The China National Tourism Administration and Ministry of Commerce earlier amended the Provisional Regulations on the Establishment of Foreign Majority-Owned or Wholly Foreign-Owned Travel Agencies, lowering the threshold for foreign investment in travel agencies by reducing their minimum registered capital from Rmmb4 million to Rmb2.5 million.

The amended regulations also lifted the geographical restriction on these travel agencies. In the past, foreign investors were only allowed to set up travel agencies in State Council-approved national holiday resorts and in the five cities of Beijing, Shanghai, Guangzhou, Shenzhen and Xian.

However, foreign investors intending to set up foreign majority-owned travel agencies must still meet the following requirements:

(1)   They must be travel agencies or enterprises mainly engaged in travel business;

(2)   They must have an annual tourism revenue of over US$40 million;

(3)   They must be members of travel industry associations in their home country (region);

(4)   They must have a good international reputation and advanced travel management experience; and

(5)   They must abide by Chinese laws as well as regulations governing the tourism industry in China.

Foreign investors intending to set up wholly foreign-owned travel agencies must fulfill clauses (1), (2), (4) and (5) mentioned above and must have an annual tourism revenue of over US$500 million under clause (2).

Each offshore investor will, as a rule, only be permitted to set up one foreign majority-owned or wholly foreign-owned travel agency on the mainland. There is also no amendment or relaxation of the clause that restricts them from arranging tours for Chinese citizens to foreign countries or for people from other parts of the Chinese mainland to travel to Hong Kong, Macau and Taiwan, or engaging in these businesses in disguised forms.