The industry association that is supposed to help hoteliers on the popular holiday island of Hainan is proving to be more of a burden, as the “voluntary” fees it charges are necessary if companies hope to stay in business, state news agency Xinhua reported Thursday.

Hotels and travel agencies in the tourist city of Sanya, in southern China’s Hainan province, complained to Xinhua that the local tourism association’s membership fees are bordering on extortion. The companies can’t refuse to pay them, either, if they want their hotels to receive a rating or their travel agencies be recognized as credible businesses.

“We all know that it’s just a certificate you can buy,” said Hong Ling, a hostel owner in Sanya, referring to his business’s three-star rating. “But now that some of our guests think that it’s important, we have to pay the price,” he told Sixth Tone. Hong’s business pays the local tourism association an annual membership fee of 8,000 yuan (nearly $1,200).

Membership for Sanya’s more than 1,750 hotels and inns starts at 1,000 yuan, which gets companies a “credible business” certificate, Hong said.

Sun Dan, deputy director of the Sanya Tourism Association’s administrative affairs office, denied that membership is necessary to receive such certificates. “Nonmembers can also apply to receive credible business titles,” she told Sixth Tone. However, according to business owners interviewed by Xinhua, nonmembers are effectively excluded from receiving ratings or similar certificates.

Industry associations are categorized as “non-for-profit social entities” that work to defend the common legal interests of the companies involved. In theory, they are independent, nongovernmental organizations — but in practice, they usually have ties to local or national government departments.

Hainan’s industry associations earlier this year came under scrutiny when the Haikou Interior Decoration Association was shut down for imposing illegal fees. For “training,” it had been charging the city’s interior designers and interior decoration project managers 2,000 and 1,800 yuan, respectively. “A small decoration company was then required to have one project manager and two designers with those certificates,” Zhuang Fan, an interior designer with Tiantai Design, a Haikou-based decoration company, told Sixth Tone on Thursday.

But as early as March 2015, the central government had canceled qualification permits for 67 professions, including “interior decoration project manager” and “interior designer.”

Such practices are not confined to Hainan. The Xinhua report mentioned a mining enterprise that was forced to pay 265,000 yuan between 2014 and 2016 to six industry associations, including national-level China Chemical Mining Association and China Mining Association. “They just charge membership fees without providing any services,” the company manager told Xinhua.

An anonymous insider was quoted by Xinhua as saying that although the associations for the mining industry say their membership is voluntary, a company’s production qualification and export quota may be affected if they don’t join and pay up. The associations have this power because there are always government departments backing them, the insider said.

Yu Jianxing, dean of the School of Public Affairs at Zhejiang University in eastern China, told Sixth Tone that the central government stepped up its monitoring of industry associations at the end of 2016. As a result, he expects fees to become increasingly standardized.

“It is essential that charges imposed by these associations be publicized and that pricing standards be clarified,” Yu said, adding that only with more transparency can these associations gain credibility.

Editor: Kevin Schoenmakers.

(Header image: A woman walks past a display featuring logos of Chinese business associations, Beijing, Dec. 9, 2004. Zhang Xiaoping/VCG)