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China Travel Sees Big Market Potential

Lured by the increasing popularity of tourism on the mainland, China Travel Service (Holdings) HK (CTS Holdings) vows to tap the market potential by increasing its market manoeuvres.

"We are preparing to enlarge our market shares on the mainland dramatically through means of acquisition, merger, shareholding and co-operation," said Che Shujian, chairman of CTS Holdings.

Che said the group is now negotiating with several mainland-based tourist companies, but he did not name them.

The group has so far developed business relationships with about 300 mainland-based travel agencies and tourism-related companies and formed a worldwide tourist services network.

The Hong Kong-listed China Travel International Investment Hong Kong (CTII), a subsidiary company of CTS Holdings, announced restructuring plans last month.

Zhang Xuewu, vice-chairman of CTS Holdings, said the restructuring is to strengthen CTII's role as a listed tourism flagship and its profitability.

The company posted a net profit of HK$150.92 million (US$19.25 million) for the year 2000.

"The restructuring is now going smoothly," Che said.

After the re-organization, the company will concentrate mainly on tourism, as well as developing related industries such as infrastructure and real estate.

He said the company will help people travel from Hong Kong to the mainland and back, and from Hong Kong and the mainland to overseas destinations.

"When the per capita GDP (gross domestic products) tops US$500, it symbolizes that a country's tourist industry will experience quick development," Zhang said.

China's per capita GDP reached US$800 last year, he said, so the market potential is overwhelming.

Furthermore, the three long national holidays have greatly contributed to boost the country's tourist industry - Labor Day, National Day and Spring Festival.

Statistics indicated that last year alone, the output of the tourism industry hit 340 billion yuan (US$40.96 billion).

Package services

"We will continue to develop more customer-oriented products and further popularize our reputation by providing high-quality services to our customers," said Che.

He said the company will develop a package of tourist services such as combining touring with watching athletic contests or touring with relaxing.

Company statistics showed China Travel Service (HK) has become one of the major tourist services providers on the mainland by receiving about 3.9 million Hong Kong people and foreign customers on the mainland every year.

Last year, the company handled about 3.93 million tourists between Hong Kong and the mainland.

"To refresh our scenic spots to attract more tourists will be a major task for our company this year," the vice-chairman said.

In Shenzhen's Window of the World, a major scenic spot, the company is likely to invest about HK$40 million (US$4.8 million) to build three new projects including a stage and a restaurant, which is likely to be finished this year.

The construction of Hong Kong Disneyland may also trigger another boom for tourists from the mainland, Zhang said.

According to him, when Disneyland opens in 2005, it is likely to attract about 1.85 million tourists from the mainland every year.

"We will lose no chance to go to the country's western regions, as the region is poised to be a huge market for us," Che said.

CTS Holdings has so far invested about 3 billion yuan (US$361 million) into the country's western regions.

For example, it established Shaanxi Weihe River Power Station in 1997, which has a capacity of 1.2 million kilowatts per year.

In June 1996, together with Gansu Lanzhou Oil Refinery Factory, the company set up Lanzhou Refinery and China Travel Service Petrochemical Co. The company invested about US$10 million in the joint venture.

"We will continue to invest heavily in the western regions," Che said.

He said the company is now studying the feasibility of several plans to build new scenic spots in the region such as the canal around Xi'an's Old City.

They are also considering expanding their overseas market with China's pending entry into the World Trade Organization, Che said.

The company has 16 branch offices in 12 countries.

(China Daily 04/28/2001)

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