Key Points:

  • Sino-foreign joint venture travel agencies are allowed to provide outbound travel services on a trial basis
  • Only a limited number of agencies will be granted licenses
  • Most of the foreign-invested agencies will have to wait three years until the trial is completed

On August 29, 2010 the Tentative Measures on Administration of Sino-Foreign Travel Agencies Conducting Outbound Travel Business (the Measures) were published as the implementing rules of the State Counsel Opinion on Speeding the Development of the Travel Industry promulgated in July 2010. For the first time, the Measures allow foreign-invested travel agencies to conduct outbound travel business from China on a trial basis.

The Measures permit Sino-foreign joint venture (JV) travel agencies to provide outbound travel services – i.e., soliciting and organizing PRC residents to travel outside the PRC, including Hong Kong and Macau, but excluding Taiwan. Under the current law, foreign-invested travel agencies are not allowed to provide outbound travel services to PRC residents, even foreigners who reside in the PRC.

Note the following points:

  • Only JV agencies can apply to provide outbound travel services. Wholly foreign-owned travel agencies are not yet allowed to do so.
  • The Measures will be implemented only on a trial basis. Specifically, the number of JV agencies that will be approved to provide outbound travel services is strictly limited. It is, however, unclear exactly what the quota will be. The Measures allow the Travel Bureau to decide on the actual number.
  • A JV agency that is approved to provide outbound travel services will be required to submit a report to the Travel Bureau that includes information about the business such as the number of people served, destinations and revenue. The government will use these reports to evaluate the trial and whether to open the market further. The trial period is three years.
  • The requirements for applying for an outbound travel service license are the same as those for China-based travel agencies, i.e., the agency has been established for two years and has never been punished by a government authority for impairing a customer’s legal rights and interests.

According to a public announcement from the Travel Bureau, it is now ready to accept applications. In reality, however, there are only 17 approved JV agencies so far, and not all of them have existed for two years. Therefore, participation in the trial will be quite limited. It can be expected that the number of travel agencies that are eventually granted a license will be minimal. Most foreign-owned travel service providers will probably need to wait another three years, after the trial is completed, to be accepted into China’s outbound travel market.