Rising business travel volumes are increasing costs for China-based companies. That is the main finding of a new survey by American Express – and travel costs are set to increase further in 2008. “I am betting that 75 per cent of companies in China will see their travel and entertainment expenditures (T+E) rise next year,” said Gregor Lochtie, Vice President and General Manager, CITS American Express Business Travel Greater China.
Lochtie was speaking in Shanghai at the launch of Amex’s 4th China
Business Travel Survey, which canvassed 230 Chinese, joint venture and
foreign-owned companies with 100 employees or more in Shanghai, Beijing
and Guangzhou. Forty six per cent of companies surveyed had increased
their T&E budget in the last 12 months, and the survey confirmed
that T&E remains the second-largest controllable cost for
China-based companies, after salaries.
“This year there were four clear trends in China,” Lochtie said. “The
growing maturity in the business travel market; a growing similarity
between the Chinese and U.S. business travel markets, with a majority
concentration of travel between domestic destinations; business travel
is increasingly centrally managed by a dedicated travel or procurement
professional; and the use of the internet for business travel is
stabilising.”
The majority of corporate travel budgets for all companies surveyed (69
per cent) is spent in mainland China, with 12 per cent in Hong Kong.
However, as Chinese companies raise more capital and increasingly
invest overseas – outbound direct investment from China totals USD27bn
so far this year, up from USD16.1bn in the full 2006 year – foreign
travel spend rose to 19 per cent, from 13 per cent in 2006.
Travel management in China is still a largely fragmented market,
Lochtie said, with most companies using at least two travel agencies in
order to secure the cheapest pricing on a deal-by-deal basis. And cash
remains king, with 81 per cent of T&E spend settled in cash.
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