Chinese Corporates Strategize T&E Spend

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China has now taken the lead in business travel spend, surpassing that of the U.S. as of 2016. China’s growth rate in corporate travel and expense budgets has steadily climbed by nearly 5 percent in the last two years, according to CITS American Express Global Business Travel, which released new analysis on exactly how Chinese firms plan to spend the cash allocated in their expanded travel budgets in the months ahead.

CITS American Express Global Business Travel released its 2016 China Business Travel Barometer last week, which uncovered additional evidence to support China’s reign as a corporate travel spend leader. But analysts also noted some muted optimism thanks to economic uncertainty and a greater need for smarter spending.

 

Where The Money Will Go

American Express Global Business Travel found that, while China may be on top when it comes to business travel spend, most companies in the country aren’t planning to increase their T&E budgets next year. More than half of the firms surveyed said their budgets remained the same over the last 12 months, and 61 percent said those budgets will continue to remain level in 2017.

While nearly a third said their business travel strategies aim to help the business grow, 36 percent said their companies will need to explore ways to be more efficient and smarter at spending corporate funds for travel activity. This focus on domestic growth is likely behind the survey’s finding that Chinese corporates are more often traveling domestically, with international travel down by 4 percent in 2016 compared to a year ago.

China’s slowing economic growth, American Express Global Business Travel said, means companies are more conservative in their international growth plans, as well as their spending habits.

“Our research indicates that, because of continued economic uncertainty, companies are cautious when it comes to increasing their business travel spending,” said American Express Global Business Travel Vice President of Mainland China and Hong Kong Operations Marco Pellizzer.

But tighter purse strings don’t mean corporate travel is off the table when it comes to corporate spend, he added.

“They do, however, recognize the importance of travel as a contributor to revenue growth and, as such, are trying to find smarter, more innovative and efficient ways to manage their business travel programs,” stated Pellizzer. “Further, in keeping with increased disruption and instability globally, business leaders are more focused than ever before on supporting their traveling employees from a duty-of-care perspective.”

 

Duty Of Care

As it turns out, while Chinese companies are more cautious with their spending habits, when it comes to business travel, employee safety trumps cost savings.

According to the barometer, employee safety, mental and physical conditions and work efficiency during and after business travel are employers’ top three priorities when it comes to formulating corporate travel policy. These are also common motivators behind any changes in corporate travel policy, researchers found.

With a focus on employee satisfaction, Chinese firms have shifted their T&E spending in some ways. For instance, companies report a 7 percent increase in the use of sharing economy services, up to 60 percent this year. Researchers concluded this signals a move to accommodate employee travel preferences. Meanwhile, 56 percent of businesses said they plan to begin using sharing economy travel solutions in the next year.

While employee satisfaction may not be directly related to corporate spending, these trends are correlated with corporate investment in talent and efforts to continue their growth trajectories, researchers found.

“As competition for talent in China continues to increase, the trend of leveraging better employee travel schemes for the purposes of retention and recruitment is expected to increase,” Amex GBT said in its summary.

 

Growth Strategy

With China’s slowing economy, it’s now more important than ever that local companies strategically place their money in places that will promote corporate growth. Amex GBT’s Pellizzer said corporate travel is one area that can help.

“Regardless of economic cycles, experienced business leaders are seeking new revenue opportunities, and business travel goes hand-in-hand with these,” added Pellizzer. “However, it is important that an organization’s managed travel program is designed and executed with overall business objectives and efficiencies in mind.”

“Enterprises should invest in knowledge and innovation and fully leverage the expertise of TMCs to benefit their overall business travel program,” he continued.