24-26 BRIC feature 30/1/09 18:45 Page 26
26 emerging markets
India
CORPORATE
TRAVEL IS A KEY
China
DRIVER FOR
Of the four largest emerging markets, India is
GROWTH DUE TO
China has had a well-documented downturn in the
proving to be the most robust, though not immune past few months, but figures are relative compared
from the downturn.
ITS HUGE AND
to the west. Its growth rates dipped from double
Following the terrorist attacks in Mumbai in RELATIVELY figures down to 8% in the last quarter of last year
November, the country stood on the brink of war with
UNTAPPED
– and are predicted to fall further.
neighbouring Pakistan and its economy was on the
POTENTIAL
In November China’s central bank dropped rates by
cusp of capitulation. But hard work by political the biggest margin in 11 years in a bid to stave off a
diplomats from the neighbouring nuclear powers further slump. China’s key problem is huge exposure
averted any possibility of military action and normality to the west in terms of exports, plus its investment
soon returned to India’s biggest cities. in North America’s and Europe’s capital markets.
It remains the second fastest growing economy in A recent report conducted by Amadeus and
the world and its GDP, according to the International PhoCusWright stated: “In the current economic
Monetary Fund, will this year slow to about 6.9%, a climate there is no denying the corporate travel
far cry from the 9% enjoyed only two years ago. sector has been affected, with many companies
Business travel traffic between the UK and India has slashing travel budgets. And for essential business
remained strong. British Airways operates between travel, corporations are seeking ways to manage
London and Mumbai, Calcutta, Delhi and Bangalore. budgets more efficiently.” However the report did
And despite falling passenger numbers in the business- add that corporate travel is a key driver for growth
class cabin, in December the UK flag-carrier launched due to its huge and relatively untapped potential.
a five-times-a-week service from Heathrow to China has two huge advantages over mature
Hyderabad – India’s bio-tech, IT and outsourcing western markets in terms of business travel: a
business hub. BA’s chief executive, Willie Walsh, told massive and growing domestic market that needs to
ttgbusiness that India provides “lots of opportunities” travel; and a fledgling – in terms of policy – business
due to its economic stability. travel sector. Both of these factors mean cost savings
While the credit crunch has undoubtedly affected are immediately achievable with new technology and
foreign investment, the Indian economy is safe in the putting route and hotel deals in place.
knowledge that the country’s rising middle class is still American Express Business Travel’s Gregor Loctie
demanding consumer goods. says China is “by no means immune” from cutbacks
In 2007 Indian’s consumer expenditure as a share of in business travel: “There has been a direct cut in
GDP peaked at 54.1%. While it will come nowhere near what we believe is non-essential travel – to internal
this level in 2009, the fact that many consumers do not meetings for example – but there are minimal cuts in
have bank accounts has limited levels of debt and travel to meet with customers or partners.”
helped to minimise the banks’ vulnerability to the HRG managing director Ian Windsor says: “The
credit crunch. Asia markets have experienced a slowdown, but it is
India is also thought to have a large trade surplus still a growing market in terms of business travel.”
and foreign exchange reserves that make it more And according to data by iResearch, users of
resilient to the downturn. The government could use online travel reservations in China passed six million,
the reserves to increase spending and consumer to an estimated £280 million in 2008 – a 22.7%
demand. growth compared to the previous year.
One problem the economy may face is the closure of Virgin Atlantic recently shifted its sixth London-
outsourcing centres subsidised by western corporations. New York flight to Hong Kong, making it a double
The sector has thrived in recent years but could be hurt daily. General manager Paul Wait said the China
if companies are forced to cut investment. market was holding up well for the carrier.
ttgbusiness.com ❖ february/march 2009
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