Now, a new report has highlighted that China is in fact set to pip the US to the top spot, becoming the world’s biggest spender on business travel by as early as next year.
China to overtake the US
According to the Global Business Travel Association (GBTA) Foundation’s latest GBTA BTI Outlook – China report, the world’s second largest economy is fast catching up with the globe’s greatest – the US – in terms of business travel spending, with the projected growth rate forecasting it is only a matter of months now before China takes the top spot.
The report, sponsored by Visa, takes into account numerous factors – not only the local economy, but also that of markets abroad that have a direct impact.
As well as projecting China’s ascension to a leading position, it also highlighted that the country’s total business travel spend will grow by 16.5% this year, which is more than double the speed at which the domestic economy will expand.
Business travel growing quicker than GDP
The country recently announced GDP figures for last year, revealing a growth rate of 7.7%. While this was above the government’s target of 7.5%, it was still only equal to the figure for 2012, suggesting what the Confederation of British Industry dubbed “a subdued expansion by historical standards”.
Nevertheless, the figures do not, by definition, mean that China’s business leaders are neglecting their domestic market.
Indeed, the GBTA statistics show that this travel spending accounts for both domestic and international travel, with the former in fact being the primary driver of spending, responsible for almost 95%. However, regional director for GBTA Asia Welf Ebeling explains how improving performance by exporters and more promising signs for western economies are helping to drive the growth of international outbound travel.
According to official figures from the European Commission, the European Union (EU) emerged from the depths of recession last spring and has since been consolidating a steady recovery. Economic growth is expected to accelerate to 2% in 2015 for the EU and 1.8% within the eurozone – both of which comprise upward revisions of one percentage point from predictions made last autumn.
The surge in business travel has had other interesting repercussions for China’s business travellers. Country manager for Visa China Jeff Liao explains how there has been a rise in the number of corporate cards that are being issued. With more business travel comes an increased need to keep track of expenses and employees jetsetting around the globe – something which electronic payments can help to facilitate far more easily.
Such a trend was in fact touched upon recently by MasterCard, which released survey results highlighting the importance of electronic payments for small businesses all over the world, should they wish to remain competitive.
According to the financial giant, the move to electronic payment systems is necessary for a range of reasons, from innovation and convenience, to safety and hygiene – not only to appeal to local consumers, but also tourists and other individuals who find themselves away from home.
Is China ready?
If the construction statistics are anything to go by, it would appear that China is more than ready to absorb this surge in business travel. The country’s airports have doubled in size over the last ten years, with projects in the pipeline to ease the burden on facilities such as Beijing Capital International Airport, which is currently the second busiest airport in the entire world, in terms of the number of passengers with which it deals. The city’s second international airport is set to open in four years’ time.
Meanwhile, data from Lodging Econometrics for the second quarter of last year suggested that China had 1,695 hotel construction plans in place, which will give the country 435,000 extra rooms to house all of the business bods passing through.
So, it would seem China is indeed bracing itself for more business travel. But when it comes to your own commercial operations, if you are thinking about expanding overseas or indeed have already done so, are you ready for take-off?