Chinese credit crisis shakes local travel firms
View(s):Chinese travel agents owe Sri Lankan travel agents millions of rupees in credit advances for organising tour packages for Chinese visitors and the delayed payment has hit the industry in a sluggish economy, local tour operators said.
“A few small timers have closed operations while several medium and large scale operators are faced with delayed payments up to 180 days or non-payment up to large amounts of US dollars at present,” an official spokesman of the Sri Lanka Association of Inbound Tour Operators (SLAITO) told the Business Times.
Around 40 to 50 Sri Lankan travel companies are engaged in bringing down Chinese travellers at present, he revealed.
Many Chinese travel agents have defaulted in settling credit given by a number of travel companies in several instances.
One such local travel company has given credit amounting to US$ 2 million to a Chinese travel agent and is now in serious financial trouble, he said adding that the accumulated credit of some of these local tour operators under this set up would be more than $10 million easily.
“Working with Chinese agents has a credit risk at large. The ideal scenario is to recover the full payment in advance or 60-80 per cent prior to the tour,” he observed.
If credit is extended, it should be given after a thorough background check, he pointed out adding that generally majority of Chinese agents will request credit for 60-90 days.
However when credit is extended a very close tab on payments is needed on the business handled and future business as well, he suggested.
Each company will have to carry out their own back ground checks on Chinese agents and extend credit accordingly, SLAITO spokesman emphasised.
Most of the Sri Lankan companies have used different methods to recover debt payments by complaining to the Sri Lanka Embassy in Beijing and with the help of third party payment recovery units operating in China.
Some have been successful to a greater extent while others have not been that successful, he disclosed.
Over 268,000 Chinese tourists visited Sri Lanka last year with China emerging as the second largest market, Tourism Ministry data showed. In December 2017 alone, over 19,000 Chinese tourists arrived in Sri Lanka.
(BS)