China National Tourism Administration (CNTA) is taking action against “price slashing”, fixing yet another malpractice in the cutthroat Chinese tourism industry after taking swift action against the Qunar and Utour debacle involving 18 travel companies in April.
CNTA has tasked the Yunnan tourism authorities to investigate a case in which a female tour guide allegedly verbally abused and forced tourists into shopping trips, and vows to penalize the offenders.
CNTA dispatched investigators to Guangxi, Guangdong, Zhejiang, Shanxi and Hainan provinces during the May Day holiday to conduct local investigations focusing on price slashing and civilized behavior in the tourism market.
China’s Tourism Law forbids practices such as price slashing activities, touting and forced shopping trips to subsidize tour fees.
“Price slashing” not clearly defined
However, CNTA vice director Wenxue Wu admitted that there is still no authoritative consensus on the definition of “price slashing” under the Tourism Law. “As the tourism industry is rapidly growing, we can’t just wait until there is an official definition before taking actions. We have arrived at a preliminary definition of price slashing after consulting different legal and industry sources,” he said.
In general, any pricing that deviates from the general rule of pricing and is priced lower than the cost in order to lure customers with unrealistic pricing in promotions and result in disruption in market order would constitute “price slashing”. The “zero-fee” outbound tour packages are obvious examples of price slashing, Mr. Wu said.
Mr. Wu said that ultimately pricing irregularities must be regulated by industry players themselves, as the onus is on the businesses to follow market rules in their pricing system.
E-commerce business come under fire
CNTA has tasked provincial authorities to investigate companies that are frequently reported for violations and will set up a reporting system including a hotline to report offenders. “CNTA will not let any companies who want to stay in the market get away with price slashing,” Mr. Wu said.
CNTA has stepped up unannounced inspections to get a better grip of the market situation. In a recent high-profile case, CNTA made surprise inspections of 10 5A-rated national attractions and uncovered certain irregularities. CNTA made its presence felt by issuing warnings to the offending attractions accordingly.
Industry support needed for self regulation
China International Travel Service’s director Ningning Yu said: “Price slashing has already seriously hurt the healthy development of the tourism industry. So the first step for companies to take to correct this situation is to police themselves, starting with us.”
China Travel Service’s president Shigang Zhang thinks ensuring fair pricing is the bedrock of quality service and all companies in the industry have the responsibility and obligation to work together to maintain market standards.
CYTS’s vice president Jing Li concurred: “China’s tourism industry is only worried about getting customers and compete soley in prices instead of services.” He said industry professionals have to respect the value of service first in order to make consumers value service.
ETI Holidays’s president Yong He said: “The government, associations and companies themselves are all aware of the harmful effects on market order that price slashing brings. Healthy market competition spurs industry development and the industry must abide by regulations, standards and pricing rules.”
Jettour’s vice president Meng Yang thinks the industry work follow the lead of CNTA and come together to boycott unreasonably priced tours and maintain market order.
Tuniu’s CEO Donald Yu said: “Thanks to CNTA’s mediation, all the companies involved in the last dispute were able to address this issue. For its part, Tuniu gives its full support to CNTA’s efforts and strongly supports its action against disruptive price slashing. Tuniu will strictly adhere to the terms of its contract and actively work with CNTA to maintain market order.” (Translation by David)
