China's policies on foreign‐invested travel agencies upon its entry to the WTO

Abstract

PurposeBased on the commitments made when it joined the World Trade Organization (WTO) in 2001, China began to allow the establishment of foreign‐invested travel agencies. During this transition period, China promulgated travel service‐related policies and paid a great deal of attention to this specific business market. This paper aims to analyze the said tourism policies and provide suggestions to foreign investors for their future business activities in this promising market.Design/methodology/approachThe study uses both primary and secondary data to specify China's policies on foreign‐invested travel agencies upon its accession to the WTO and discuss foreign investors' entry modes and operating strategies for joining the market. Hall's model is employed to examine the policy‐making process, including policy demands, policy decisions, policy outputs, and policy impacts.FindingsSome foreign investment‐related tourism policies were implemented ahead of the schedule to which China committed upon its entry to the WTO. The tight nature of the policies implemented meant that only 25 foreign‐invested agencies had survived in China by August 2007. Industry professionals recruited for this study commented that the nature and pattern of FDI in this market has been successfully framed by the policies adopted.Practical implicationsThe entry modes that foreign investors in China's travel service market should adopt and the detailed operating strategies they should use are discussed.Originality/valueThe paper can be seen as a successful and enlightening attempt to pave the way for future researchers to engage in further discussions about FDI in tourism in a political environment, particularly in developing countries.