Chinese Companies Still Not Using Best Travel Practices

China-based organizations largely have not adopted generally accepted best practices for managing corporate travel in the West, and many still use paper-based processes to facilitate travel and rely on cash as the primary payment for travel expenses, according to a report today issued by Amadeus and PhoCusWright.

The report examined 112 executive responses from a cross-section of organizations that operate in China, including multinational corporations, state-owned organizations and China-based businesses.

More than 75 percent of those respondents use "manual process and paper forms" for expense reporting, and only two respondents claimed use of a corporate self-booking tool. The study found that about one-quarter of respondents book air and hotel through consumer travel sites.

The report said that 80 percent of the respondents rely on paper "to some extent for corporate travel management processes," with just 27 percent using such IT systems as enterprise resource planning or customer relationship management systems.

"Automation of travel management is in its early stages in China, where paper forms and manual processes dominate the entire travel requisition, approval and payment process," the report said.

The study also found less than half of respondents rely on a single agency for travel management services, leaving many organizations to book through "a combination of sources."

The study noted, "This trend is likely to continue for the next five to 10 years, due to a widespread perception that centralizing travel management will not yield the lowest air rates for companies or produce any other significant value-add benefits."

Corporate card penetration also remains low among China-based business travelers, as more than 90 percent of the respondents "give employees cash advances to cover travel expenses." Seventy-nine percent of the respondents also allow travelers to cover expenses with their own cash and 75 percent allow personal plastic for travel expenses.

Meanwhile, the study found that airline commissions dominate revenues for travel management companies in the country, though the practice "is shifting due to recent regulatory changes," noting that the Civil Aviation Administration of China "cancelled its mandated 3 percent commission rate on air bookings in May 2008," leaving agencies to negotiate commissions directly with carriers.