(December 9, 1999) Redundant investment and cutthroat competition by cruise lines are ruining the tourist industry at the Three Gorges, China’s legendary scenic wonder, reported the December 8, 1999 Hua Sheng Bao (Hua Sheng Overseas Chinese Newspaper).

According to the Yangtze River Transportation Bureau, years of vicious competition have seriously damaged the reputation of this once hot tourist attraction. It is now almost deserted by tourists.

In the first ten months of 1999, fewer than 50,000 foreign tourists visited the Three Gorges. Cruise ships carried only 34% of their passenger capacity, about 30% below the break-even point. As a result, many cruise companies, already deep in debt, suffered yet more losses.

In November, all but two out of 60 cruise ships were stranded. Even the two lucky ones, rented by foreign companies, had to struggle to survive in the dearth of business.

As early as 1987, the Tourism Coordinating Group under the State Council forecasted the crisis. It found out that with a normal 15% annual tourist growth rate, the projected number of overseas tourists to the area would reach about 200,000 in the year 2000. Twenty cruise ships should have been more than adequate.

Unfortunately the forecast, widely publicized at the time, did not get the attention it deserved either from the tourist industry, or from cruise lines. Lured by high profit potentials, many went into a buying frenzy for luxury boats.

By 1994, there were 28 tourism companies and 60 luxury ships with a total passenger capacity of 8,000, capable of handling 600,000 tourists per year. However, the volume of overseas tourists increased more slowly than expected, with only 100,000 in 1994.

Consequently, companies were locked in a fight for customers. The Three Gorges Dam Project was used as a marketing scheme by companies organizing Farewell to the Three Gorges Cruises (much of the Three Gorges will be submerged once the dam is completed).

The number of foreign visitors dropped to 50,000 in 1998, far below annual passenger capacity. The 28 companies entered into a suicidal competition and have been operating in the red since 1994. Ten of them are now on the verge of bankruptcy.

Worse still, all the companies acquired their luxury boats through bank loans totaling over RMB 3 billion (US$363 mln), and they will have a hard time repaying the banks.

The tourist industry in the Three Gorges area shows no signs of recovering in the near future.

December 9, 1999