China To See Westernization Of Travel Management?

<B> China To See Westernization Of Travel Management?</B>

By Amon Cohen

Western-style travel management could be on its way to China following a relaxation in the rules governing foreign ownership of travel companies.

Until early last year, foreign investment in travel was forbidden. Now, the China National Tour-ism Administration has announced that outside companies can take up to a 49 percent stake in joint ventures with Chinese businesses, according to Simon MacKinnon, the chief representative of P&O Asia--a 50 percent shareholder in Hong Kong-based P&O Travel Asia, which is actively considering entering the market following the rule change.

According to the Shanghai-based MacKinnon, the first such joint venture already has opened--with the overseas minority partner being Swiss-based Diethelm--in a pioneering operation designed mainly for inbound leisure travel. It is based in Yunnan province, near China's borders with Myanmar, Laos and Vietnam.

At present, foreign companies based in China purchase their travel through either their head office, subsidiaries in Hong Kong and Taiwan or the state-owned China International Travel Service. Some travel agencies, such as American Express, have representative offices or unofficial tie-ups with Chinese companies. But none of these options are entirely satisfactory for companies wishing to consolidate and control their spend in the manner that is understood in the West.

MacKinnon said the relaxation of ownership rules will improve the situation dramatically: ''The outlook will improve, the expertise will come in and within the next two to three years, there will be some substantial business travel operations here."

P&O Travel Asia is in active talks, according to director Tony Hughes, who also is managing director of the U.K. agency P&O Business Travel. ''We have already opened a representative office in Beijing and have been in negotiations with a major Chinese travel firm for four months,'' he said. ''The ultimate plan would be to have ownership in our own right.''

While they may be new to business travel, the professionalism of Chinese companies should not be underestimated, Hughes said. ''The company we are talking to has ISO 9002 accreditation, so there are some pockets of excellence,'' he noted. ''Travel management is coming, but we need to remember that just because something is acceptable in the West, it is not necessarily the ideal solution elsewhere. It may not be the Chinese way. Having said that, the Chinese are well aware of Western business travel methods.''

Hughes is excited by the prospect of serving Western companies in China. Hard figures are impossible to come by, but hotels and airlines are reporting a large increase in the number of Chinese traveling on business. Recession has not hit as hard here as in other parts of Asia and economic growth is still 7 to 8 percent, though that figure is down from the double-digit expansion witnessed earlier in the decade.

Business travel facilities also are improving rapidly in China. Shanghai, China's largest city, will have a new international airport next October, on the eastern edge of Pudong, its massive new development zone. The airport will have four runways and a metro system running west through Pudong into the center of Shanghai and on to the existing airport, which will switch to serving domestic routes.

Pudong's first international hotel, the Shangri-La, opened in September, boasting full office back-up facilities and all the in-room amenities one would expect in a top business hotel. Another hotel, the 85-floor Grand Hyatt, will open next spring.