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Hong Kong travel agencies generally tend to stick to inbound or outbound tourism so that they can focus on doing what they do best -- either jetting tourists off to far, exotic places, or bringing in tourists to be dazzled by the wonders of Hong Kong. China Travel Service (Hong Kong) Ltd. (CTS HK) is among the exceptions, because not only has it secured a sizeable slice of both pies, but it also has set its sights on becoming the top travel agency for visitors travelling to and from the Mainland.

CTS HK first opened up for business in the territory in 1928 when Chinese banker Chen Guangpu founded the company in April that year as a branch of CTS, which he had established in Shanghai a few years earlier. Initially, CTS HK had two branches employing 10 staff.

The company managed to survive through the war years, over which time it laid the foundations for its future development, before becoming a state-owned enterprise in 1954.

In the 1980s, CTS HK capitalised on China's "opening-door policy," and in October 1985, China Travel Service (Holdings) H K Ltd. (CTS Holdings) was established, and became the parent company of CTS HK.

"Tourism is a 'sunrise' industry offering bright prospects and CTS Holdings is committed to providing one-stop services for clients and catering to all aspects of their needs," Che Shujian, chairman of CTS Holdings, said.

The company is now one of the largest travel service providers in Hong Kong, with 38 branches and offices here, in addition to 16 overseas branches in 13 countries, servicing 3 million people annually. It is the exclusive organisation officially authorised by the PRC government to issue the "Entry Permit for Hong Kong and Macau Residents" and the "Entry Permit for Taiwan Residents to the Mainland."

Its development has not been all plain sailing, however. Like most businesses in Hong Kong during the 1997 Asian financial crisis, CTS Holdings was badly hit as travel almost ground to a halt. This created cash flow problems, a high debt ratio and jeopardised its investments. At the same time, the company faced intensified competition in the Mainland as the 9,300 Chinese travel agents operating in the country underwent restructuring, takeovers and mergers. International travel service providers were also looking to take a slice of CTS Holdings' pie.

To stave off competition, Mr Che said CTS Holdings improved the efficiency of its operations. In the first half of last year the group underwent restructuring, which involved setting up a wholly-owned subsidiary in Beijing. It also took over a number of travel agencies to expand its footprint.

"We have worked out short- and long-term plans to further expand our business," Mr Che said, "and we aim to become truly international in three to five years' time."

China Travel International Investment Hong Kong Ltd, a listed subsidiary of CTS Holdings, has also signed an agreement to build a resort village in Zhuhai, covering 2.7 square meters. The project aims to complement three other popular travel spots in Shenzhen that it has developed over the last decade, namely, Window of the World, Splendid China and China Folk Culture Villages.

Over the mid to long-term, Mr Che said CTS Holdings' goal can be described as "going out of Hong Kong and China, and integrating into the world." To achieve this, the company has already started consolidating its internal resources and is looking for ways to improve its services to enhance its competitive edge.

But that doesn't mean the company will be moving away from its core competencies. Mr Che said that despite the turndown in the late 1990s, business is starting to rebound to pre-handover levels. As such, he is upbeat about the prospects for tourism in both Hong Kong and the Mainland.

"The travel sector in Hong Kong is ahead of other industries in shaking off the impact of the 1997 financial crisis. For example, in 2000, the number of inbound tourists rose 15.3 per cent," Mr Che said. "Even in the midst of the international economic slump, the industry continues to perform well. For the first six months of 2002, the number of people travelling to Hong Kong increased by 12.8 per cent over the same period last year."

Most of those additional visitors came from the Mainland following the government's decision to scrap the daily quota for Mainland travellers to Hong Kong.

Regardless of whether Hong Kong is a first destination, or merely a jumping-off point, Mr Che said he believes Hong Kong will benefit from the rapid rise in visitors from the Mainland. Statistics show that 3.8 million foreign travellers use Hong Kong as a doorway when travelling to or from China every year. With China now in the World Trade Organisation, these figures are expected to soar, especially for business travel, he said.

Moreover, according to the World Tourism Organisation, China will become the most popular tourist destination by 2020, with the country expected to receive more than 100 million tourists annually.

"Tourism in the Mainland is poised to enjoy the benefits of the ongoing economic reforms and WTO entry," Mr Che said.
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