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China Beijing Quanjude Group and Beijing New Yansha Group, two major tourism commercial service companies in the Chinese capital, merged at the weekend to become the Beijing Tourism Group.
The 1.17 billion yuan (US$140.9 million) equity belonging to Quanjude, famous for its roast duck, and New Yansha, which owns the Beijing Lufthansa Center, is now being managed by the tourism group. The tourism group and its two subsidiaries are all State-owned. Saturday's merger puts the new company's assets in excess of 15 billion yuan (US$1.8 billion), said Duan Qiang, chairman of the Beijing Tourism Group.
"The new company is now capable of earning up to 10 billion yuan (US$1.2 billion) in business income each year and more than 600 million yuan (US$72.3 million) in annual profits," he said.
But the original names of Quanjude and New Yansha will remain unchanged, Duan said.
Zhai Hongxiang, Beijing's executive vice-mayor, said the merger was an important move undertaken by the local government to deepen reform of the State-owned enterprises.
The merger will have a great impact on the future development, reform and reshuffling of the three companies, she said.
Beijing's tourism sector has developed rapidly during the past few years. Tourism revenue accounted for 6 per cent of the local gross domestic product in 2002.
"The tourism industry has become an important pillar industry fuelling local economic growth," Duan said.
Further development of the tourism industry called for large tourism companies, he said.
Increasing competition from foreign companies following China's accession to the World Trade Organization also forced domestic tourism groups to merge, Duan said.
"For us, the merger is just the first step," Duan said. "Business reshuffling will be more important."
The Beijing Tourism Group will focus on seven major business areas including hotels, dining and auto services. It will also attempt to gain domestic and foreign companies as its equity owners, Duan said.
"Our aim is to double our assets, business income and profits within five years," he said.
By 2008, the new company should be a leading tourism company in China, Duan said. It should also be known internationally.
According to Duan, the company does not yet have plans to get listed on stock exchanges.
But he said its subsidiary companies will attempt to become listed as soon as possible.
For example, Quanjude is busy preparing for a stock listing, he said.
Jiang Junxian, chairman of Quanjude and now a board member of the Beijing Tourism Group, said the merger helped create a good external environment for Quanjude's listing.
"We hope to complete the preparation work (for listing) as early as possible," he said, declining to give a specific timetable.
(China Daily April 19, 2004)
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