the country launched pilot projects of foreign-funded agencies in selected areas in 1998, only seven joint ventures were approved in three years, compared with eight this time.

Wang said besides the eight, more Sino-foreign travel agencies are expected to be approved this year.

However, there are still limits at the moment.

For example, only Chinese partners would be allowed to have controlling rights in the joint ventures. Wholly foreign-owned projects will not be permitted.

Approved joint ventures will be limited to bringing foreign tourists to China and offering domestic tourism packages.

"We are mulling over whether to completely lift the bans on Sino-foreign travel agencies this year," Wang said.

"It is aimed not only at increasing foreign investment, but also at improving Chinese travel agencies, which are small, scattered and weak and generally provide poor service," Wang said.

Joint ventures can help Chinese travel agencies improve their service, Wang said, adding that such ventures will also open up new sales channels.

Yue Zuofu, a professor at Beijing Tourism College, said increasing the participation of foreign players may have a large impact on domestic travel agencies.

"If the market is fully opened, there are fears small domestic agencies cannot compete with foreign giants and will collapse," Yue said.

The industry, despite bursting with potential, is plagued by limited capital scales, insufficient infrastructure, backward management and outdated marketing strategies.

Yue suggested domestic agencies should complete more acquisitions and cooperate further to face the upcoming challenges.

Wang said deregulation cannot be escaped, but the government is also thinking about what can be done to foster the development of domestic agencies.

"The State Council debated policies recently to support those qualified travel agencies in raising funds through stock listing," he said.

The government will actively look for ways to set up tourism industry funds and encourage various types of businesses to participate in the industry, Wang added.

Facing the imminent challenges of more foreign rivals, China Youth Travel Service, a domestic giant in the sector, said it is trying to strengthen itself through rapid expansion.

Jiang Jianning, president of China Youth, said his company will acquire well-performing domestic agencies in famous scenic regions and develop more branches around the country.

China Youth Travel has opened five branches in Beijing and is expected to have 12 more in the city by the end of this year.

According to Wang, China's tourism industry is expected to reap 500 billion yuan (US$60.4 billion) this year, an increase of 11 per cent over 2000.

(China Daily 09/24/2001)