How China is ahead of Europe on apps, pay and business travel

13 July 2017

When new travellers bypass the traditional way of doing things there are new challenges and considerations

Europe is starting to look to the East, particularly China, for emerging and forward-thinking trends. Like other evolving countries, China has ignored many of the traditional methods we would use to search, book and pay for travel and has leapfrogged to using simple and mobile-driven technology instead. Now that China has extended its business travel lead, it is only a matter of time before these trends and Chinese traveller behaviours are affecting travel programmes, just like those of young European travellers.

Suppliers in the East also work differently. Something important that I heard from Colin Lewis, CMO of OpenJaw at Skift Forum Europe is that Chinese companies want to see how a process or service can be made easier before thinking about money. There’s a different thought process when businesses are putting traveller ease and convenience first; it is how most start-ups get going too. It’s also that model that has led the pace in technological change and made its consumers more willing to take up new products.

China is ahead of Europe when it comes to the concept of ‘one app’, payment and chat. Where does Europe sit in comparison and what does it mean for travel managers?

It’s all about mobile…and one app?

If you want to succeed in China, mobile is the place to be. As the travelling population grows, so does the number of phones and downloads. There are no bricks and mortar travel agents and increasingly fewer physical wallets. Nick Newman, commercial manager UK and Ireland at China Southern Airlines tells me even contactless has slowed down now that consumers are choosing to pay within apps.

‘In app’ activity is huge in China and the biggest of those is WeChat. WeChat is like WhatsApp, Facebook, Uber, Amazon, Instagram, PayPal and a host of other functions all in one app. I’ve heard conflicting views over other app usage. Newman says, “WeChat is powerful and all-in-one but more about communication or marketing. Everyone [brands] still have their own apps.” While Acacia Leroy, a trend strategist at TrendWatching says young Chinese consumers don’t download other apps. So perhaps there is a difference depending on the context of using an app or the traveller’s age.

The below video about WeChat has been played at several travel conferences but I’ll include it here because it is excellent in explaining what it is capable of (skip to 2.20 for the real ‘wow’ part).

Also, while many travel suppliers are keen to expand into China, they are coming across ecosystems that aren’t like those in Europe and the US. Sorry for another acronym but get used to hearing BAT ie Baidu, Alibaba, Tencent. These are the Facebooks and Googles of China that even the largest of travel companies are taking their time to understand.

In Europe there is an underlying battle to be the ‘one app’. A lot of us, me included, are getting confused with multiple logins and passwords. You would think it most likely that Google, Facebook or Amazon would win the race unless the Eastern giants can make their mark over here. Or there may be a newcomer that overtakes the lot. In a recent survey, 24% of UK residents told Sabre they think a financial institution will be behind the ‘one app’, followed by 13% thinking it will be retail and 12% entertainment. None of those are big numbers so the net is wide open.

Ways to pay

More than half a million people use payment channel Alipay in China while one of WeChat’s most striking features is the way it allows such easy payment as you will have seen in the video above.

With this different infrastructure comes alternative ways of doing things. A travel manager speaking at ITM’s conference said travel is antiquated in China but acknowledged it can be done [booked, paid for] better on phones. This buyer provides Chinese travellers with cash for trips because they cannot get international cards. Given the innovation in payments happening all over the world this seems like a backward move; is it difficult to find a trusted local alternative or is there some reluctance to break from traditional suppliers?

In the Western world several start-ups have already made it a lot easier to move money around. But new legislation that comes into play next year will accelerate payment capabilities further and also make the concept of one app more tangible. Under the European Parliament’s Directive on Payment Services (PSD2), APIs will be opened up between retailers and banks, meaning we’ll be able to pay easier and quicker within apps. People will also be able to store multiple bank details in one portal. There’s some more information here but there’s a great deal of disruption to come in the payment world and you’d expect most of that will come in the form of apps.

What does this mean for travel managers? There will be a clearer flow of where money has been spent and smarter reporting tools and data to use for future planning and negotiations. It’s cleaner for the traveller to pay, payments will be processed quicker and if it’s embedded in an app, like the TMC’s, than it will be easier to keep them in the programme.

Chat

More travel managers are looking at using messenger platforms and social media tools to get feedback and communicate travel messages. As its name suggests, WeChat’s foundations are in messaging. It’s heavily used for day to day conversation but a recent study by the China Academy of Information and Communications Technology (CAICT) found WeChat is increasingly becoming a workplace tool.

In its survey of 1,000 WeChat users and 9,000 business account managers, more than 80% said they use it for work and 57% said new contacts on the app are work-related.

In a business context it is predominantly used to arrange tasks and receive notifications. They are willing to join groups of 100 or more people to keep up on internal communications and 40% say the app is used for large scale communications.

WeChat chart 1

Email might not have as much of an impact, as shown by the graph below. There are added complications for email exchanges between China and other countries due to the lack of access to international websites. For example, Newman has a China Southern email address but it blocks some emails coming in from Europe, so also has a work Gmail account.

For travel managers that means a different approach to communicating travel policies. Some of the popular communication channels are here. 

Wechat chart 2

In Europe, while email is still a staple communication tool, travel managers know that messaging tools and notifications (whether in a tool, app, SMS or otherwise) work well for travellers. Platforms like WhatsApp are quite closed where others like Facebook Messenger have opened up for chatbots and other services to be developed, especially by travel companies.

One of the major trends in China that Leroy mentioned at Skift Forum Europe was the livestream economy. When people are increasingly watching more online and ‘as it happens’, we can usually get a more accurate account. Maybe in the future you could provide help in a crisis via FaceTime or present updates in a live Q&A via a company platform.

What’s happening in business travel specifically?

Chart 3Most of China’s business travel is still domestic and although international travel saw a setback last year it may be turning around, especially for the UK at least. Chinese companies are taking advantage of the weak pound by buying up English companies in sectors such as fashion and large offices are opening up for petrol or finance firms.

Such is the change that suppliers like China Southern Airlines, which operates as the country’s international airline specialist, are switching strategies. “Initially our core was connecting leisure travellers to Australia and New Zealand. But recently it’s been more about business travel now that more companies have offices in China or have been bought by Chinese companies,” explained Newman. “It’s positive for us and there is a lot of growth. The Chinese ambassador has said business associations are looking to buy football clubs and brand names while the pound is cheap. There’s a big investment in property and power plants too.”

Several TMCs have had a footprint in the country for some time, although some find there needs to be more trust and openness to doing things differently. Geraldine Valenti of CWT said at the ITM Conference, “TMCs have progressed dramatically with development programmes but it’s hard to sell confidence [in account managers] to the westernised region as it’s a different culture. There needs to be a cross-understanding between east and west.”

If you’re taking on China as a territory, then all the buyers and suppliers mentioned in this article encourage you to get on a plane and experience China. Perhaps instead of playing catch up, you can jump ahead.

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