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CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF A REPORT SUBMITTED BY THE NATIONAL TOURISM ADMINISTRATION CONCERNING THE FURTHER CHECKING-UP AND RECTIFICATION OF TOURIST AGENCIES

    The report, "Suggestions Concerning Further Checking-up and Rectification
of Tourist Agencies", submitted by the National Tourism Administration, has
been approved by the State Council; and now the report is hereby transmitted
to you for implementation.
SUGGESTIONS CONCERNING FURTHER CHECKING-UP AND RECTIFICATION OF TOURIST
AGENCIES

    In order to promote the sound development of tourist industry in our
country, and in accordance with the decision of the Central Committee of the
Communist Party of China and the State Council concerning the checking-up and
rectification of companies, our suggestions are hereby advanced on the further
checking-up and rectification of tourist agencies (including tourist companies
and other similar organizations; the same below):

    1. Various localities and departments shall carry out conscientiously the
checking-up and rectification on the tourist agencies that are under their
jurisdiction. The emphasis of the checking-up and rectification shall be
placed on the tourist agencies of Categories 1 and 2 that handle international
tourist business operations, and also on those tourist agencies that are
engaged, without permission, in soliciting tourists from abroad. Those tourist
agencies that do not possess the prerequisites as prescribed for tourist
business operations shall be abolished or merged, and the problems concerning
multilateral connections with overseas business parties, the reduction of
tourist prices for competition, and poor-quality tourist services shall be
earnestly dealt with.

    2. A tourist agency that comes under one of the following circumstances
shall be abolished or merged with other tourist agencies:

    (1) Tourist agencies which are in operation, but do not possess the
prerequisites of a certain category as prescribed in "Interim Regulations on
the Administration of Tourist Agencies" and "Rules for the lmplementation of
the Interim Regulations on the Administration of Tourist Agencies" in terms of
the actual registered capital, employed personnel, site for business
operations, and organizational setups.

    (2) Tourist agencies of Category 1 which, from the date "Rules for the
Implementation of the Interim Regulations on the Administration of Tourist
Agencies" are promulgated for implementation to the end of March, 1990, have
not reached the prescribed annual accumulative total of tourists received and
the amount of foreign exchange earned.

    (3) Tourist agencies which have been engaged in such serious illegal
business activities as reducing tourist prices for competition, evading
foreign exchange regulations and practising arbitrage, procuring foreign
exchange by illegal means, and reselling foreign exchange for a profit.

    (4) Tourist agencies with inefficient business operations, poor
management, unsound internal rules and regulations, and insufficient earnings
for repaying debts.

    (5) Tourist agencies whose services are so poor that they have incurred
frequent complaints from tourists; whose tourist guides and other employed
personnel have been presumptuous in seeking and accepting tips and commission,
or whose ill conduct has frequently brought damage to the reputation of our
country and has thus created very bad influence.

    (6) Tourist agencies which are unable to recover the travelling expenses
owed for a long period of time by foreign tourist agents, and have, since
1988, new debts added to old ones, thus suffering heavy economic losses.

    (7) The branch offices of a tourist agency, the head office of which has
been abolished or merged.

    (8) Tourist agencies set up and run by hotels (or guest houses).

    (9) Tourist agencies (including their business offices) that have been
established in foreign countries or in the regions of Hong Kong and Macao by
various localities or departments without the approval of the National Tourism
Administration.

    With respect to those tourist agencies which are to be abolished according
to the pertinent decisions, the competent authorities over them shall, in
accordance with the pertinent provisions, set up a liquidation organization to
check up and settle the creditors' financial claims and to liquidate
liabilities, and to attend to the winding-up business.

    3. The task of the checking-up and rectification of the existing tourist
agencies shall be completed by the end of the third quarter of this year.
Various localities and departments shall have to submit their plans for the
abolition, merging, or retention of tourist agencies to the National Tourism
Administration for examination and approval, and also to the National Leading
Group of Checking-up and Rectifying Companies for the record. Those tourist
agencies that have been retained shall, by presenting the document of approval
issued by the National Tourism Administration, apply anew for their
re-establishment, and go through the registration procedures in accordance
with the law. In order to prevent the setting up of an excessive number of
tourist agencies of Categories 1 and 2, within 2 years beginning from 1990, no
applications for the establishment of new tourist agencies of Categories 1 and
2 shall be examined and approved. With respect to those tourist agencies the
applications for the establishment of which have already been approved by the
National Tourism Administration or by the tourism bureaus of the provinces,
autonomous regions, or municipalities directly under the Central Government
but which have not yet gone through the registration procedures with the
administrative departments for industry and commerce, the original document of
approval shall be declared invalid.

    4. In the course of the checking-up and rectification of tourist agencies,
it shall be imperative to implement the policy of deepening the reforms, and
further streamline the administration of tourist agencies. Tourist agencies
shall separate themselves in such respects as working personnel, financial
matters, and assets and materials from Party and government organs,
institutions, and public organizations, and establish themselves as economic
entities, which shall have independent business accounting, assume sole
responsibility for their profits and losses, and conduct their business
operations according to law. The business operations of tourist agencies shall
be placed under the administration of the administrative department for
tourism.

    5. The checking-up and rectification of tourist agencies shall be carried
out in close link with the establishment and improvement of the relevant rules
and regulations and administrative systems, so as to further strengthen the
administration of tourist agencies.

    (1) In order to protect the State interests and to check the competition
between various tourist agencies by reduction of tourist prices, all tourist
agencies must strictly implement the unified stipulation on price standard,
rules for the calculation of prices, and the measures for preferential
treatment, as formulated by the National Tourism Administration and the State
Administration for Commodity Prices.

    (2) In 1990, the State auditing organs shall carry out trade auditing on
the financial revenue and expenditure situation and the business activities of
tourist agencies of Categories 1 and 2. The National Tourism Administration
and the tourism bureaus of various provinces, autonomous regions, and
municipalities directly under the Central Government shall, working in
coordination with the commodity prices authorities at the same level, carry
out regular inspections of the situation concerning the business operations
and the prices for overseas sales relating to tourist agencies of Categories
1 and 2.

    (3) In accordance with the provisions of Interim Measures for the Control
of Foreign Exchange from Tourism, promulgated by the State Administration for
Control of Foreign Exchange and the National Tourism Administration, the
foreign exchange earnings, collected by those units and enterprises which,
without the approval of the competent authorities for tourism, presumptuously
conduct international tourist business operations, shall all be converted, and
no retention of foreign exchange shall be allowed.

    (4) The competent authorities for tourism that are vested with the right
to issue notice of visa must, strictly in accordance with the pertinent
provisions of the Ministry of Foreign Affairs and the National Tourism
Administration, check and issue notices of visa; they shall not be permitted
to issue notices of visa on behalf of other units or of those tourist agencies
which do not have the right to solicit tourists from abroad. Those who have
violated the aforesaid provisions shall have their right to issue visa notice
revoked.