[Photo provided to China Daily]

Industry insiders said all cheap tours operate on a similar "negative-fee" model, in which tourists sign up for trips priced at far below cost.

Some tours are even offered gratis.

The burden of recovering the expense falls primarily on assigned tour guides, most of whom are unpaid and have to pay the agency for the "privilege" of leading a group.

In turn, the guides depend on commissions offered by stores designated on the tour itinerary to recover their advance payment and earn a living.

Many stores raise their prices to take advantage of tourists.

Wong Ka-ngai, a frontline tour guide who is chairman of the Hong Kong Tour Guides General Union, estimated that more than 90 percent of inbound mainland tours operate via this model.

In recent years, some mainland tour organizers have reportedly used their own guides, often disguised as tourists, to cajole fellow travelers to purchase items.

Local guides are also hired in accordance with local regulations, but as they don't force people to shop they are not entitled to any of the lucrative commissions.

Industry insiders said Hong Kong has strict rules to regulate negative-fee tour groups, but fierce competition forces travel providers to cooperate with organizers on the mainland.

Ricky Tse Kam-ting, chairman of the Hong Kong Inbound Tour Operators Association, explained: "The cost structure of negative-fee groups is determined by mainland organizers, and Hong Kong operators have to comply to survive the competition".

Joseph Tung Yiu-chung, executive director of the Hong Kong Travel Industry Council, said it's difficult for an industry-controlled body to tell the industry how to conduct itself.

"We've been telling them (operators) not to receive tours at such low fees, but they reply that they need the business to stay in operation," he said.