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The rapidly growing business-travel market in China is sparking fierce competition between domestic travel agencies and foreign travel management companies.
As Chinese companies become more global they are giving more attention to the control of corporate travel budgets and seeking professional travel management to help them. Hubert Joly, CEO of the world's leading business travel management company, Carlson Wagonlit Travel (CWT), discussed this trend during his trip to Shanghai earlier this month.
At present, most companies and government units have looked to local travel agencies since the Shanghai Municipal Tourism Administrative Commission allowed travel agencies to approach corporate clients last year. Others began individually booking hotel rooms and plane tickets on the Internet.
Current clients of CWT in China are to be found among the world's top 100 Fortune companies. Joly said CWT could help them "optimize their travel budgets" not only through booking hotels and air tickets but also by providing consultation and outsourcing services.
A source from American-based chemical company Ashland Management (Shanghai) Co Ltd, listed among the Fortune Global 500, said so far the Shanghai office has not set up a specific travel management department to arrange business trip plans through co-operation with travel management companies, as it does at its headquarters in the United States. Instead, the administration department helped employees book hotel and air tickets that the company has direct co-operation contracts with or through Ctrip.com, a local travel services website.
"We may turn to local travel agencies or the travel management companies in the near future, after our company grows bigger in China," the source added.
CWT's Joly said companies have not realized that travel agencies receive commissions from service providers, defined as service charges by Chen Suiqin, deputy general manager of the Shanghai China Travel Service Outbound Tours Co.
"The Chinese travelers can have problems during trips, for example, language problems, so travel agencies can provide better services in this regard," Chen said. Nearly half of the travel agency's clients are corporate customers.
"Multinational companies are used to sticking to some of their global companies, even in China. But there is still a big space for local agencies in the market," Chen noted.
(Shanghai Daily January 25, 2005)
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