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HK Tour Firm Seeks Ground on Mainland
Lucrative potentials in China's tourism industry have lured more and more overseas travel companies to tap the market.
Domestic travel agencies have found themselves in a reshuffle even before China joins the World Trade Organization (WTO).
The closest threat comes from Hong Kong-listed China Travel International Investment Hong Kong (CTII), which recently unveiled a HK$2-billion (US$256.4 million), plan to acquire mainland tourism companies.
The company is targeting travel agencies in areas with rich traveller resources, convenient transportation and sound economic development, such as Beijing, Shanghai and eastern coastal provinces of Guangdong, Fujian and Hainan.
"It will better link our business in the mainland, Hong Kong and international market," said general manager Shen Zhuying.
The acquisition plan is well under way and the company has talked with local agencies of several major travel companies in the mainland, including China Travel Service, China Youth Travel Service and China International Travel Service, said Shen.
"Those under China Travel Service will be our key targets for the namesake," he said.
Like CTII, other overseas travel companies are pursuing a share of the mainland tourist market.
China reported US$16.2 billion of forex income from international tourism and 317.6 billion yuan (US$38.3 billion) from domestic tourism last year.
CTII is a subsidiary company of China Travel Service (Holdings) HK (CTS Holdings). Also operated under the name China Travel Service, the Hong Kong company has no capital relation with the mainland-based China Travel Service.
"Now we would like to transform the business relationship into a capital one ," said Shen.
But it is still not clear how the acquisition can be done as there is a regulation that forbids overseas companies from taking up a dominant amount of shares in mainland travel companies.
A spokesman from the China Youth Travel Service (CYTS) said the company had not received any concrete proposals from CTII regarding its acquisition plan.
But he said if the takeover can benefit both sides, it may well be a good plan, provided it gets the go-ahead from the top.
Presently , even the number of Sino-foreign travel joint ventures is limited in China , with only a few in several major cities on an experimental basis and the ventures cannot provide international travel services to Chinese citizens.
The market is expected to open wider to foreign companies after China joins the WTO , but the ratio of foreign stakes would still be controlled in the first few years.
Even so , "wider access of foreign travel agencies to China may also be a stimulus to domestic companies ," said the CYTS official, "We can also get more overseas tourist resources for travelling in China and it will be easier for us to expand business abroad."
The shake-up of China's tourism industry is unavoidable, said a professor from the Beijing Tourism Institute.
After a decade of rapid growth, it is time for the domestic travel agencies to restructure, he added.
Smaller-sized agencies have already become targets of the stronger ones.
Guangdong China Travel Service, for example, recently took over the Shenzhen Luohu China International Travel Service , with more similar plans ahead.
Luohu is one of the biggest checkpoints in China. More than 160 , 000 mainland travelers enter Hong Kong through the place each year.
The purchase enables Guangdong CTS to expand its Hong Kong and overseas travel business. The company has already acquired five local agencies in coastal cities.
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