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The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Friday, March 22, 2013

Ctrip starts selling train tickets, part 2: status update

My last post on CTRP talks about that CTRP starts to sell train tickets. See the following:

It was pretty clear that it is directly related to China dismantled its biggest monopoly, as well as its biggest fiefdom, the Ministry of Railroad. See the following:

It had been 11 days since CTRP started train service. This is just a quick status update.

First, on 3/16/2013, or, only 5 days after it started to sell train tickets, Ctrip stopped the train ticketing service again. See the following:

Most Chinese thought that CTRP was being stopped by the old monopoly, the old Ministry of Railroad. But a few days later, Ctrip restart the train ticketing service:

Therefore, it was probably just technical related issues that cause it temporarily stopped the service. But now the service is back on. Note that all tickets requires 20 RMB insurance. It is possible that is how CTRP makes money on the tickets. It might split the insurance with the insurance company.

Since anybody can buy the tickets from the Ministry of Railroad (or whatever name the new company is going to be) directly, a customer will have to pay 20 RMB extra to get it from CTRP. Thus, it is not expected to add much revenue to CTRP in the short term.

But it still could be significant in the future.

Ministry of Railroad is going to be breaking up into two identities, a regulatory entity that is part of Ministry of Transportation and an operating entity, a Chinese railroad monopoly.

But it is possible that the regulatory entity will start to break up the ticket selling function of the monopoly. If it becomes the case, CTRP can really benefit. Especially it is starting to gain experience in working with China railroad company.

This case is a perfect demonstration of that China is anything but a law-based society. In this society, most often the one who is willing to break the rule (and more importantly, one who is smart enough to know which rule to break) will probably come out ahead.

At this point, Chinese government is still trying to break up the old bureaucracy. It is definitely not worry about something so small like ticket selling functions. I am pretty sure CTRP is doing something not strictly legal. But it is also probably not illegal since the old entity no longer exists.

At this point, CTRP is the only company that is doing this. it will be interesting to see if others follow.

Anyway, I will have to keep on following this story. I don't think it will help CTRP much in the short term. But the potential bounty in the future could be tremendous.


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