The tourism industry is complaining over lost profits caused by the government’s misguided policies on regulating tourists from China, which overtook Japan as the country with the largest tourist presence in Taiwan last year.
The industry says its profit margins are being compressed because of Hong Kong investors monopolizing the sector, adding that despite the increased volume of Chinese tourists, the poor quality of tours and delayed payments by Chinese tourism firms have not given the sector the boost it needs.
Travel agencies say investors from Hong Kong are executing what is known in the tourism industry as “flush” monopolization and exerting control over tour agencies, hotels, restaurants, stores and tour bus agencies in Taiwan.
The stores in the “flush” exclusively sell products made in and imported from China. The stores are suspected of tax avoidance because thery often burn their receipts instead of filing them for taxation, the agencies said.
According to Lee Ming-huei (李銘輝) from the Taiwan Hospitality and Tourism College, Hong Kong tycoons own eight of the 10 travel agencies with the most Chinese customers in Taiwan.
The government should make an effort to promote local goods and increase the number of Chinese free independent travelers (FIT) instead of group tours because the profits made by Taiwanese operators under the current scenario are very small, travel agencies said.
However, Yang Yeong-sheng (楊永盛), the director of the Tourism Bureau’s Planning and Research Division, said Taiwanese should not blame Hong Kong businesspeople for monopolizing the market.
“Flush” tactics are common practice in the industry, and Taiwanese businesspeople have been known to employ the same tactics in Japan to cater to Taiwanese tourists, Yang said.
Others within the industry also complained that the “flush” was degrading the quality of tourism in Taiwan because tour groups focused excessively on shopping instead of visiting scenic spots.
Minister of Transportation and Communications Mao Chi-kuo (毛治國) said that although group tours had given the tourism sector sufficient capital to finance day-to-day operations, the problem lies with the industry’s inability to develop new tourist hotspots or upgrade infrastructure.
In an effort to address the issue, Mao said the bureau has met with industry figures and proposed implementing tour regulations such as prohibiting shopping mall visits that take up half of a tour’s entire time, or placing a one-hour time limit on shopping during tours.
Travel agencies said the bureau was overstepping its authority and should only concern itself with devising policy to improve the quality of tourism in Taiwan, and leave tour decisions to the agencies. The agencies added that cutting out shopping from tours, or devoting less time to it would drastically raise tour group costs, which could hurt demand from Chinese tourists.
The government should instead continue to expand the list of cities in China from which Taiwan accepts applications for FIT to visit Taiwan, agencies said.
On the issue of how the Chinese agencies often defer payment by two or three months, the agencies said that even though this was the case, they had to keep accepting Chinese tour groups to drum up business.
The government refuses to approve applications for Chinese tour groups if travel agencies report that they have not received full payment from their Chinese counterparts, so agencies often falsify their reports to bring in business, even though they complain about the low profits generated by operating such tour groups.
Travel Agent Association chairman Yao Ta-kuang (姚大光) criticized the agencies for complaining to the government, saying last year that this was a commercial matter and the agencies should pressure their Chinese counterparts to pay.
Yao compared the agencies’ complaining to running a marathon with a broken leg and saying their legs hurt, Yao said.
In response, Yang said the government was aware of the situation and planned to talk with Beijing about operating Chinese tour groups on a “pay first, travel later” basis on March 28. Yang said that both sides could choose a third party — either a bank or insurance company — that would hold the funds until the tour was completed, and then the money could be withdrawn.
Meanwhile, academics and agencies said that Chinese FITs were the best solution for improving the quality of tours because these sorts of travelers would not be bound by rigid group tour schedules and also are able to see the “real” Taiwan.
Delayed payment would not be an issue with individual travelers because they pay in cash and up front, agencies said, adding that increasing the number of such tourists would boost both the industry and the economy.