Chinese companies report increased business confidence

BTN News
Wednesday, 18 October 2017

The CITS American Express Global Business Travel 2017 China Business Travel Survey (The Barometer) has revealed that 31 per cent of Chinese companies expect travel budgets to rise over the next 12 months. 

The figure reflects increasing business confidence, as only 17 per cent of respondents predicted budget increases when asked the same question last year. Forty per cent of organisations have reported plans to expand budgets because of opportunities presented by the Belt and Road initiative. These results were released during the thirteenth annual China Business Travel Forum (CBTF) held in Shanghai.

Last year, China became the country with the largest business travel expenditure in the world, overtaking the United States.

Despite 75 per cent of China's business travel spend being domestic, its increasingly-outward-looking approach to global commerce is likely to create opportunities for international business travel in future.

China's Belt and Road Initiative is one example of a major investment project that could benefit Chinese organisations with an international travel program (43 per cent of companies), as well as those with a regional program (21 per cent of companies). 

"The results of this year's China Business Travel Barometer are hugely positive, and a strong indication of the opportunities Chinese organisations are recognising both domestically but also globally," said Kevin Tan, vice president of CITS American Express Global Business Travel. 

"While our research indicates an intent to increase business travel budgets over the next year, when we look deeper we find that the intention to increase spending also comes with some strategic reallocation of expenditure. This is particularly noticeable when considering the number of organisations that have reported plans to reduce spend on internal meetings." 

Financial returns from business travel are clear and measurable

This year's Barometer highlighted the importance of business travel as a key driver of revenue for many Chinese organisations, with 90 per cent reporting that increased client-facing travel would likely increase revenue. 

Better RoI tracking

Additionally, more than half of the respondents (53 per cent) believe an increase in client-related travel would improve overall revenue by 10-20 per cent. Developing new business relationships, and maintaining existing clients were listed as the top two reasons for business travel.

Beyond simply acknowledging the value of business travel to overall company bottom line, most Chinese organisations also reported having systems in place to measure the return on investment (RoI) of business travel. Forty one per cent of organisations currently track the level of business travel expenditure required to sign a new business deal. More than half of companies also claimed to measure business travel RoI by linking business travel spend to company revenue, reviewing T&E programs with C-level management, regularly aligning travel programs with business strategy and linking business travel spend to converting prospects or maintaining client relationships.

Interestingly, almost half of the respondents (46 per cent) in this year's Barometer say their company could save 10-20 per cent of their total travel budget from better budget management. Twenty per cent of larger companies also stated they are likely to replace close to half of all internal meetings with video or teleconferencing within the next year.

In addition to saving money from better budget management, many companies also identified indirect costs and opportunity costs as key areas of focus. For example, 40 per cent of companies reported requiring pre-trip approvals by manual paper or email, which can lead to inefficiencies compared with automated processes.

"The research tells us Chinese companies believe there are savings to be identified within their current travel budgets, and that many intend to put measures in place to realise some of these savings in the next year.
“When we consider the belief among many organisations that client-facing business travel drives revenue growth, it will be interesting to see whether companies look to strategically reallocate their business travel savings to other areas of the travel program," said Tan.

Savings strategies

Many Chinese organisations (58 per cent) have identified new technology and tools that can deliver cost savings in their travel budgets. Other cost saving strategies identified by Chinese companies included streamlining costs through enhanced negotiations with suppliers (60 per cent) and improved travel policy communication (59 per cent). Savings through enhanced negotiations with suppliers was considered a greater priority among smaller companies (70 per cent) than larger companies (43 per cent), indicating they could likely benefit from a travel management company negotiating on their behalf.

"Emerging technologies are enabling companies to reconsider their approaches to business travel. While tools such as videoconferencing have created new opportunities, this hasn't replaced the value of face-to-face meetings. Every business is different and companies need to ensure their travel program is tailored to a company's specific needs," said Tan.

Chinese companies report increased business confidence

BTN News
Wednesday, 18 October 2017

The CITS American Express Global Business Travel 2017 China Business Travel Survey (The Barometer) has revealed that 31 per cent of Chinese companies expect travel budgets to rise over the next 12 months. 

The figure reflects increasing business confidence, as only 17 per cent of respondents predicted budget increases when asked the same question last year. Forty per cent of organisations have reported plans to expand budgets because of opportunities presented by the Belt and Road initiative. These results were released during the thirteenth annual China Business Travel Forum (CBTF) held in Shanghai.

Last year, China became the country with the largest business travel expenditure in the world, overtaking the United States.

Despite 75 per cent of China's business travel spend being domestic, its increasingly-outward-looking approach to global commerce is likely to create opportunities for international business travel in future.

China's Belt and Road Initiative is one example of a major investment project that could benefit Chinese organisations with an international travel program (43 per cent of companies), as well as those with a regional program (21 per cent of companies). 

"The results of this year's China Business Travel Barometer are hugely positive, and a strong indication of the opportunities Chinese organisations are recognising both domestically but also globally," said Kevin Tan, vice president of CITS American Express Global Business Travel. 

"While our research indicates an intent to increase business travel budgets over the next year, when we look deeper we find that the intention to increase spending also comes with some strategic reallocation of expenditure. This is particularly noticeable when considering the number of organisations that have reported plans to reduce spend on internal meetings." 

Financial returns from business travel are clear and measurable

This year's Barometer highlighted the importance of business travel as a key driver of revenue for many Chinese organisations, with 90 per cent reporting that increased client-facing travel would likely increase revenue. 

Better RoI tracking

Additionally, more than half of the respondents (53 per cent) believe an increase in client-related travel would improve overall revenue by 10-20 per cent. Developing new business relationships, and maintaining existing clients were listed as the top two reasons for business travel.

Beyond simply acknowledging the value of business travel to overall company bottom line, most Chinese organisations also reported having systems in place to measure the return on investment (RoI) of business travel. Forty one per cent of organisations currently track the level of business travel expenditure required to sign a new business deal. More than half of companies also claimed to measure business travel RoI by linking business travel spend to company revenue, reviewing T&E programs with C-level management, regularly aligning travel programs with business strategy and linking business travel spend to converting prospects or maintaining client relationships.

Interestingly, almost half of the respondents (46 per cent) in this year's Barometer say their company could save 10-20 per cent of their total travel budget from better budget management. Twenty per cent of larger companies also stated they are likely to replace close to half of all internal meetings with video or teleconferencing within the next year.

In addition to saving money from better budget management, many companies also identified indirect costs and opportunity costs as key areas of focus. For example, 40 per cent of companies reported requiring pre-trip approvals by manual paper or email, which can lead to inefficiencies compared with automated processes.

"The research tells us Chinese companies believe there are savings to be identified within their current travel budgets, and that many intend to put measures in place to realise some of these savings in the next year.
“When we consider the belief among many organisations that client-facing business travel drives revenue growth, it will be interesting to see whether companies look to strategically reallocate their business travel savings to other areas of the travel program," said Tan.

Savings strategies

Many Chinese organisations (58 per cent) have identified new technology and tools that can deliver cost savings in their travel budgets. Other cost saving strategies identified by Chinese companies included streamlining costs through enhanced negotiations with suppliers (60 per cent) and improved travel policy communication (59 per cent). Savings through enhanced negotiations with suppliers was considered a greater priority among smaller companies (70 per cent) than larger companies (43 per cent), indicating they could likely benefit from a travel management company negotiating on their behalf.

"Emerging technologies are enabling companies to reconsider their approaches to business travel. While tools such as videoconferencing have created new opportunities, this hasn't replaced the value of face-to-face meetings. Every business is different and companies need to ensure their travel program is tailored to a company's specific needs," said Tan.