But while the move to regulate the market may be music to the ears of consumers, it has not been poorly received by some bed and breakfast operators.

"Our business has suddenly become illegal because of the introduction of licenses," said a woman who runs three home-stay properties in Pudong. "We don't dare advertise anymore."

It is difficult to obtain a business license because only registered companies can do so, she said, and becoming a registered company requires a certain amount of capital that many people lack.

The woman also lamented the costs needed to ensure that each minsu meets government regulations regarding safety standards.

"Having to meet all these standards drives up costs, thus reducing profitability. The development of the minsu industry needs standards, but there also needs to be some support from the government."