In conjunction with American Express' China Business Travel Forum in Shanghai, April 13-15, where BTN Asia-Pacific is official publication, this issue's cover story unearths the size and complexities of China's corporate travel. CAROLINE BOEY reports on the value and the inner workings of the market.

Everyone loves statistics; receiving them, analysing them, quoting them, because they help us put things into perspective, to make comparisons, to set targets. With its growing importance as a political and economic power, everyone is hungry for statistics about China.

While leisure travel statistics are quite readily available, many BTN Asia-Pacific spoke to pointed to a lack of reliable statistics about corporate travel in China. The World Tourism Organization (WTO), for example, has forecast China will receive 210 million visitors by 2020, become the number one tourism destination and the number four outbound source and earn US$300 billion in tourism receipts. These are figures that are often quoted. But no study on a similar scale has been conducted to look at China's fledgling, but rapidly growing corporate travel market. So putting together a picture of China's inbound, outbound and domestic corporate travel market will be an attempt to piece together a jigsaw puzzle with many missing pieces.

Among those which have tried to put China's corporate travel market under the microscope include ACTE (Association of Corporate Travel Executives), which has examined the concerns of travel managers, TMCs (travel management companies) and travel suppliers on the state of business travel management in China. Among the international chains, Starwood Hotels & Resorts is conducting a four-month study on China's domestic and outbound travel in Shanghai to determine "where it should be going" and to be sure it is on the right track.

Similarly American Express Business Travel, which is organising the China Business Travel Forum, from April 13-15 in Shanghai, has done a survey and will deliver the findings during the event.

China National Tourism Administration (CNTA) meanwhile has released a 2004 figure of 3,861,359 foreign visitors who came to China for meetings and business. This was an increase of 33 per cent and based on purpose of visit, the figure represents 23 per cent of all trips made by foreign visitors.

A CNTA source added Shanghai was the business travel hub in China, where almost 58 per cent of its arrivals were related to business.

Of the Chinese corporate traveller, travel suppliers in China described them as "savvy" and many were already making substantial bookings for leisure and corporate travel at leading online agents such as eLong.net and www.ctrip.com.

In sharing its findings on China's outbound corporate travel market, GDS Amadeus pins the dramatic increases in credit card ownership and in Internet usage, particularly among well-educated younger people, for the significant growth in e-commerce and strong growth in international business and leisure travel.

Fuelled by the striking growth of export manufacturing, the Chinese international travel market, according to Amadeus, was worth an estimated US$10 billion in 2004, and was expected to show double-digit growth annually over the next five years. Amadeus added China's international corporate travel expenditure had reached US$6.5 billion, while domestic corporate travel was more than US$30 billion.

"In 2005, the potential size of the corporate travel market (inbound, outbound and domestic) in China will reach US$50 billion. And right now the percentage of corporate travel managed by TMCs is no more than 10 per cent," the spokesman added.

According to the World Travel and Tourism Council (WTTC) China's T&E expenses are valued at US$10 billion, of which US$5 billion are business travel expenses. WTTC added the commercial hubs of Shanghai, Beijing, Guangzhou and Shenzhen remain the major sources for international business travel and other economic zones and manufacturing cities were becoming sizeable markets.

Business travel was also being undertaken to promote major events such as the 2008 Beijing Olympics and the 2010 Shanghai World Expo, WTTC said. According to another GDS, which asked not to be named, business travel volume was showing an upward trend despite a decrease in proportion and slower growth compared to private travel.

Among the contributing factors were China's GDP growth of between eight and 10 per cent and expanding economic activities, continued huge inflow of foreign direct investment (FDI), World Trade Organization commitments and continued liberalisation and a more developed legal and financial framework.

Hertz International director China, Ms Eleen Chua, based in Beijing, said published reports showed China received US$60.63 billion in FDI in 2004, an increase of 13.3 per cent compared with 2003.

FDI is expected to keep increasing in 2005. And even though growth is expected to slow down, a rise of up to 10 per cent is expected.

Among the 400 of the Fortune 500 companies which had entered China and based on 2004 revenues, the majority were in the automotive, IT, telecommunication and mobile communication, electronic and electricity industries.

Ms Chua said a report had claimed 5.87 million business trips were made in 2004, an increase of 8.55 per cent compared to 2003.

Amadeus added that state-owned companies contributed around 70 to 85 per cent of China's domestic corporate travel and the preference of the majority of state-owned companies was to use rail except where the trip was too long and time was limited. Its spokesman added: "MNCs contribute around 20 per cent of China's domestic corporate travel, mainly large and medium-sized IT companies, the automotive, heavy industry and pharmaceutical industries. These domestic trips are primarily to meet colleagues and clients as well as some incentive trips. The majority of trips are managed by the traveller himself or with the support of an assistant.

"Most MNCs have travel policies, although an 'under-the-table' approach to managing corporate travel also makes up a key component of the Chinese corporate travel market and travel suppliers are ready to offer 'negotiated' rates."

The other GDS source added the larger MNCs would have a travel department and travel manager working with a TMC, usually the same one used outside China as part of a worldwide agreement.

"However, given the diversity of domestic travel, I won't be surprised some travellers and their secretaries make some travel arrangements on their own".

"For the SMEs (small and medium enterprises), most are unmanaged and even if they have a so-called corporate travel agent handling their business, most of them only use the agency as a ticketing agent rather than to manage their travel".

"Your readers may be interested to note that 80 per cent of www.ctrip.com's hotels are actually booked by unmanaged business travellers and their secretaries from among the SMEs".

"TMCs are a relatively new concept in China but are becoming increasingly popular and more and more local agents are joining hands with the foreign TMCs - Amex and CITS, Carlson Wagonlit and CAS, Flight Centre and China Comfort, TUI and CTS, BTI and Jin Jiang, Synergy and Sunshine, etc".

"Most of the local agents start as a ticketing shop, and some also handle leisure travel. When the MNCs started moving into China and when local companies started to expand overseas they realised the potential and started forming a corporate department and signing JVs (joint ventures) with foreign TMCs which could deliver some ready MNC customers".

"Most of these players are located in the three major cities of Beijing, Shanghai and Guangzhou, and secondary cities such as Shenzhen, Tianjin, Qingdao, Suzhou, Wuxi, Dalian, Shenyang, Xian, Chengdu, Wuhan, Chongqing, Fuzhou, Xiamen, Zhuhai, Hangzhou, Nanjing, etc. One of our major corporate agencies here has an operation covering more than 45 cities."

There is no denying China's domestic corporate travel was growing at a "furious pace", Gloria International Hotels domestic corporate vice-president, sales and marketing, Mr Willie Ooi, said.

"We have experienced the biggest growth in MICE (meetings, incentives, conventions and exhibitions) from local companies and MNCs in China. Just about every company is holding a meeting once every three to four months."

On the special needs of the local Chinese, Mr Ooi said it was a combination of location and pricing. "Because of the traffic jams in major cities in China, many go for the location of a hotel, especially in Beijing. If you are conducting business in the western part of the city, many choose a hotel in the west as travel can be time consuming.

"Our domestic clients are a mixed bag as we have accounts ranging from MNCs to state-owned companies to local companies. Our well-located and value-for-money hotels have attracted long-stay guests from Japan and the US at our city hotels especially in Beijing, Shenyang, Harbin, Suzhou and Nanchang."

Gloria's portfolio of clients includes GE, Nokia, COFCO, Siemens and Philips. "I believe most companies do not have a corporate travel policy per se in place. But most would have guidelines based on budget and star-rating as there is volatile pricing among hotels in China, especially among the three- and four-star hotels in big cities.

"And accessibility to best available room rates is as simple as calling one of the numerous booking centres here where eLong.net and www.ctrip.com are the biggest. You may be interested to know the ctrip booking centre in Shanghai has more than 1,000 staff handling telephone bookings daily."

Adding her observations, Marriott International Global Sales Organization vice-president Asia-Pacific, Ms Bernadette Dennis, said the difference in Chinese corporate travel from other countries now "is really only sophistication".

"Corporate travel is very new in China and the method of managing corporate travel is in its infancy. We must remember that until a few years ago, a business traveller had to receive a letter of invitation to get an exit visa and leisure travel was restricted to government-controlled groups to specific destinations. But since more and more countries are getting their ADS (approved destination status) this will change quickly."

She named the main outbound destinations as Hong Kong, Taiwan, Singapore, South Korea and Thailand.

"The MNCs in China are starting their corporate travel programmes, but the mandate will be slow. Too many 'bookers' are involved and it is an incentive for them to manage their bosses' travel. However, with 60 per cent of all Fortune 500 companies having an office in Shanghai, and 60 with their Asia-Pacific HQ in Shanghai, the more formal policies will come soon."

Ms Dennis said 95 per cent of travel in China was booked offline and in the Asia-Pacific region, nearly 60 per cent of all Marriott reservations went directly to the hotels. "So we have a long way to go on technology," she added.

But Chinese businessmen can teach their western counterpart a thing or two about how to enjoy business travel more, according Accor vice-president sales and marketing, China, Mr Daniel Tannenbaum, who said domestic corporate travellers were the mainstay for the chain.

"About 70 per cent is domestic."

A lot of those companies are joint ventures or foreign-owned companies which are just pushing business. A growing number have travel policies and travel is managed. Nokia for example.

"On a per spend basis, Chinese businessmen would more often make use of a hotel's spa entertainment and dining facilities and that would make up for the yield. It would be interesting to see who spends more: the Chinese businessman or his western counterpart."

Accor's Sofitel and Novotel brands, aimed at the business traveller, are the most dominant in China.

In the case of Starwood Hotels and Resorts which has a network of 30 to 35 hotels, open or under construction by 2007, Asia-Pacific vice-president sales and marketing, Mr Oliver Bonke, compared the China corporate travel market to the early days of the Internet.

Domestic corporate travel was "healthy and strong", he said, but until there are major Chinese MNCs the likes of Microsoft or IBM with a global network, the number of outbound travellers would be relatively small in relation to the market size.

"It will grow when there are more mergers and acquisitions by Chinese companies. But a number of economic issues now affect the ability of Chinese companies to invest in international companies. Of course the inbound picture is different as the main MNCs have set up operations in China," Mr Bonke said.

"Apart from the key Chinese cities of Beijing and Shanghai, places such as Shenzhen, Suzhou, Dongguan, Shenyang and Tianjin are emerging as key secondary cities for corporate travel."

"For Starwood, Sheraton is the top brand although we have introduced the first Four Points by Sheraton in Shenzhen. For us more than 50 per cent of our business is domestic and it is the upscale sector that is growing."

Describing China as less advanced as markets such as Hong Kong or Singapore, the fact it is a "cash society" made the implementation of corporate travel policies more difficult, he said. "It is important to realise the very large impetus among Chinese travellers to use eLong.net and www.ctrip.com to research for corporate travel information and rates and to make the booking online.

"The online media is a significant element in China," Mr Bonke said.