China’s business travel growth decelerates

Thirty-eight percent of the staff in an average organisation have travelled on business this year
Thirty-eight percent of the staff in an average Chinese organisation have travelled on business this year

Business travel spending in China will continue to grow in 2014 and 2015, but at a slower rate than in previous years.

According to American Express Business Travel’s 2014 China Business Travel Survey, softening economic growth and the increased cost of compliance in China both have contributed to lower-than-expected travel and expense (T&E) spending this year.

Growth of 4.3% growth had been forecast for 2014, but year-to-date the rate of expansion has been just 1.6%. Despite this, travel managers still expect to grow their T&E budgets by 3.5% in 2015.

“Despite concerns about the softening rates of economic growth, and the increasing cost of doing business in China, it appears as though company leaders remain optimistic and still recognise the value of their business travel investment,” Marco Pellizzer, vice president of American Express Global Business Travel.

“There is a strong indication that companies in China expect to grow their T&E budgets again next year. Further, evidence suggests business leaders are increasingly broadening their business focus beyond China by expanding internationally, either with their manufacturing operations or marketing and sales efforts.”

According to the survey, fewer organisations (34%) plan to increase T&E budgets in 2015, compared with 2014 (40%) and 2013 (49%). Larger organisations seem to be more conservative than smaller ones. On average, small organisations (up to 200 employees) anticipate an increase in their T&E expenditure of 5%, versus 2.5% for larger companies.

In addition, survey revealed that more employees are travelling. Thirty-eight percent of the staff in an average organisation have travelled on business this year, versus 33% in 2013 and 28% in 2012. And the number who take international trips has increased to 13%, up from 8% two years ago. And this trend is likely to continue, as 34% of the interviewed organisations reported plans to expand their operations outside China in the next three years, up from 19% in 2012.

Twenty-three percent of business travel in 2014 was done to maintain existing client relationships, and 23% to develop new clients. Corporate incentives and seminars (10%) and internal meetings (14%) were the other main reasons for business travel.

The survey gathered information from 230 companies in major Chinese cities, such as Shanghai, Beijing, Guangzhou, Shenzhen and Wuhan.

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