Beijing set to further open its outbound travel market

Beijing-based wholly foreign-owned travel agencies are expected to dip their toes in the outbound tourism market, as the capital city has forwarded request for approval, Beijing Business Today reported on Monday.

The move comes after Wan Cheng (Shanghai) Travel Service Co Ltd, controlled by a Hong Kong enterprise, became the first of its kind in Chinese mainland to run outbound travel business last year; and UK travel agency Thomas Cook set up a joint venture with Fosun Tourism group in Sanya, Hainan province, last week.

Since 2003, when the first wholly foreign-owned travel agency established in China, these agencies have been only allowed to engage in inbound tourism, which was on a slow development track compared with robust outbound tourism market. Beijing Business Today cited data showing that more than 90 percent of nearly 30 foreign travel companies in Chinese mainland operated in the red until the first half of 2015.

On the other hand, statistics from Ministry of Culture and Tourism revealed the number of Chinese visits abroad reached 71.31 million in the first six month of this year, a 15 percent increase from a year earlier. Meanwhile, China has been the top country in spending the most during traveling out of border for consecutive years, the newspaper said.

Shi Jianzhong, secretary-general of Beijing Tourism Industry Association, told Beijing Business Today that competition in the sector will become fierce if wholly foreign-owned travel agencies participate in outbound tourism in China, adding that it is not a bad thing for a wider opening-up, because Chinese players could learn foreign management concept and promote product development and consumers will also have more choices with more affordable prices.

And the tourism industry may face a shakeup, as foreign entrants, such as American Express, Germany's Touristik Union International and Japan Travel Bureau Foundation, could invest a lot to expand their sales network either built on their own or through acquisition, Liu Simin, a researcher at Beijing Foreign Studies University, said. But they also have to be ready for a long battle and understand Chinese market, Liu added.

At the same time, industry insiders said high profits in outbound tourism seem lucrative, but many changes still remain in the business, including long-lasting process of market expanding and cultivating and high requirement for integrating capacity.