The first Hong Kong capital-controlled travel agency in the mainland's southern Guangdong Province is expected to open before the end of June.

In what is expected to be a joint venture, Hong Kong Skal Travel Service Ltd will have a 70 percent share and the mainland-based Shenzhen China Travel Service will hold the remainder.

According to Guo Shiqiang, assistant to the Shenzhen China Travel Service's general manager, the firm has received verbal approval from the National Tourism Administration for the partnership and is awaiting final authorization from the Ministry of Commerce.

The announcement of the partnership, which has been touted as beneficial for both groups, comes after a year of negotiation.

"Skal Travel Service Ltd specializes in ticketing within the Hong Kong travel industry, which will greatly reduce our costs when managing business tour services at home or abroad," Guo told China Daily.

The Hong Kong partner will rely on its mainland counterpart to explore the domestic tourism network, building up its brands gradually to prepare for the possible opening up of outbound travel services to foreign backed travel agencies.

Foreign capital controlled tourism agencies have been permitted to operate in China since July. However, these agencies are not allowed to operate outbound travel services involving mainland citizens going to Hong Kong and Macao or Taiwan Province.

Guo said the highly profitable outbound travel services have been strongly desired by their Hong Kong competitors, who have long held the lead in terms of offering international travel packages.

(China Daily March 4, 2004)