Last year nearly 3 million tourists from abroad came even with the threat of SARS (severe acute respiratory syndrome) hanging over China.

"The advent of the new agencies was delayed a year because of the SARS situation,'' said Dao Shuming, deputy director of the Shanghai Municipal Tourism Administrative Commission.

Now, however, the international partners and investors have moved into the Shanghai market. They include some from Germany, the United States, Japan and various Southeast Asian countries, Dao said.

It July 2003 when China announced it had granted permission for foreign share-holders and solely-owned travel agencies to operate, it fulfilled requirements of its entry into the World Trade Organization. A dozen such agencies have been established, with half in Beijing and the rest in Guangzhou, Guangdong Province and Xi'an, Shaanxi Province.

"Shanghai is a late comer, but it will move fast in allowing foreign-funded travel agencies in within the next few years,'' Dao said.

More international travel agencies will be set up and their participation in the local market will help regulate the trade, he said.

Their well-developed networks around the world should help make Shanghai a more popular tourism destination, Dao noted.

At present, only such agencies with an annual revenue surpassing US$50 million are allowed to invest in China.

Confronting the potential competition from foreign counterparts, local Chinese travel agencies have felt the pressure, owners say.

"Many of our staff will probably job-hop to the overseas agencies because they have a more mature management system and a market network,'' said Chen Suiqin, executive deputy general manager with Shanghai China Travel Service (Group) Corp Ltd.

Chen's group is approaching a co-operative agreement with a Hong Kong agency, hoping to improve its capabilities.

Foreign-invested travel agencies can do all kinds of business that Chinese agencies can do at present, except outbound travel services.

So far, 28 countries have been approved as destination countries for Chinese tourists, and China is expected to have 100 million travelers heading abroad annually in the next few years.

"We forbid foreign-funded agencies to do outbound travel because some of the destination countries are not prepared for such a big number of tourists,'' Dao said,

Shanghai is working on attracting more foreign tourists by sending groups of local tourism professionals to Europe, Japan and Saudi Arabia to promote the city's tourism.

With annual foreign exchange earnings of US$2.3 billion in the tourism industry, the most in the country, Shanghai is expected to receive 500,000 more foreign travelers in 2004.

"We plan to entirely revive the tourism industry by the end of 2004, one year earlier than other cities. The local tourism enterprises lost 5 billion yuan (US$602 million) because of SARS,'' he said.

For the increasing number of tourists to the city, Shanghai is tapping its tourism resources and trying to make them more diverse to attract the tourists.

| China Travel Update |