Page 294 - 2017 White Paper
P. 294
7 White Paper on the Business Environment in China
reports, China’s movie market surged 49% to reach $6.78 operate travel agencies within China. The paper reported
billion, while the North American market grew only 8% to that:
$11.1 billion. China’s cinema build-out is also powering
ahead at a breathtaking rate. There are currently more According to promises China made for entry into the
than 31,600 cinema screens in China. Last year, it added WTO, the new regulation stipulates that in addition to
an average of 22 screens a day. However, China has yet to Chinese-foreign equity and contractual joint ventures,
bring a blockbuster movie to the international market. To foreign investors can also set up foreign travel agencies.
jumpstart a Made-in-China hit in the global marketplace, An official from the National Tourism Administration
Chinese authorities have announced a plan to give any said foreign travel agencies will be entitled to national
local film that earns more than $150,000 overseas a treatment in the three major tourism markets—inbound,
reward equivalent to at least 1% of the film’s international outbound and domestic tours (People’s Daily 2009).
box office (Stout 2016).
Of note, however, is that foreign enterprises will not,
As China’s film market surges, it’s on track to overtake at first, be permitted to operate outbound tours—a
the U.S. as the largest movie market in the world by 2017. clear competitive advantage in their favor due to their
experience and expertise outside of China—until
Notable Policy Activity they have operated for two years “without receiving
administrative punishment for infringing on tourists’
2007 Revision of the Catalog for the legal rights and interests” (People’s Daily 2009).
Guidance of Foreign Invested Enterprises1
In September 2010 these regulations were revised
As always, while it is clearly the prerogative of the to allow foreign-domestic joint-ventures to organize
Chinese state to adjust regulatory policy to best guide outbound tours for Mainland citizens, with the
the domestic economy according to development goals, requirement that a deposit of 1.2 million yuan must be
the issue at hand for foreign investors is not the policy paid in order to obtain a license for the activity, among
itself but the way in which it is implemented. In this case, others. Wholly-foreign owned enterprises apparently
the revisions to the Catalog for the Guidance of Foreign remain prohibited from organizing outbound tours
Invested Enterprises were released to the public (in for Mainland citizens, as no changes for that category
Chinese) on November 7, 2007, and effective December are articulated in the release (The National Tourism
1, 2007, placed foreign participation in “Construction and Administration of China 2010c).
operation of high-ranking hotels, villas, high-class office
buildings and international exhibition centers” under the Draft Law to Combat “Sharp Practices by
“Restricted” category. The 23 days between first notice Travel Agents”
and the new rules becoming effective is an extremely
short period of time for companies to assess and react As of August 2012, the National People’s Congress was
to the new environment. While this particular change reviewing a draft law that would “clearly [state] the rights
may not affect the many foreign companies managing of travelers”which, if passed, would become the first-ever
locally-owned properties, this method may continue legislation in the PRC to cover the tourism industry (Tan
to undermine investor confidence in other encouraged 2012).
sectors.
Interestingly, President Dai Bin of the China Tourism
“Regulations on Travel Agencies” Academy claims that “A motion for legislation was raised
more than three decades ago, but the process was slow,
In March of 2009 People’s Daily reported that according partly because the tourism industry is supervised by more
to new regulations that were to take effect on May 1, than 100 government organizations—and administrated
2009, foreign investors would be permitted to own and by both central and local authorities” (Tan 2012).
1 This section has been left intact from the 2008 edition to
supplement the discussion of declining foreign investment in the
hospitality industry above.
294
reports, China’s movie market surged 49% to reach $6.78 operate travel agencies within China. The paper reported
billion, while the North American market grew only 8% to that:
$11.1 billion. China’s cinema build-out is also powering
ahead at a breathtaking rate. There are currently more According to promises China made for entry into the
than 31,600 cinema screens in China. Last year, it added WTO, the new regulation stipulates that in addition to
an average of 22 screens a day. However, China has yet to Chinese-foreign equity and contractual joint ventures,
bring a blockbuster movie to the international market. To foreign investors can also set up foreign travel agencies.
jumpstart a Made-in-China hit in the global marketplace, An official from the National Tourism Administration
Chinese authorities have announced a plan to give any said foreign travel agencies will be entitled to national
local film that earns more than $150,000 overseas a treatment in the three major tourism markets—inbound,
reward equivalent to at least 1% of the film’s international outbound and domestic tours (People’s Daily 2009).
box office (Stout 2016).
Of note, however, is that foreign enterprises will not,
As China’s film market surges, it’s on track to overtake at first, be permitted to operate outbound tours—a
the U.S. as the largest movie market in the world by 2017. clear competitive advantage in their favor due to their
experience and expertise outside of China—until
Notable Policy Activity they have operated for two years “without receiving
administrative punishment for infringing on tourists’
2007 Revision of the Catalog for the legal rights and interests” (People’s Daily 2009).
Guidance of Foreign Invested Enterprises1
In September 2010 these regulations were revised
As always, while it is clearly the prerogative of the to allow foreign-domestic joint-ventures to organize
Chinese state to adjust regulatory policy to best guide outbound tours for Mainland citizens, with the
the domestic economy according to development goals, requirement that a deposit of 1.2 million yuan must be
the issue at hand for foreign investors is not the policy paid in order to obtain a license for the activity, among
itself but the way in which it is implemented. In this case, others. Wholly-foreign owned enterprises apparently
the revisions to the Catalog for the Guidance of Foreign remain prohibited from organizing outbound tours
Invested Enterprises were released to the public (in for Mainland citizens, as no changes for that category
Chinese) on November 7, 2007, and effective December are articulated in the release (The National Tourism
1, 2007, placed foreign participation in “Construction and Administration of China 2010c).
operation of high-ranking hotels, villas, high-class office
buildings and international exhibition centers” under the Draft Law to Combat “Sharp Practices by
“Restricted” category. The 23 days between first notice Travel Agents”
and the new rules becoming effective is an extremely
short period of time for companies to assess and react As of August 2012, the National People’s Congress was
to the new environment. While this particular change reviewing a draft law that would “clearly [state] the rights
may not affect the many foreign companies managing of travelers”which, if passed, would become the first-ever
locally-owned properties, this method may continue legislation in the PRC to cover the tourism industry (Tan
to undermine investor confidence in other encouraged 2012).
sectors.
Interestingly, President Dai Bin of the China Tourism
“Regulations on Travel Agencies” Academy claims that “A motion for legislation was raised
more than three decades ago, but the process was slow,
In March of 2009 People’s Daily reported that according partly because the tourism industry is supervised by more
to new regulations that were to take effect on May 1, than 100 government organizations—and administrated
2009, foreign investors would be permitted to own and by both central and local authorities” (Tan 2012).
1 This section has been left intact from the 2008 edition to
supplement the discussion of declining foreign investment in the
hospitality industry above.
294
