Shanghai — November 10, 2006 — Corporations in China spent $7.41 billion on air travel in 2005, making China the fourth biggest business travel market in the world, according to the results of American Express Business Travel's China Business Travel Survey.
Released during the second American Express China Business Travel Forum (CBTF) in Shanghai, findings of the survey, know as the Barometer, revealed that travel and entertainment (T&E) has become the second largest controllable costs for organizations, accounting for 24 percent of total controllable expenses, American Express said.
Findings of the Barometer provided a snapshot of the latest information of the T&E management practices and outlook of the market for 2007 in China. This is the third business travel survey conducted by American Express in China. The last two surveys were announced in 2003 and 2005.
"As business activities increase, companies operating in China look for opportunities to optimize their T&E expenses, an investment that can improve the bottom line of their business, "said Charles Petruccelli, president of American Express Global Travel Services.
T&E market highlights from this year's survey included:
- Corporations in China spent $7.41 billion on air travel in 2005, making China the fourth biggest business travel market in the world after United States, Japan and Germany.
- Among different industries, manufacturing reported the largest business travel spending and growth in 2006.
- The business travel growth is largely driven by the domestic market — 28 percent of the surveyed organizations reported an increase in their T&E expenditure and 87 percent of these expenses occurred in mainland China and Hong Kong.
- According to the Barometer, T&E has become the second largest controllable costs for organizations accounting for 24 percent of the total controllable expenses, with the first one being salaries (51 percent) and the third being information technology (15 percent).
- Meals and entertainment remained the largest expense category accounting for 42 percent of total T& E expenditure, followed by air travel (24 percent).
- T&E is considered an investment by companies to acquire new clients (53 percent) or maintain existing business relationships (47 percent).
- Business travel management is gaining momentum in China. According to the survey, there are more negotiated rates with suppliers, up 20 percent since 2004.
- 70 percent of the organizations have a T&E policy, up 15 percent from 2005. Traceability, efficiency and cost are the driving forces of the T&E policies.
- Compliance is low. According to the survey, only 28 percent of the organizations comply with more than 50 percent of the T&E policy. Over half of the organizations surveyed have no control in place.
- According to the survey, about one-third of organizations use a travel agency for their business travel requirements.
- Use of the Internet for business travel is not high. Only 37 percent of organizations reported Internet usage. However, over 50 percent of both the Chinese- and foreign-owned companies are not considering the implementation of an online tool.
- Payment method evolved slowly. Reimbursement on cash receipts remains the main method of expense payment, with 73 percent of surveyed companies using this payment method and over half of the respondents had temporary cash advances.
- Almost a third of organizations expect further growth in their T&E expenditure for the coming 12 months — 33 percent of manufacturing organizations as well as 31 percent of the service industry expect their business travel budget to increase over the next 12 months.
- The domestic market will continue to drive the growth in T&E expenditure, with 41 percent of organizations citing continued business development in China as the reason for the expected increase in T&E expenditure in the next 12 months.