Travel opportunities abound for China-based companies despite ongoing global uncertainty
FYI, this story is more than a year old
More than half (55%) of China-based companies believe the country's Belt and Road initiative is creating opportunities for business travel, according to the CITS American Express Global Business Travel's 2019 China Business Travel Barometer .
In addition, a significant number of these companies say they are pursuing business opportunities in Southeast Asia to offset any negative effects caused by prevailing economic uncertainty, such as US-China trade frictions (44%).
Almost a quarter of survey respondents said they expect travel budgets to increase in 2020, while 71% anticipate operating with the same level of investment, suggesting China-based companies remain relatively optimistic about the business travel environment.
"Global economies look comparatively different today than a decade ago. This year's Barometer tells us that China-based companies are showing great adaptability as they continue to expand their international operations,” explains Kevin Tan, vice president and general manager of CITS American Express Global Business Travel.
Tan says a focus on expanding international operations is generating increased demand for business travel, particularly to Southeast Asia.
"As trading priorities change, 60% of respondents said the pursuit of new geographical opportunities is a top priority for 2020.
"The Belt and Road initiative is creating a global mindset in tier one and two cities across industries including manufacturing, professional services and the retail sector," he says.
“Respondents in tier one (38%) and tier two (40%) cities predict a significantly higher impact from the initiative as they look to increase their international travel, compared with only 13% in tier three cities.
“Managing travel costs and policy compliance remain top of mind for companies, with 68% of respondents considering increased attention on costs and 55% increasing investment in compliance,” says Tan.
"Surprisingly, respondents anticipate increasing employee satisfaction (60%) and environmental sustainability (58%) to be equally pressing issues for their organisations. This shows a major shift in thinking as you would expect these areas to receive less investment and focus, especially when faced with a globally tougher environment,” he says.
Smarter travel management, reducing inefficiencies
According to the Barometer, more companies are thinking about consolidating bookings under one travel management company (TMC). Respondents say this shift is driven by a desire for simplification and consolidation (65%), cost optimisation (63%), heightened transparency and improved compliance (58%).
Currently, only a quarter of companies surveyed use a single agency to manage all business travel, with 70% of companies using between two to four TMCs.
"Traditionally Chinese companies have opted for multiple TMCs as a way to diversify risk," says Tan.
"However, by choosing one provider, companies can standardise processes, increase travel programme compliance and significantly cut the additional costs associated with using multiple providers."
The Barometer revealed many large companies are pursuing this strategy, with 47% reporting major cost savings when using one TMC. In addition, large companies found that using a single TMC was 2.5 times more effective in achieving cost savings of more than 20%, versus those using multiple agencies.
Compliance in Travel Programmes
In an increasingly regulated environment, compliance remains an ongoing focus. Less than half of companies (47%) surveyed report a travel policy compliance rate of more than 75%, which has decreased since 2017.
"Compliance is a key priority area for travel management programmes as we have seen an increased focus on this from regulators," Tan says.
”TMCs are well placed to help businesses implement smarter travel policies and technology to optimize travel programmes and compliance levels."
In support of growing business travel activity, the scale of the meetings and events sector continues to rise across corporate China, where 23% of companies saw meetings, incentives, conferences and exhibitions (MICE) budgets increase in the last year.
A large portion of companies surveyed in the Barometer say the development of business and trade within Asia Pacific (50%) and within China (36%) were key contributors to growth in meetings and events activity.