Few will argue the Middle Kingdom is the corporate travel market of the future. And all will agree it poses massive challenges at every corner. JOYCE WONG reports.

China’s corporate travel market is for those who love challenges. Various speakers at the recent inaugural Asia Business Travel Market in Shanghai made that clear. Corporate travel spending in China is expected to reach US$5 billion. Sixty per cent of Fortune 500 companies have set up offices in Shanghai and soon all of them will, as Credit Suisse First Boston director internal client services group, Mr Mike Molloy, points out. But, “it will still take time for travel processes to come up to standard,” he said.

That comes as no surprise as corporate travel is still relatively new to Asia, let alone a newly deregulated China market.

American Express Corporate Services Japan/Asia/Pacific/Australia head of strategic relationships, global business partnerships, Mr Bradley Prentice, said: “I do not think the Chinese companies focus on T&E expenses because they are loosely managed in the first place. While it is not a priority for them, they still try to get the best rates from their suppliers.

“So while the programmes remain unmanaged, the focus is on cost rather than the value provided.”

Abacus vice-president north Asia, Mr Patrick Lai, believes T&E management in China will have to be enforced because T&E expenses are increasing. He said: “The cost of doing business is rapidly going up in China, while Hong Kong and Singapore have seen prices going down, and China will need to become more competitive.

“The big advantage for China is it can learn from the experience of Hong Kong and Singapore and does not need to start from scratch; the development of T&E management will go much faster.”

A big challenge for his company is the lack of technology.

“The importance of guanxi (relationships) in China leads travel agents to believe they do not want or need automation. So they do not install the technology required to make bookings and capture data.”

“The challenge for the MNCs here is to link the systems together from offices all over China and develop back offices systems that can work together. This is essential for data to be retrieved. It is being done slowly, but it has to be completed for travel management to succeed.”

GDS (global distribution system) restrictions are another problem.

“At the moment, travel agents using an international GDS cannot use the BSP (Billing and Settlement Plan) to issue a ticket for airlines but there are no such restrictions for hotel bookings. So what we see in China is a large number of agents using the system for hotel bookings rather than airline or car, which is the reverse in the rest of the world.

“The other problem we face is that we do not know which corporate agency has which client and therefore which corporate rate has been negotiated. So I would urge all TMCs to tell their GDS about the corporate rates they have so we can upload them for the agent to see,” Mr Lai said. Alliente senior global travel manager, Mr Sim Beng Khoon, highlights some of the challenges he faces in managing T&E in China. Capturing accurate data about his travellers is one.

“We have 80 per cent domestic travel and 20 per cent international, and most travellers stay at low budget hotels and local chains which are not attached to a GDS mainly because of the cost. So we have to live without booking through a GDS which makes it difficult to capture data. “Half of the bookings are still done by the travellers directly calling the hotels, which we cannot track. This is compounded by the lack of a useable card payment system.”

Finding a good TMC is another problem. “We have not been able to find a travel agency which offers pan-China coverage while the development of TMCs is still at the growth stage.

“Companies are also unable to provide a usable set of data across all locations and this is a struggle for us when we go to the suppliers. “There is also a problem with rate accuracy with the hotels. Sometimes the traveller goes to the hotel with a corporate deal only to find out that the reservation and the sales department have the authority to set rates and override each other.

“Hotels also still prefer to deal with reservations through fax rather than e-mail because the whole department shares one e-mail address or even one PC and we get an answer days later to confirm reservations.” Swissôtel Beijing director of sales and marketing, Mr Gino Tan, said the first step for MNCs in China was to identify for the suppliers, who the T&E decisionmaker was.

He said: “A particular problem in China is the companies ask for two rates – one for domestic travellers with a lower per diem, and one for international travellers.

But what do we classify as international and domestic? If an expat travels domestically while here from overseas, then what rate do we charge?”

Those who expect to make big bucks quickly with the China corporate travel market can forget it. Those who are patient, however, stand to reap rewards in the future.