- Special requirements for global companies seeking to invest in a travel agency in China eliminated
- Distinction between national and international travel agencies removed
- More details regarding payment of travel quality deposits
With the goal of improving the administration of travel agencies and keeping the commitments outlined in China’s WTO concessions, the State Council released its Provisions for Travel Agencies (“Provisions”) on February 20, 2009 with an effective date of May 1, 2009.
Prior to the issuance of the Provisions, global companies seeking to invest in a travel agency in China faced a slate of special requirements. The necessary minimum registered capital was RMB2.5 million, and the outside investor was required to be a travel agency engaging in the travel business that had earned at least US$500 million in the previous year.
To comply with the commitments made by China in its WTO concessions, the State Council passed Provisions to extend the same treatment to investors inside and outside China in canceling all special requirements for outside investors wishing to form a travel agency in China. Under the Provisions, all applicants wishing to establish travel agencies are required to meet the same conditions, such as having fixed business venues, all the necessary equipment and minimum registered capital of RMB300,000. However, under the Provisions, except for Hong Kong/Macau outbound travel services provided by Hong Kong/Macau-invested travel agencies in Guangdong Province, no travel agency with investors from outside China is permitted to engage in outbound travel business unless otherwise provided for in the free trade agreement.
Under current provisions, two types of travel agencies exist in China: national agencies and international agencies. National travel agencies are permitted to conduct only in-China travel business, while an international travel agency may engage in inbound and outbound travel business in addition to domestic travel business. The Provisions no longer make such a distinction. Any travel agency may engage in both in-China travel business and inbound travel business. If a China-invested travel agency follows all applicable laws and regulations, it may apply for permission to offer outbound travel services within two years of its establishment.
In addition, the Provisions supply more detailed information on requirements for the payment of travel quality deposits. To protect tourists’ interests and rights, previous provisions for establishment of travel agencies in China have required agencies to establish travel quality deposits, which are managed by the China National Tourism Administration. However, under the new Provisions, a travel agency may present a letter of guarantee issued by a bank as an alternative to making a travel quality deposit. Furthermore, a travel agency may withdraw half of the quality deposit remaining in its designated bank account if it has not been fined for harming travelers’ interests in the past three years.