Decision of the State Council on Amending the Regulations on Administration of Travel Agencies

(Adopted at the 49th Executing Meeting of the State Council on December 5, 2001, promulgated by Decree No.334 of the State Council of the People's Republic of China on December 11, 2001, and effective as of January 1, 2002)

The State Council decides to make the following amendments to the Regulations on Administration of Travel Agencies for the purposes of satisfying the need arising from the opening up of China's tourism industry to the outside world and promoting its development:

I.Paragraph 1 of Article 5 shall be amended as follows: "Travel agencies shall be categorized into international travel agencies and domestic travel agencies according to their business scope. Where necessary, the special provisions of these Regulations, if any, shall apply thereto."

II.Article 16 shall be deleted.

III.One chapter shall be added as Chapter IV: "Chapter V Special Provisions on Foreign-invested Travel Agencies"

1. "Article 27 The provisions of this Chapter shall apply to foreign-invested travel agencies; where this Chapter remains silent, other relevant provisions of these Regulations shall apply thereto.

"Foreign-invested travel agencies mentioned in the preceding paragraph shall include Chinese-foreign equity joint venture travel agencies and Chinese-foreign contractual joint venture travel agencies established according to law jointly by foreign tourism operators and Chinese investors."

2. "Article 28 The minimum registered capital of a Chinese-foreign equity joint venture travel agency shall be RMB 4 million yuan. The minimum registered capital of a Chinese-foreign contractual joint venture travel agency may be adjusted. The competent tourism administration department of the State Council shall, together with the competent foreign trade and economic cooperation department of the State Council, determine the time limit for adjustment.

"The competent tourism administration department of the State Council shall, together with the competent foreign trade and economic cooperation department of the State Council, determine the proportion of capital to be contributed by the investors in Chinese-foreign equity joint venture travel agencies according to the relevant provisions.

"The provisions of Paragraphs 1 and 2 of this Article shall apply mutatis mutandis to the minimum registered capital and the proportion of capital to be contributed by the parties in Chinese-foreign contractual joint venture travel agencies."

3. "Article 29 The Chinese investor in a foreign-invested travel agency shall satisfy the following conditions:

(1) being a company established according to law;

(2) having no record of law breaking or serious regulation breaking in the past three years; and

(3) meeting the prudence requirement and the requirements for special industry specified by the competent tourism administration department of the State Council."

4. "Article 30 The foreign investor in a foreign-invested travel agency shall satisfy the following conditions:

(1) being a travel agency or an enterprise mainly engaging in tourism business;

(2) having the annual business volume of more than USD$ 40 million; and

(3) being a member of the tourism association of its own country."

5. "Article 31 When applying to establish a foreign-invested travel agency, the Chinese investor shall make the application to the competent tourism administration department of the State Council and submit the documents as specified in Article 10 of these Regulations and the certificates in conformity with the provisions of Article 30 of these Regulations. The competent tourism administration department of the State Council shall finish the examination on the application and make the decision of approval or disapproval within 60 days from the date of receipt of the application. If the approval is granted, it shall issue the Letter of Examination Opinion on Business Operation Licensing for Foreign-invested Travel Agency; if no approval is granted, it shall inform the applicant and give reasons in writing.

"The applicant shall, by presenting the Letter of Examination Opinion on Business Operation Licensing for Foreign-invested Travel Agency, the contract and articles of association signed by all investors, apply to the competent foreign trade and economic cooperation department of the State Council for the establishment of the foreign-invested enterprise. The competent foreign trade and economic cooperation department of the State Council shall finish the examination on the contract and articles of association of the proposed foreign-invested travel agency and make the decision of approval or disapproval within the time limit as specified by the relevant laws and administrative regulations. If the approval is granted, it shall issue the Approval Certificate for Foreign-invested Enterprise and inform the applicant to obtain the Business Operation Permit for Travel Agency from the competent tourism administration department of the State Council. If no approval is granted, it shall inform the applicant and give reasons in writing.

"The applicant shall, on the strength of the Business Operation Permit for Travel Agency and the Approval Certificate for Foreign-invested Enterprise, go through the formalities for registration of foreign-invested travel agency with the industrial and commercial administration department."

6. "Article 32 Foreign-invested travel agencies may engage in the inbound tourism business and domestic tourism business.

"No foreign-invested travel agency may set up any branch."

7. "Article 33 No foreign-invested travel agency may engage in the tourism business of Chinese citizens traveling abroad and of citizens from other Chinese territories traveling to Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region."

IV.Article 32 shall be amended as follows: "Article 38 Where anyone violates the provisions of Paragraph 2 of Article 12 or Paragraph 2 of Article 16 of these Regulations, the tourism administration department shall order him to stop the illegal operation, confiscate the illegal income and impose a fine of not less than RMB 10,000 yuan but not more than RMB 50,000 yuan concurrently."

V.Article 33 shall be amended as follows: "Article 39 Where anyone violates the provisions of Paragraph 1 of Article 17, Article 21, Paragraph 1 of Article 22, Article 24, Paragraph 1 of Article 25, Article 32 or Article 33 of these Regulations, the tourism administration department shall order him to make corrections within a prescribed time limit, confiscate the illegal income, if any; if he fails to make corrections within the prescribed time limit, order him to suspend business for 15 to 30 days for rectification and may concurrently impose a fine of not less than RMB 5,000 yuan but not more than RMB 20,000 yuan; if the circumstances are serious, may revoke the Business Operation Permit for Travel Agency."

VI.Article 34 shall be amended as follows: "Article 40 Where anyone violates the provisions of Article 18 or Paragraph 2 of Article 20 of these Regulations, penalties shall be given in accordance with the relevant provisions of the Trademark Law of the People's Republic of China and the Law of the People's Republic of China Against Unfair Competition."

VII.Article 35 shall be amended as follows: "Article 41 Where anyone violates the provisions of Article 26 or Paragraph 1 of Article 35 of these Regulations, the tourism administration department shall order him to make corrections within a prescribed time limit and give a warning; if he fails to make corrections within the prescribed time limit, order him to suspend business for 3 to 15 days for rectification and may impose a fine of not less than RMB 3,000 yuan but not more than RMB 10,000 yuan concurrently."

VIII.Article 37 shall be amended as follows: "Article 43 The tourism administration department that accepts the complaint as specified in Article 23 of these Regulations shall, if the case is proved true after investigation, order the travel agency concerned to make compensation on the basis of actual losses of tourists; if the travel agency refuses or is unable to bear the responsibility for compensation, the tourism administration department may make the payment from the quality guaranty bond of the travel agency concerned."

IX.Article 38 shall be amended as follows: "Article 44 Where the tourism administration department or the competent foreign trade and economic cooperation department, in violation of the provisions of these Regulations, commits any of the following acts, administrative sanctions shall be given to the persons in charge who have responsibility and other persons directly responsible for the violations according to law:

(1) failing to issue the Business Operation Permit for Travel Agency or the Approval Certificate for Foreign-invested Enterprise to the applicant who satisfies the conditions; or

(2) issuing the Business Operation Permit for Travel Agency or the Approval Certificate for Foreign-invested Enterprise to the applicant who does not satisfy the conditions."

X.Article 39 shall be amended as follows: "Article 45 Any staff members of the tourism administration department who neglect their duties or abuse their powers shall be investigated for criminal liability according to law if the criminal law is violated; or be given administrative sanctions according to law if the offense is not serious enough for criminal penalty."

XI.One article shall be added to the Supplementary Provisions as Article 46: "Article 46 These Regulations shall apply mutatis mutandis to the establishment of travel agencies on the mainland with the investment by tourism operators from the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region."

The order of articles of these Regulations shall be adjusted correspondingly in accordance with the above-mentioned amendments.

This Decision shall become effective as of January 1, 2002. The Interim Measures for Travel Agencies with Chinese and foreign Investment, approved by the State Council on October 29, 1998 and promulgated jointly by the National Tourism Administration and the Ministry of Foreign Trade and Economic Cooperation on December 2, 1998, shall be repealed simultaneously.

The Regulations on Administration of Travel Agencies shall be revised correspondingly according to this Decision and re-promulgated.

Appendix:

Regulations on Administration of Travel Agencies

(Promulgated by Decree No.205 of the State Council of the People's Republic of China on October 15, 1996, and revised in accordance with the Decision of the State Council on Amending the Regulations on Administration of Travel Agencies on December 11, 2001)

Chapter I General Provisions

Article 1These Regulations are formulated for the purposes of strengthening the administration of travel agencies, protecting the lawful rights and interests of tourists and travel agencies, maintaining the order of tourism market and promoting the healthy development of tourism.

Article 2These Regulations shall apply to travel agencies established within the territory of the People's Republic of China and resident offices established within the territory of the People's Republic of China by foreign travel agencies (hereinafter referred to as resident offices of foreign travel agencies).

Article 3Travel agencies referred to in these Regulations mean the enterprises that engage in the tourism business with making profit as their aim.

Tourism business referred to in these Regulations means the business activities of providing such paid services as fulfillment of procedures in respect of exit, entry and visa on behalf of tourists, soliciting and receiving tourists or arranging board and lodging for them.

Article 4The competent tourism administration department of the State Council shall be responsible for the supervision and administration of travel agencies throughout the country.

Departments for tourism administration under local people's governments at or above the county level shall, according to their duties, be responsible for the supervision and administration of travel agencies within their respective administrative areas.

Departments mentioned in Paragraphs 1 and 2 of this Article are collectively referred to as the tourism administration departments.

Article 5Travel agencies shall be categorized into international travel agencies and domestic travel agencies according to their business scope. Where necessary, the special provisions of these Regulations, if any, shall apply thereto.

The business scope of international travel agencies shall include the inbound tourism business, outbound tourism business and domestic tourism business.

The business scope of domestic travel agencies shall be limited only to the domestic tourism business.

Chapter II Establishment of Travel Agencies

Article 6To establish a travel agency, the following conditions shall be satisfied:

(1) having the fixed business premises;

(2) having necessary business facilities;

(3) having trained business personnel who possess the qualification certificate issued by the tourism administration department of the people's government at or above the level of province, autonomous region or municipality directly under the Central Government; and

(4) having the registered capital and the quality guaranty bond as specified in Articles 7 and 8 of these Regulations.

Article 7The registered capital of travel agencies shall comply with the following requirements:

(1) The registered capital of an international travel agency may not be less than RMB 1.5 million yuan; and

(2) The registered capital of a domestic travel agency may not be less than RMB 300,000 yuan.

Article 8To apply to establish a travel agency, the quality guaranty bond shall be paid to the tourism administration department according to the following provisions:

(1) The applicant for establishing an international travel agency shall pay RMB 600,000 yuan for the inbound tourism business or RMB 1 million yuan for the outbound tourism business; and

(2) The applicant for establishing a domestic travel agency shall pay RMB 100,000 yuan.

The quality guaranty bond and its interests accrued in the period of custody by the tourism administration department shall belong to the travel agency; the tourism administration department may, according to the relevant provisions of the State, deduct the custody fee at a certain rate from the interest.

Article 9To apply to establish an international travel agency, the application shall be submitted to the department for tourism administration of the people's government of the province, autonomous region or municipality directly under the Central Government where it is to be situated; after the examination and consent by the department for tourism administration of the people's government of the province, autonomous region or municipality directly under the Central Government, that application shall be submitted to the competent tourism administration department of the State Council for examination and approval.

TO apply to establish a domestic travel agency, the application shall be submitted for approval to the department for tourism administration of the people's government of the province, autonomous region or municipality directly under the Central Government where it is to be situated.

Article 10To apply to establish a travel agency, the following documents shall be submitted:

(1) the written application for the proposed travel agency;

(2) the feasibility study report for the proposed travel agency;

(3) the articles of association of the proposed travel agency;

(4) resumes of the manager and deputy managers of the proposed travel agency and their qualification certificates as specified in Item (3) of Article 6 of these Regulations;

(5) the capital and credibility certification issued by the deposit bank and the capital verification report issued by the certified public accountant and his accounting firm or auditing firm;

(6) the business premises certificate; and

(7) the business facilities certificate.

Article 11The tourism administration department shall, after the receipt of an application, carry out the examination according to the following principles:

(1) whether or not it conforms to the tourism development planning;

(2) whether or not it meets the need of tourist market; and

(3) whether or not it satisfies the conditions as specified in Article 6 of these Regulations.

The tourism administration department shall, within 30 days from the date of receipt of the application, make the decision of approval or disapproval, and notify the applicant of its findings.

Article 12If the application is approved upon examination and approval, the tourism administration department shall issue the Business Operation Permit for Travel Agency to the applicant. The applicant shall, by presenting such a Permit, obtain the business license from the industrial and commercial administration department.

The applicant who fails to obtain the Business Operation Permit for Travel Agency may not engage in the tourism business.

Article 13The travel agency that intends to make a change to its business scope shall obtain approval from the tourism administration department that originally approved it, and after that, go through the registration formalities for the change with the industrial and commercial administration department.

The travel agency that intends to make a change to such item as its name, business premises or legal representative, or to terminate or suspend its business, shall go through the relevant registration formalities for the change or cancellation with the industrial and commercial administration department, and report it to the tourism administration department that originally approved it for the record.

Article 14The tourism administration departments shall practice the system of announcement with regard to travel agencies, which shall include the announcement of business commencement, change of name or business scope, termination of business or revocation of permit.

Article 15The travel agency that has an annual reception of more than 100,000 person-time tourists may set up branch agency which has no status of legal person (hereinafter referred to as the branch).

The international travel agency shall make an increase of RMB 750,000 yuan to its registered capital and RMB 300,000 yuan to its quality guaranty bond when a branch is set up. The domestic travel agency shall make an increase of RMB 150,000 yuan to its registered capital and RMB 50,000 yuan to its quality guaranty bond when a branch is set up.

Travel agencies and their branches shall be under unified management, financial control, market promotion and receiving.

The branches set up by travel agencies shall accept the supervision and administration from the departments for tourism administration of local people's governments at and above the county level where they are located.

Article 16Foreign travel agencies that intend to establish resident offices within the territory of the People's Republic of China must obtain approval from the competent tourism administration department of the State Council.

Resident offices of foreign travel agencies may engage only in tourism consultation, liaison and publicity, and may not engage in the tourism business.

Chapter III Operation of Travel Agencies

Article 17Travel agencies shall carry out their business activities within the approved business scope.

Travel agencies shall, in their business activities, adhere to the principles of voluntariness, equality, fairness, honesty and credibility and observe commercial ethics.

Article 18No travel agency may, by using the following illegal methods, engage in the tourism business so as to harm its competitor:

(1) to counterfeit the registered trademark of another travel agency;

(2) to use the name of another travel agency without authorization;

(3) to defame another travel agency;

(4) to authorize a unit which is not a travel agency or an individual to engage in the tourism business on its behalf; or

(5) to commit other acts to disturb the order of tourism market.

Article 19Travel agencies shall conclude written contracts with the business personnel they employed in order to establish the rights and obligations of both the parties.

No business personnel may without the consent of the travel agency, disclose, use or allow another person to use the travel agency's business secrets coming to his knowledge.

Article 20Travel agencies shall protect the lawful rights and interests of tourists.

The tourism service information provided by travel agencies to tourists must be true and reliable, and no false promotion may be permitted.

Article 21Travel agencies shall, when organizing tours, buy the tour accident insurance for their tourists and guarantee that the services they provide comply with the requirements for the tourists' personal and property safety; and in case of potential danger to the tourists' personal and property safety, they shall make true disclosure and explicit warnings to the tourists and take measures to avoid the occurrence of any danger.

Article 22Travel agencies are entitled to collect fees for services they provide to their tourists according to the provisions of the State, and if extra charges are charged for additional services in the course of a tour, they shall obtain the consent from tourists in advance.

Travel agencies shall, when providing paid services, issue service documents to the tourists according to the provisions of the State.

Article 23Tourists shall have the right to lodge complaints with the tourism administration department for any losses caused to them under any of the following circumstances:

(1) The travel agency fails to meet, due to its own fault, the service quality standard set forth in the contract;

(2) The service provided by the travel agency fails to meet the national or trade standard; or

(3) Bankruptcy of the travel agency causes losses to the tour fee prepaid by tourists.

The tourism administration department shall handle the complaints lodged by tourists according to the provisions of these Regulations.

Article 24The tour guides receiving tourists and the tour leaders for outbound tour employed by travel agencies shall have the qualification certificate issued by tourism administration departments of people's governments at or above the level of province, autonomous region or municipality directly under the Central Government.

Article 25Travel agencies shall, when organizing outbound tour for tourists, select counterpart travel agencies in the countries or regions concerned, which are established according to law and have good reputation, and can entrust them with the reception only after a writing agreement with them has been concluded.

In case of infringement upon the tourists' rights or interests due to breach of agreement by the travel agency abroad, the home travel agency that organizes the outbound tour shall be liable for compensation, and then it may demand reimbursement from the travel agency abroad.

Article 26Travel agencies shall keep complete records of soliciting and receiving tourists, and preserve the relevant documents and materials for inspection by the tourism administration department.

Chapter IV Special Provisions on Foreign-invested Travel Agencies

Article 27The provisions of this Chapter shall apply to foreign-invested travel agencies; where this Chapter remains silent, other relevant provisions of these Regulations shall apply thereto.

Foreign-invested travel agencies mentioned in the preceding paragraph shall include Chinese-foreign equity joint venture travel agencies and Chinese-foreign contractual joint venture travel agencies established according to law jointly by foreign tourism operators and Chinese investors.

Article 28The minimum registered capital of a Chinese-foreign equity joint venture travel agency shall be RMB 4 million yuan. The minimum registered capital of a Chinese-foreign contractual joint venture travel agency may be adjusted. The competent tourism administration department of the State Council shall, together with the competent foreign trade and economic cooperation department of the State Council, determine the time limit for adjustment.

The competent tourism administration department of the State Council shall, together with the competent foreign trade and economic cooperation department of the State Council, determine the proportion of capital to be contributed by the investors in Chinese-foreign equity joint venture travel agencies according to the relevant provisions.

The provisions of Paragraphs 1 and 2 of this Article shall apply mutatis mutandis to the minimum registered capital and the proportion of capital to be contributed by the parties in Chinese-foreign contractual joint venture travel agencies.

Article 29The Chinese investor in a foreign-invested travel agency shall satisfy the following conditions:

(1) being a company established according to law;

(2) having no record of law breaking or serious regulation breaking in the past three years; and

(3) meeting the prudence requirement and the requirements for special industry specified by the competent tourism administration department of the State Council.

Article 30The foreign investor in a foreign-invested travel agency shall satisfy the following conditions:

(1) being a travel agency or an enterprise mainly engaging in tourism business;

(2) having the annual business volume of more than USD $ 40 million; and

(3) being a member of the tourism association of its own country.

Article 31When applying to establish a foreign-invested travel agency, the Chinese investor shall make the application to the competent tourism administration department of the State Council and submit the documents as specified in Article 10 of these Regulations and the certificates in conformity with the provisions of Article 30 of these Regulations. The competent tourism administration department of the State Council shall finish the examination on the application and make the decision of approval or disapproval within 60 days from the date of receipt of the application. If the approval is granted, it shall issue the Letter of Examination Opinion on Business Operation Licensing for Foreign-invested Travel Agency; if no approval is granted, it shall inform the applicant and give reasons in writing.

The applicant shall, by presenting the Letter of Examination Opinion on Business Operation Licensing for Foreign-invested Travel Agency, the contract and articles of association signed by all investors, apply to the competent foreign trade and economic cooperation department of the State Council for the establishment of the foreign-invested enterprise. The competent foreign trade and economic cooperation department of the State Council shall finish the examination on the contract and articles of association of the proposed foreign-invested travel agency and make the decision of approval or disapproval within the time limit as specified by the relevant laws and administrative regulations. If the approval is granted, it shall issue the Approval Certificate for Foreign-invested Enterprise and inform the applicant to obtain the Business Operation Permit for Travel Agency from the competent tourism administration department of the State Council. If no approval is granted, it shall inform the applicant and give reasons in writing.

The applicant shall, on the strength of the Business Operation Permit for Travel Agency and the Approval Certificate for Foreign-invested Enterprise, go through the formalities for registration of foreign-invested travel agency with the industrial and commercial administration department.

Article 32Foreign-invested travel agencies may engage in the inbound tourism business and domestic tourism business.

No foreign-invested travel agency may set up any branch.

Article 33No foreign-invested travel agency may engage in the tourism business of Chinese citizens traveling abroad and of citizens from other Chinese territories traveling to Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region.

Chapter V Supervision and Inspection

Article 34Tourism administration departments shall, according to law, strengthen the supervision and administration of travel agencies and resident offices of foreign travel agencies, and maintain the order of tourism market.

Article 35Travel agencies shall accept the supervision and inspection from tourism administration departments on their service quality, safety, price, financial accounts, payment of foreign exchange and other business operations.

The staff members of tourism administration departments shall show their certificates when they perform their duties of supervision and inspection.

Article 36Tourism administration departments shall carry out the annual inspection on travel agencies every year. Travel agencies shall submit the annual inspection report, assets statement, financial statement and other relevant documents and materials in accordance with the provisions of tourism administration departments.

Article 37Tourism administration departments shall strengthen the financial management of quality guaranty bonds, and use them for compensation to the economic losses of tourists according to the relevant provisions of the State. No unit or individual may use the quality guaranty bonds for any other purpose.

Chapter VI Penalty Provisions

Article 38Where anyone violates the provisions of Paragraph 2 of Article 12 or Paragraph 2 of Article 16 of these Regulations, the tourism administration department shall order him to stop the illegal operation, confiscate the illegal income and impose a fine of not less than RMB 10,000 yuan but not more than RMB 50,000 yuan concurrently.

Article 39Where anyone violates the provisions of Paragraph 1 of Article 17, Article 21, Paragraph 1 of Article 22, Article 24, Paragraph 1 of Article 25, Article 32 or Article 33 of these Regulations, the tourism administration department shall order him to make corrections within a prescribed time limit, confiscate the illegal income, if any; if he fails to make corrections within the prescribed time limit, order him to suspend business for 15 to 30 days for rectification and may concurrently impose a fine of not less than RMB 5,000 yuan but not more than RMB 20,000 yuan; if the circumstances are serious, may revoke the Business Operation Permit for Travel Agency.

Article 40Where anyone violates the provisions of Article 18 or Paragraph 2 of Article 20 of these Regulations, penalties shall be given in accordance with the relevant provisions of the Trademark Law of the People's Republic of China and the Law of the People's Republic of China Against Unfair Competition.

Article 41Where anyone violates the provisions of Article 26 or Paragraph 1 of Article 35 of these Regulations, the tourism administration department shall order him to make corrections within a prescribed time limit and give a warning; if he fails to make corrections within the prescribed time limit, shall order him to suspend business for 3 to 15 days for rectification and may impose a fine of not less than RMB 3,000 yuan but not more than RMB 10,000 yuan concurrently.

Article 42Where a travel agency is revoked its Business Operation Permit for Travel Agency, it shall be revoked its business license by the industrial and commercial administration department accordingly.

Article 43The tourism administration department that accepts the complaint as specified in Article 23 of these Regulations shall, if the case is proved true after investigation, order the travel agency concerned to make compensation on the basis of actual losses of tourists; if the travel agency refuses or is unable to bear the responsibility for compensation, the tourism administration department may make the payment from the quality guaranty bond of the travel agency concerned.

Article 44Where the tourism administration department or the competent foreign trade and economic cooperation department, in violation of the provisions of these Regulations, commits any of the following acts, administrative sanctions shall be given to the persons in charge who have responsibility and other persons directly responsible for the violations according to law:

(1) failing to issue the Business Operation Permit for Travel Agency or the Approval Certificate for Foreign-invested Enterprise to the applicant who satisfies the conditions; or

(2) issuing the Business Operation Permit for Travel Agency or the Approval Certificate for Foreign-invested Enterprise to the applicant who does not satisfy the conditions.

Article 45Any staff members of the tourism administration department who neglect their duties or abuse their powers shall be investigated for criminal liability according to law if the criminal law is violated; or be given administrative sanctions according to law if the offense is not serious enough for criminal penalty.

Chapter VII Supplementary Provisions

Article 46These Regulations shall apply mutatis mutandis to the establishment of travel agencies on the mainland with the investment by tourism operators from the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region.

Article 47These Regulations shall be effective as of the date of promulgation. The Interim Regulations on Administration of Travel Agencies promulgated by the State Council on May 11, 1985 shall be repealed simultaneously.