China is to fully open its market to foreign travel agencies from July 1, about four months ahead of the November 11 deadline set by the World Trade Organization (WTO), said a senior official.

This means foreign-funded travel agencies can set up subsidiaries in China without restrictions, and requirements on the registered capital of foreign-funded travel agencies will also be eased.

Shao Qiwei, head of the China National Tourism Administration, told China Daily the full opening-up of China's tourism industry will further boost the industry's overall quality and improve its competitiveness in the world.

"We welcome the entry of the world's big tourism companies and well-known brand names into China. It will help enhance the competitiveness of Chinese tourism enterprises," he said.

Although as agreed with the WTO, joint-venture and solely foreign-funded agencies cannot operate outbound tours, the full opening-up is still good news for overseas investors. China has the largest domestic tourism market and is the world's fourth most popular destination.

Official statistics show the number of domestic travelers last year was 1.39 billion, and the administration forecasts the number will be 1.78 billion by 2010.

Attracted by the lucrative market, 25 solely foreign-funded travel agencies have been set up in China in the past five years.

Large Chinese travel services are confident they will be able to compete.

Yao Yuecan, president of the China International Travel Service Head Office, told China Daily the further opening-up "will not influence our business".

"The profit that travel agencies in China make is rather limited. It will not be easy for foreign-funded travel agencies to survive in China's market," he said.

To register a travel agency in China to operate domestic tours costs only 300,000 yuan ($39,000), and there are many small agencies that cut prices to compete against the State-owned agencies.

This sort of competition has restricted the development of large travel agencies.

Yao said he believes the entry of foreign investors might be able to curb the "unruly" competition, since foreign agencies might merge or take over the smaller local ones.

China joined the WTO in November 2001. It has fulfilled some WTO commitments regarding the tourism sector ahead of schedule or on time, including allowing foreign investors to hold major stakes in joint-venture agencies in 2003, and giving the go-ahead to establish solely foreign-funded travel agencies in December 2005.

(China Daily 05/19/2007 page1)