This is the shocking moment a crazed Thai tour guide attacked Chinese tourists with a knife after allegedly cheating them out of a dream trip to tropical islands.

The incident unfolded after Fang Liqiao, 36, and his family booked a tour deal with travel agency Blue Ocean Travel for a one-day trip to the idyllic Similan Islands in Thailand's Phang Nga province on January 29.

They set their holiday excursion for January 31 and paid a 5,000 baht (150 USD) deposit for the package, which included a pick-up service from their hotel.

However, come the scheduled day the assigned tour operator never showed up.

The holidaymakers tried to contact the tour company but the staff claimed they had 'gone to the wrong hotel'.

The tourists called the police for help. They were refunded 3,400 baht (101 USD) but feeling they had been scammed and wanting the entire deposit back, confronted tour operator Wiree Sawengwit, 44, directly at her office.

Footage shows how Wiree went berserk, kicking at the holidaymaker before whipping out a small knife and slashing him on the arm.

Cops arrested her after the attack and mediated negotiations until the furious tourists received all of their money back.

Police Colonel Kundech Na Nongkhai, Karon Police Station superintendent, said: 'The suspect has been charged with bodily harm resulting in injury. Her travel company has a valid certificate to operate.'

The Thai Tourism Department has slapped the agency with a six-month suspension 'for damaging Thai culture and tourism'.

Wiree claimed that Fang had changed the arranged meeting spot, causing the mix-up. Meanwhile, Fang and his family returned to China on February 2.

Tourist police and local tourism organisations said they will discuss the matter further with the Chinese Consulate.

Thailand has developed a notorious reputation for ripping off tourists with taxis, tuk-tuks, tours, trips and overpriced MSG-laden gunge branded romantically as 'street food'.

Government attractions even push state-sponsored dual pricing - with foreigners charged extortionate fees in comparison with Thai nationals.

While last month, Taiwanese actress Charlene An experienced the country's endemic corruption when police extorted bribes from her and her friends for 27,000 Baht (810 USD) for carrying vape pens.

After returning to Taiwan, Charlene revealed the incident, sparking outrage and highlighting how police extort tourists for bribes. Police chiefs initially denied extorting the tourist but later admitted they had forced bribes from the group after threatening them with two nights in the cells.