Ｂｅｉｊｉｎｇ Ｔｏｕｒｉｓｍ Ｇｒｏｕｐ：Ｍａｋｉｎｇ Ｉｔ Ｂｉｇ Ｔｈｒｏｕｇｈ Ｌａｔｅｒａｌ Ｄｅｖｅｌｏｐｍｅｎｔ

ＳＵＮ　ＬＩ

TOURISM was the first industry opening to the outside world, and also a field contested by all forces, including private, foreign and state-owned enterprises. In the showdown, Beijing Tourism Group (BTG) has sustained its lead by a big margin.

In 2008, despite the impacts of the Wenchuan Earthquake and the global financial crisis, BTG racked up revenues of RMB 22 billion, equal to 10 percent of that generated by Beijings entire tourism industry. This was an increase of RMB 1.6 billion, or 7.84 percent, over the previous year. According to 2008 statistics from the National Statistical Bureau, BTG ranked 188th among Chinas top 500 enterprises.

Regrouping:

A Platform for Striding Development

The Beijing Tourism Group Co., Ltd., founded in 1998, has restructured twice. In 1999, some Beijing-based tourism enterprises under the National Tourism Administration and other ministries and commissions were merged into what was then known as BTG. From a simple administration office, it soon developed into an enterprise with a modern corporate governance structure and scientific management mode.

In 2004, BTG merged with four other state-owned enterprises to form the new BTG, those new partners being Beijing New Yansha Group, Quanjude Group, Antique City Market Group and Donglai-shun Group.

“Merging and strategic regrouping have provided us chances to expand, and so weve grabbed the chances and taken the enterprise places we could never have reached through natural expansion,” remarked Duan Qiang, chairman of the BTG, recalling the two mergers. “Scale of operation makes a big difference,” he added.

BTGs total assets increased from RMB 8.326 billion in 1998 to RMB 26.975 billion in 2008, representing an annual increase of 11.23 percent; and over the same period its annual gross profits grew from RMB 100 million to RMB 1.257 billion, an average of 25.88 percent per annum.

Specialization of

Operations

In the aftermath of mergers, BTG formed six specialized sectors each with a clear market orientation and sharp competitive edge.

Retailing: BTG has reorganized its commercial resources by removing non-retail elements from the New Yansha Group and merging them into relevant groups. With the remainder, it formed four commercial operations – the deluxe metropolitan merchandise represented by Yansha Friendship Shopping City, the theme fashionable merchandise represented by Guiyou Mansion, the super-sized shopping center of Jinyuan Yansha Mall, and the chain of Yansha Outlets. The New Yansha Group has realized full specialization. Its total profits increased from RMB 170 million in 2004 to RMB 492 million in 2008, a growth of 189.4 percent.

Catering: BTG has transformed traditional time-honored brand names and forged a modern catering conglomerate based on Quanjude, famous for its roasted duck. BTG has given full support to the reform of Quanjudes share structures, and in the form of mergers and acquisitions, some excellent catering enterprises from the original BTG and New Yansha were merged into the Quanjude Group. In November 2007, Quanjude Group was listed on the stock market, raising RMB 388 million. By June 2009, the group had 83 member enterprises, and was adding branches abroad.

Donglaishun is another century-old restaurant in Beijing, famous for halal cuisine. BTG has meanwhile accelerated the development of the Donglaishun Group, with the goal of creating Chinas No. 1 halal chain catering. The number of Donglaishun outlets have grown significantly in Beijing, Wuhan, Ningxia, Hangzhou, Tianjin and Suzhou. The profits of the Quanjude and Donglai-shun groups make up 11 percent of BTGs total.

Auto Renting: Early in 2005, BTG reorganized its auto service providers by merging 1,300 motor vehicles of the Youlian Auto Renting Company under the original New Yansha Group into the Shou Qi Group. The reorganization has made BTG the largest auto renting service provider in Beijing.

Hoteliers: The hotel industry is organized over major and core cities. Beijing Hotel, Grand Hotel and Jianguo Hotel, the most famous in China, are all under BTG. Through BTG Jianguo Hotel Management Company, BTG manages 70 hotels in the country. BTGs own brand-name – Home Inns – has 547 outlets. Another brand, Xinyandu, has 25 hotels in its chain. At present, under BTG there are 676 hotels under different ownership, representing a total of 102,080 guestrooms. This line of business has realized a transformation from local state-owned enterprises to national comprehensive tourism companies, and it ranks in the forefront of Chinas tourist hotel industry with respect to its scale of assets and operation.

Travel Agencies: In 2008 the business line of travel agencies realized revenues of RMB 7 billion, 1.75 times the 2004 figure of RMB 4 billion. The rapid development of the Comfort International Travel Service and the BTG International Travel and Tours have secured critical milestones in the tourism industry for the group.

Destination Development: Travel destinations, scenic areas and spots have begun to assume great importance in the industry. BTG has allocated excellent assets to establish Beijing Capital Tourism Co., Ltd. (BCT), which went public on the Shanghai Stock Exchange in 2000, becoming BTGs first listed company. With BCT as the principal investor, BTG has expanded into the development of tourist destinations, investing in the construction of Hainan Nanshan Cultural Scenic Area, Ningxia Shahu Scenic Area and Changchun Film and Television City.

Core Values: Thinking, Acting and Achieving

“Assets integration is easier than personnel management,” remarked Duan Qiang, adding, “Only when the managers learn to better serve the staff can the staff better serve the customers.”

With their restructuring guided by a correct strategy, standardized systems and a unified corporate culture, BTGs efforts to promote harmony have been rewarded with smooth progress on assets regrouping and business integration.

The motto of “Thinking, Acting and Achieving” has been accepted and recognized by the senior management and rank-and-file alike. BTG fulfills its political, social and security responsibilities in an over-arching manner, and has undertaken important tasks such as hosting sessions of the National Congress of the Communist Party of China, National Peoples Congress, Chinese Peoples Political Consultative Conference, Fortune Forum, and Beijing Summit of the Forum on China-Africa Cooperation. In 2008, BTGs task to serve the Beijing Olympic Games, realizing the goal of “zero service complaints, zero work error, and zero accidents,” was satisfactorily accomplished.

The development and achievements of BTG in the past 11 years have proven that state-owned enterprises can keep ahead of the competition by focusing on scale operation and specialization through reform and reorganization, and mergers and acquisitions. They have broad prospects on all those fronts.