China is rising rapidly as a new major source of outbound tourists in the world. The market potential is enormous. For New Zealand, the visitor numbers will jump to almost 160,000 within the following five years, making China one of New Zealand’s biggest markets. Chinese outbound travel agencies play dominate role in operating and organizing international travel in China as outbound travel is highly controlled by the government and outbound agencies are the only group who are authorized to do international travel businesses. Therefore, it is imperative for the New Zealand tourism industry to understand the nature of the Chinese outbound travel agencies and the distribution system as it helps successfully market New Zealand in the Chinese market. This thesis explores the structure of distribution channels linking China and New Zealand and examines the performance of Chinese outbound travel agencies in conducting outbound travel to New Zealand in the Chinese market. The research studies the inter-dependent relationships and partnerships between outbound travel agencies and various channel members. It identifies the functions of channel members from each level in the distribution system and provides behavioural explanations for their distribution decisions. It also discusses the characteristics of the Chinese outbound market and Chinese travel preferences indirectly from tourism suppliers’ perspetive aiming at providing a better understanding of the behavioural characteristics of Chinese outbound travel agencies and why the industry functions the way it does in the Chinese market. The research used qualitative research method in order to obtain an in-depth understanding into a wide range of issues in relation to the topic. In-depth semi-structured interviews were conducted to study the functions and performance of the outbound travel agencies as well as other channel members at every level both at the market and the destination. By examining the entire distribution system across national boundaries, this thesis seeks to expose multiplicities involved in the Chinese outbound travel and provide a systematic and comprehensive study. The research findings show that Chinese outbound travel agencies are the most influential member in the entire distribution system. They act as a bridge linking the Chinese market and the destination. They work with Chinese travel retailers by introducing a variety of international tour products and providing up-to-date information. They are highly dependent on inbound travel agents at the destination in terms of obtaining information and providing ground services. Limited number of outbound travel agencies makes them well positioned along the distribution system and gives them the advantage over other channel members. However, the Chinese outbound travel industry is immature and very price oriented. Due to the lack of destination information, price is considered as the most critical factor to make purchasing decision for both travel industry and the market. This feature was taken advantage by some overseas tour operators since they have been involved in selling below cost tour packages and low value trips. Many countries were facing this problem from the Chinese market. Moreover, New Zealand inbound tour operators were more satisfied with large travel agencies in China since they have reasonably good destination knowledge and better understanding of conducting business while the rest of the market was considered lack of sufficient information about the New Zealand products. Education and training programme are required in the Chinese market in order to improve the image of the destination and increase market share.