BEIJING - Most funeral homes in China are operating at a loss, despite annual income of more than 200 billion yuan ($30.5 billion), because illegal funeral agencies have expanded, an official said on Saturday.

Zhu Yong, deputy director of China National Committee on Aging and chief editor of the annual Report on Funerals, said a cremation and funeral can cost a substantial sum, partly because illegal funeral agencies charge high prices to the surviving families, who know little about such services.

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Zhu charged that these agencies also collaborate with mortuaries to ensure more bodies are sent to them.

Zhu made the remarks on the sidelines of a book release, which was held by the Ministry of Civil Affairs three days ahead of the traditional Tomb-Sweeping Day, when more than 400 million people will visit the tombs of their deceased relatives and pay their respects.

The Report on Funerals of China (2011) said 9 million people die in China each year and for each it costs on average about 22,000 yuan for funeral, cremation, burial of the ashes and the burial plot.

A large part of the funeral expense goes to illegal agencies, not public funeral homes, Zhu said. "An all-inclusive cremation service through a public service provider costs only about 1,200 yuan.

"The price of some basic services, such as transporting the body, preservation and cremation in a public funeral home, are fixed by the Ministry of Civil Affairs.

"However," Zhu said, "due to the public's unfamiliarity with the industry, some privately owned service providers take advantage and ask for a high price."

In a recent case, the civil affairs authority in Nanning, capital of South China's Guangxi Zhuang autonomous region, ruled that a private funeral service provider was involved in an illegal business operation following customer complaints about excessive prices, information portal guangxinews.com.cn reported on Friday.

A customer named Gan said the company had charged him 4,800 yuan for an all-inclusive service, compared with the 1,200 yuan charged by a public funeral home.

Private companies are not authorized to solicit business in mortuaries or to take bodies to funeral homes, according to the Regulation on Funeral and Interment Control issued by the State Council in 1997, local civil affairs authority said.

Chen Weicheng, general manager of the Nanning-based private service provider, argued that his business is under attack only because it "breaks the monopoly".

Zhu said that ensuring a certain number of State-owned funeral homes was necessary for healthy development of the industry, and the government should establish a special administration to better manage the market.

A primary reason, he said, is that there is no alternative for such a service. "It has to be open to both the rich and the poor."