The Chinese are spending a massive amount on business travel. In 2015, the People’s Republic of China nabbed the No. 1 spot in total business travel spend, surpassing the United States as the largest business travel market in the world, according to a report by the Global Business Travel Association (GBTA). China earned that title again in 2016 and was on track to hit $344.6 billion (USD) in business travel spend in 2017, according to GBTA (and as cited by China Daily).
The country also is likely to surpass the U.S. as the world’s biggest air travel market by as early as 2022, two years quicker than a previous prediction, per a report by IATA.
And according to a recent survey conducted by CITS American Express Global Business Travel (GBT), the first Sino-U.S. joint venture in China to provide business travel management services, 90 percent of the Chinese organizations polled expect to see a rise in company revenue from increased travel this year.
So how is all this business travel being managed? It depends.
According to Kevin Tan, vice president of CITS American Express GBT, many of the state-owned enterprises in China are decentralized and have unmanaged programs.
Most of CITS American Express GBT’s clients in China, however, are American and European multinationals with mainly Chinese business travelers who have adapted to a Western travel management style with set policies and pre-trip approvals in place.
In operation since 2002, CITS American Express GBT has been working to educate Chinese companies about how a Western travel management approach can lead to additional cost-savings opportunities, help to fulfill duty of care obligations and provide greater insight into their program.
While Tan says it’s a concept that is starting to catch on in China’s tier-one cities (Beijing, Shanghai, Guangzhou), many Chinese companies still are trying to grasp what exactly a travel management company (TMC) is and how a more rigid system might be embraced by the Chinese, especially when travelers there have grown accustomed to advanced technological tools that aren’t quite as available in managed programs.
Take mobile payments. With the ubiquity of low-cost smartphones in China combined with the struggles credit card companies have had entering the marketplace there, according to reporting by the Wall Street Journal, the number of Chinese consumers who whip out their phones to pay for food, transportation and other goods has skyrocketed. Essentially, the Chinese have leapfrogged credit cards and have gone straight from cash to mobile payments that are linked to their bank accounts.
In 2016, $9 trillion of mobile payments were made through apps like Tencent’s WeChat and Alibaba’s Alipay in China, according to the same Wall Street Journal report. By way of comparison, the U.S. only saw $112 billion of mobile payments during that same timeframe, a Forrester Research estimate found.
According to Tan, several startup companies are working on mobile solutions specifically for business travel that will enable travelers to book and pay for air, hotel, train and ground transportation as well as handle exchanges and refunds — all done within one app in their smartphone.
“China is moving faster than the Western world is,” Tan says. “They’re already considering a mobile solution for business travel meals and daily applications for processing and reimbursement.”
Delivering our own tech solutions
CITS American Express GBT itself is developing a WeChat application with a mobile solution that can do it all — book air, hotel, ground transportation and dining as well as handle reimbursements. It’s what Chinese business travelers are demanding.
“When we talk to the Chinese prospect, they ask, ‘Well, can you do mobile this? Can you do mobile that?’” Tan says.
Interestingly, the American and European companies operating in China have a different reaction.
“I think they’re comfortable with the telephone, email, online tools and some of the basic mobility solutions we provide to them,” Tan says, noting they are more focused on cost-savings and service than technology.
Even if the American and European firms aren’t as invested in this cutting-edge technology, it is something they need to give serious thought to since it can have implications for their travel program.
For instance, how do foreign business travelers without a Chinese bank account manage getting around in this almost cashless society? Or for those travelers based in China who are using mobile payments, are there any concerns over all the personal and company information being collected? And if these companies do not work to adopt this technology, how might that impact traveler buy-in?
As Tan goes on to explain, mobile solutions are just phase one, then in the next five to 10 years artificial intelligence (AI) will be the next big disruption in the industry. Actually, CITS American Express GBT already is delivering such a solution. It partnered with an IT company to develop a chatbot specifically for business travelers called Xiaotong (which loosely translates as “Express Jr.”) — the first of its kind in China. Xiaotong is an AI platform-based travel robot that provides companies with convenient travel communication services and helps travelers to have a dynamic understanding of their corporate travel policy.
Adopting Western policies
As Tan explains, Chinese companies are very results driven and what they find appealing about a Western travel management approach is how much it positively can impact the company’s bottom line. According to the above-mentioned survey CITS American Express GBT conducted, 41 percent of the companies polled track how much business travel on a monthly basis is required to sign a deal. Many organizations also employ a number of cost-savings measures associated with a managed program, including negotiating deals with preferred suppliers and boosting policy compliance by enhancing communication efforts with travelers. The survey also revealed that Chinese businesses see the value of a managed program for traveler safety purposes.
One area that could be improved upon, however, is the pre-trip approval process. Tan explains that many state-owned companies aren’t comfortable with third parties storing their employees’ information in their networks, so they have an internal process instead of a streamlined system with a TMC.
According to our survey findings, 40 percent of firms still have a manual setup with paper or email — a surprising finding when you consider how mobile China is!