New Regulations on Travel Agencies Effective May 1

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Mar. 31- New regulations that will allow local and foreign-owned travel agencies to run inbound and domestic tours with a lower registered capital requirement than was previously the case will take effect beginning May 1.

The revised Regulations on Travel Agencies will permit foreign-owned travel agencies to set up in China with just RMB300,000 compared to the previous minimum amount of RMB4 million and RMB1.5 million for Chinese tour companies.

The quality guarantee deposit for all operators was also slashed to RMB200,000 to aid in business costs. Foreign-owned travel companies can now open branches nationwide as part of the country’s fulfillment of WTO commitments.

Du Yili, deputy chief of the China National Tourism Administration (CNTA) told China Daily: “Foreign tour operators are given an equal footing with their Chinese counterparts in domestic and inbound business.”

However, foreign-owned agencies are still banned from arranging for outbound business in China, except for Hong Kong and Macao firms under the Closer Economic Partnership Arrangement or those approved by the government.

The new measures will also encourage illegal travel agencies to legitimize themselves. Zhang Jianzhong of the CNTA said that rogue operators are three times the number of registered agencies. Registered agencies amount to 19,800 with 18,000 of those only running domestic tours.

“With the lower requirements, illegal operators can register and become legal,” he added.

Companies wishing to enter this market may email Richard Hoffmann here. He is the legal services senior associate at Dezan Shira & Associates.