The China Travel Service (CTS), one of the country's top three travel agencies, signed an agreement of co-operative intent with the German-based tourism giant Touristik Union International (TUI) Wednesday in Shanghai.

Under the agreement, the two parties will work together to set up a joint-venture travel agency in Beijing. TUI will hold the majority of the shares.

The move is not only an effort by the State-owned agency to sharpen its competitive edge but also part of China's wider opening of the industry.

The proposed agency will be the third joint-venture travel agency set up since China joined the World Trade Organization in December last year and the first under foreign control.

The two already established are the Rosenbluth-Comfort Business Travel Service Co Ltd, a joint venture set up in May by China Comfort and the United States' Rosenbluth International, and CITS American Travel Service Ltd, set up in January by American Express and China International Travel Service.

China promised to allow foreign parties to hold controlling stakes in travel agencies before the end of 2003 and to permit wholly foreign-funded agencies before the end of 2005.

Ralf Corsten, vice-director of the TUI board, said his company is expected to expand its leading position among European travel companies in exploring the Chinese market, which he sees as one of the most important tourist markets in the world.

TUI now includes 81 tour operators, more than 3,700 travel agencies, 88 aircraft and 150,000 beds in 285 hotels worldwide. Its revenue in 2001 totalled 22.4 billion euros (US$22.6 billion).

The company brought 40,000 tourists to China last year.

Liu Jiaxiang, chairman of the CTS, said the co-operation will also help improve the management and business operation level of the CTS by learning from the experience of TUI.

The CTS has sped up its business expansion through a series of domestic and overseas acquisitions in recent years.

It has acquired 13 travel agencies across the country over the past three years in a bid to expand its national business network.

Liu said the company will target travel agencies in South China's Guangdong and East China's Fujian and Zhejiang provinces as well as in the Shanghai Municipality in its next acquisition programme.

It also plans an A-share listing, Liu added.

In line with its long-term development blueprint for 2002-10, the group aims to build itself into a well-known international travel company, based on tourism and the hotel industry.

The CTS has also acquired the Sweden China Travel Agency in its first major move to expand its overseas travel business, Liu said.

The Sweden China Travel Agency, northern Europe's largest company organizing China tours, achieved sales of US$5 million in the first eight months of this year.

(China Daily)

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