The China Outbound Travel Education Series – part 4 (Wholesale/Retail Travel Agencies)

13 July 2009 // Filed under China Outbound Education

There are 1,472 international (inbound) travel agencies in China, out of a total of more than 15,339 travel agents. Only 700+ agencies are licensed to operate outbound travel. These travel agencies vary greatly in size. Some of them have branches nationwide while others operate in certain regions only. There is no clear distinction between wholesale and retail travel agencies yet. As tourism has only been developed recently, the services provided to the customer are still rather limited.
Traditional transactions are concluded by sales people visiting the clients, based on their personal networks. This way of operating is not transparent and highly dependant on the sales person. These networks are the so-called grey areas. Although their name card may show the name of a certified travel agent, they operate independently and often switch from one agency to another (and so does their name card). The flow of staff between travel agencies is very common and staff retention is a major challenge. Any database of travel agencies in China must take this into account.
These days, more travel agencies sell their services and products at the counter to meet the demand of the growing number of customers. Customers are becoming more sophisticated and therefore demanding more quality and transparency. Branding of high-street travel shops is not developed, with travel products mostly looking the same regardless of where they are purchased.
When wholesalers exist, they are mostly based in Beijing, Shanghai and Guangzhou. They normally sell both to trade and direct consumers and operate multiple brands. The wholesalers collect their clients from all over China, through a personal network of relations.
Pressure from below (the consumers), from above (government regulations) and from the outside (foreign competition) is expected to increase in the near future. This will lead to local companies developing clear brands and diversifying their products.
There are several well known names within the travel industry. These are the travel agencies set up by different departments of the government in the days that all travel was controlled by the government. CTS, CITS, CYTS have offices all over China, but should not be considered as either a wholesaler or a national brand. Each of their offices is managed separately and must build its own reputation in the region in which it operates. Other nationally known brands include: China Comfort, CITIC, China Merchants among others. CTI, which is owned by Hong Kong CTS, is the only ‘foreign’ company that can legally operate outbound travel.
Recently, CITS and CTS began buying back a controlling part in many of their own-brand offices across China. However there is no automatic distribution of products through the chain of offices and each can choose their own suppliers.
•    Many sales and marketing staff or departments operate independently within a travel agency. When disputes arise the travel agency might not be held responsible for the services of their staff or departments. When cooperating with such people it is important to double-check their actual contract with the travel agency.
•    Franchising is a common way to operate as a certified outbound travel agency. Unfortunately the franchising contracts are often not legally binding.
•    Franchising or using another company’s license does not automatically imply that the travel agent is unreliable. One needs to assess the actual quality of the total product and judge the potential for cooperation on a case by case basis.
•    The logo or agency name on the name card is not an indication of who owns the agency or how reputable it is. Always check for their license number, which company it was issued to and what is the relationship to the agent you are dealing with.

Passports and visas
China has several types of passports: diplomatic, public affairs and private passports. When travelling to Macau, Hong Kong or Taiwan special travel permits are issued for Chinese mainland citizens. Depending on the purpose of travel the Chinese citizen holds different passports. Only private passports are used for tourism and ADS visa is issued to private passport holders. Only certified international travel agencies listed on the ADS list are allowed to handle visa applications on behalf of their clients. The ADS licensed travel agent will submit the application to the embassies or consulates involved, including documents on the social, economic and financial background of the applicants.
The ADS procedure for the Schengen member states is the same for every member country. Visa application procedures for individual, business or official travel are different with each consulate.

The China Outbound Travel Handbook 2008 in blog post sized chunks for easy reading. The posts are abridged versions of the book to give a general overview of China’s tourism industry, the marketing and sales approaches that work, case studies from different destinations, tips on hospitality and more. At any point you can go to our website to read the full version or join the ChinaContact Tourism Network and download the PDF version for free. A license to print the handbook can be purchased from our website as well.

Next week: Part 5 – traditional media marketing in China

2009-07-13  ::  Roy Graff