NEW PRC REGULATIONS DO LITTLE FOR TAIWAN TRAVEL AGENTS

UNCLAS TAIPEI 000167 SIPDIS SIPDIS STATE PASS USTR STATE FOR EAP/TC COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT TREASURY FOR OASIA/LMOGHTADER USTR FOR STRATFORD, ALTBACH E.O. 12958: N/A TAGS: ECON PREL CH TW SUBJECT: NEW PRC REGULATIONS DO LITTLE FOR TAIWAN TRAVEL AGENTS EAGER TO TAP MAINLAND MARKET Ref: A) Taipei 90, B) Taipei 133 ¶1. As Taiwan's travel industry eagerly awaits a cross-Strait agreement on tourism, now expected to be finalized in spring 2007 (reftels),Beijing announced revised regulations making it easier for foreign travel agents to operate in China. The China National Tourism Administration Director General Shao Qiwei announced on January 18, 2007, that China would ease capital requirements for foreign travel agents to establish subsidiaries in China. The required investment will be lowered from Renminbi (RMB) 2.5 million (US$320,000) to RMB 300,000 (US$39,000) starting in July 2007. Beijing also eliminated quota restrictions on the number of offices that could be opened. However, foreign firms will still be limited to offering only domestic China tourism services. ¶2. Taiwan's two largest tour companies, Set Tour and Phoenix Tours International Inc., have reacted to the announcement by saying they would like to have the ability to offer international travel services from China-based offices. Nevertheless, both said they would take advantage of the new measures to establish wholly-owned subsidiaries in China in expectation of future market opening. Set Tour has already set up offices in Shanghai and Dalien through a joint venture with a local travel agent. With its own offices, the firm hopes to more effectively take advantage of the anticipated opening of Taiwan to Mainland tourists. YOUNG#