WTO effect on Travel Industry

The China National Tourism Administration (CNTA) is harvesting two of the greatest fruits of that development: the International Olympic Committee has named Beijing as the host of the 2008 Olympic Games, and the entry of World Trade Organization (WTO).

Airlines

The pending WTO membership is already having a huge impact on travel conditions in China. Ten of the country's airlines are being consolidated into three major carriers to compete against the big international carriers after China enters the WTO. The Civil Aviation Administration of China (CAAC) believes that a more centralized management structure will make China's airline industry less vulnerable to the carriers of Asia, Europe and North America, as well as Hong Kong's Cathay Pacific.

Air China and China Southern Airlines, which, along with China Eastern, are the three mega-carriers rising out of the CAAC's merge of airlines, and they are improving rapidly. An example of that improvement can be found in the agreement that Guangzhou-based China Southern Airlines reached with IBM to develop the second phase of the Technical Document Management System. The $2.7 million innovation will make the carrier's documentation electronic, placing it on the same standard as all other major air carriers worldwide. The system is exactly the kind of change that the oncoming competition is encouraging in China's native carriers.

Hotel

On the hotel industry, China lists some 458 foreign-invested hotels. Groups such as Accor, Hilton and Sheraton have invested in China's hotel sector. One of the additions to China's luxury-hotel inventory is the 300-room St. Regis Shanghai, which opened last July. The hotel is the second of Starwood's Chinese St. Regis properties - the other is in Beijing.

Cruise

The largest bump on the road to China's evolution will come in 2004 When the Yangtze River Dam transforms the great river into an 850mile lake running west of Wuhan. A new way of cruise touring will emerge in China to challenge the decades-old dominance of coach tours connected by domestic flights that are currently so popular.

The future of the Yangtze will create a kind of travel that will make it possible to board a ship for 10 or 12 days and travel port to port. Cruisers will have a complete experience of China along the way, without all the packing and unpacking, and transferring in and out of airports. The CNTA is especially delighted at the prospect of less developed regions of China receiving the next wave of modernization from travel investment.

Travelers

Foreign investment in travel since 1979 has reached a total of $20 billion, some 7 percent of all foreign investment in China. Considering the overseas investment that has gone into Chinese manufacturing, that is a staggering share. According to research from John Hopkins University, some 30 million businesses have been created in China in the past 20 years.

The WTO sees a bright future for China, with visitor numbers expected to rise from 1999's 24 million to 130 million by 2020. And as more travelers enter the country on business, the kind of leisure travel China offers is likely to change. Tourism in China will be transforming from a destination focused on sightseeing to one with other dimensions, such as resorts and eco-tourism.

Travel Agency

Foreign travel agencies will be allowed to control stakes in joint-venture companies from January 1, 2003 and wholly own companies by the end of 2005, Chinese Travel Authorities announced on 27 December 2001. This move reflects to uphold agreements made when China formally joined the WTO. China promised that a foreign travel agency with the minimum registered capital of 2.5 million Yuan (US$302,000) could control stakes in a joint venture within three years after China's entry into the WTO and must be registered with CNTA and MOFTEC. With this, domestic companies will engage in more and more international competition. They will have to make special efforts to attract customers. Another measure to improve the competitiveness of domestic travel firms is to establish a comprehensive and effective sales network. Firms should extend their sales networks to grass roots communities so that whenever consumers want to travel, they can find the most convenient place to get the relevant information and services.

The current information revolution is drastically changing the travel industry. Travelers are depending more on Internet to get the information they need for their own travel. The role of the travel agencies has been weakened. Given this situation, it is especially necessary to establish such a travel information network to co-ordinate the domestic travel industry. If conditions mature, giant travel groups can be established through industry restructuring or merger.

Conclusion

It's difficult to avoid superlatives when describing China's growth, and entrance into the WTO will only accelerate that. China's admittance will optimize the development of all sectors related to inbound tourism including the financial, information and auto industries, and will establish management practices that conform to international ways of doing business.

Sources:
1. China Daily 27 Dec 01 - "Tourism Industry Needs Reform"
2. China Daily 28 Dec 01 - "Foreign Travel Firms To Land In China"
3. Universal Media 22 Oct 01 - "Onward and Upward. China National Tourism Administration"