China International Travel Service (CITS) is to incorporate the China Duty Free Group to set up a tourism aircraft carrier that is expected to be officially launched by the end of this year.

Zhang Beiying, deputy general manager of CITS Head Office, said the incorporation would help the new group become a world leading tourism giant, taking advantage of both sides in terms of scale of assets, business network, professional personnel and operation experience.

The two partners will play complementary roles in the new group and a complete tourism service chain may be formed, according to Li Mingde, a professor from the Tourism Research Center under the Chinese Academy of Social Sciences.

Set up in 1954, CITS currently has more than 20 exclusively invested or controlling companies and around 150 franchise institutions on the Chinese mainland and operates 14 overseas subsidiaries in the United States, Japan, Australia, Hong Kong, Macao and some European nations.

Last year, the sales revenue of CITS, the top overseas tourism service provider on the Chinese mainland, exceeded 4.9 billion yuan (US$590 million) and its assets amounted to 2.7 billion yuan (US$325 million).

China Duty Free Group, the only organization authorized to operate duty-free shops on the Chinese mainland, is operating a network of 153 duty-free shops in 90 cities and border regions in 24 provinces, municipalities and autonomous regions.

The group's General Manager Gai Zhixin said that growing numbers of foreign tourists visiting China would ensure a bright future for duty-free shops.

"After the incorporation, the combined assets of CITS Enterprises Group should exceed 3.9 billion yuan (US$469 million)," said Gai. The new aircraft carrier should add a lot of weight to the business in the international market, insiders say.

To date, the State-owned Assets Supervision and Administration Commission plans to help 187 State-owned enterprises directly under the central government, whose core businesses are not tourism, peel off their travel operational sectors and transfer related assets to CITS or China Travel Service (CTS), China's two largest State-owned travel services.

Specific teams organized by the commission have been sent to 187 enterprises to evaluate their assets and look at services offered such as visiting sites, hotels and travel.

As the evaluation work gets under way, both CITS and CTS are not commenting on the possible disposition scheme of those assets.

Set up in 1949, CTS was the first tourism group on the Chinese mainland. Its annual sales revenue has stood at hundreds of millions of US dollars since 2000.

An unnamed official of the State-owned Assets Supervision and Administration said the move aimed at forcing the large State-owned enterprises to concentrate on their core businesses, improving their competitiveness, optimizing the State-owned assets structure and consolidating co-existing resources.

(China Daily August 26, 2004)