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China just approved a regulation allowing foreign investment in travel agencies, much earlier than World Trade Organization (WTO) commitment.

Less than one week after the issue of the regulation, Jalpak was allowed to set up a totally foreign funded travel agency.

"Foreign enterprises will promote the brands formation of China's travel agencies," said Wu Bihu, an expert with Beijing University.

Some people argued, the limitation in the new regulation such as not allowing to do business in outbound tourism market or setting up subsidiaries, prohibited further development of foreign funded travel agencies.

"To develop in a local environment is a disadvantage for foreign companies," said Zhang Shangzhi, chief representative of Accor Group.

Last year, American Rosenbluth and China Comfort established a joint venture. American Express and China International Travel Service also followed suit. They aimed at China's business travel market with the total cost of 4 billion US dollars annually.

Wu said, foreigners often started from business travel market, where they are more familiar and easy to gain profit. Chinese government also hoped that they can enter the comparatively weak area.

To learn from others is the most urgent thing for domestic travel agencies to do. The joining of foreign capital will bring more vitality to China's market, said Du.