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Jalpak International Co, a travel agency affiliated with the Japan Airlines Group, has been approved as the first solely foreign-funded travel agency in China.

The company will have 5 million yuan (US$600,000) in registered capital and will focus on bringing Japanese tour groups to China, a company spokesman said.

Jalpak brought 25,000 tourists to China last year through its Beijing office and hopes to raise that number to 40,000 a year.

The new firm will open for business by the end of the year.

Approval came a week after a temporary rule issued by the National Tourism Administration and the Ministry of Commerce came into effect on July 12, lifting the ban on setting up foreign share-controlling or wholly-owned tourism agencies in China.

The opening-up of the industry comes is part of China's WTO accession commitment, which specifies the country should allow establishment of wholly foreign-owned tourism agencies before the end of 2005.

Foreign operators will be able to open outlets in five major cities Beijing, Shanghai, Guangzhou, Shenzhen and Xi'an - and at government designated resort areas.

But these tourism agencies are not permitted to deal in overseas tours involving Chinese citizens or tours by Chinese mainland residents to the Hong Kong and Macao special administrative regions or Taiwan Province.

Seven foreign travel agents have filed applications with the relevant authorities.

Liu Deqian, a senior researcher with the Tourism Research Centre of the Chinese Academy of Social Sciences, said Sino-foreign joint travel agencies could help China's inbound tourism market, devastated by the SARS outbreak, rebound sooner than expected.

Due to the wider opening of China's tourism market, the inbound travel market will witness numerous mergers and acquisitions of small, unprofessional travel agencies scattered around the country, Liu said.

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