China Is Still A Blue Ocean Market: Exclusive Interview With Elias Murad, Managing Director Of American Express International Market.

The China business travel market survey report released by China express recently showed that China's business travel expenditure reached 378 billion US dollars in 2018, and this figure is expected to reach US $401 billion in 2019 and up to US $477 billion in 2022.

There is no doubt that China has become the world's largest business travel market, but the share of the largest market has not stopped. CEO, a senior vice president and Ctrip business travel division of the Ctrip group, said in a media interview last month that the transaction volume of Ctrip in 2018 reached 22 billion yuan, and the volume of new transactions even exceeded the total number of second industries.

For this reason, Elias Murad, the managing director of the international market of American Express Global Business Travel Company, who has just bought HRG, has no doubt. In an interview with China's economic report in twenty-first Century, he said that China's business travel market did not have comprehensive and complete data to verify the market share.

"In fact, we want to be the first in terms of service and reputation." Elias Murad said he was satisfied with the business and profits of the Chinese market and did not consider changing strategy. He also revealed that American Express is continuing its acquisitions to strengthen its first place in the business travel market.

Behind the first battle is the false fire.

Twenty-first Century: there are many competitors in China's business travel market. How much do you account for in the Chinese market? Recently, Ctrip executives said they had increased the volume of new transactions even more than second of the industry. Is Ctrip the first in the industry? Does your company consider how to catch Ctrip?

Elias Murad: a very important point is that there is no official data available to answer your questions in real and concrete terms. If there is any data, it is in fact a partial, locally estimated data based on this transaction or transaction.

Actually, this problem is not just about China, but it is rather difficult in the world. Now I think only one to two countries may have more real local data, that's all.

The whole industry is growing at an average annual rate of 6.1%. The Chinese business travel market last year was US $377 billion 800 million, and it will reach US $477 billion by 2022. I think this market is more of a blue ocean market, rather than a red sea market. At the same time, China is a very fragmented market, and the proportion of giants is very small. So do we. There is no way to tell you the exact number of market shares. But I would like to point out that our business is all business travel business, which is quite different from some travel companies.

Second, our customer advantage has always been international companies. Recently, we also want to change the focus of our work, focus on small and medium enterprises, and create better products at the same time. In fact, we are doing very well in terms of profits. We do not want to be the biggest enterprise, but the service we hope to provide is the best and the best.

In fact, we have just talked about other travel management companies, and some of us have transferred from our side to them, because the prices to them may be even cheaper. It's interesting that a year later these customers may come back to us again. Because they will find that in the process of business management, there will be no way for the travel management companies to cope with any negative or unexpected situations.

Twenty-first Century: so you don't care who is number one?

Elias Murad: in fact, we want to be the first in terms of service and reputation. We have ranked first in the world, and the total volume of business worldwide has reached US $35 billion. The second place is US $26 billion, and we have been leading nearly 10 billion US dollars.

As we have just said, brand is too important for us. Now the global express business is a brand that other companies can not surpass. I believe that as long as we do well in this service and reputation, others may come together. So the retention rate of our customers is very high. If we want to expand more businesses or acquire more companies now, we will surely look at reputation and profit. We do not have to catch up with scale first. But if the companies we acquire do not bring us better service, reputation and additional profits, we will not do such a thing.

Small and medium-sized business travel is a blue ocean.

Twenty-first Century: as you mentioned just now, you mentioned that you began to focus on the business of small and medium-sized enterprises. I want to know the proportion of customers in small and medium-sized enterprises in your company. What do you think of that market? Is it a blue sea or a trap to serve SMEs?

Elias Murad: serving small and medium-sized enterprises is definitely not a trap for me, but a blue ocean. However, although it is a blue ocean, we must learn how to find the right direction in the blue ocean so as to make a real profit. After all, there may be many traps, sharks and unfavorable factors in the sea. I think the important thing is that we need to find the right small and medium enterprises, provide the right products and attitudes to help these small and medium-sized enterprises manage their own business trips.

At the same time, I would like to emphasize that the concept of small and medium enterprises may be different in different industries and countries. Maybe the total traffic volume of a business in some countries is from $0-1000, and Europe may be $50-300. In a small country, for a travel enterprise, the total traffic volume of a customer is $1 million. We should be very careful when defining the classification of small and medium enterprises.

In addition, small and medium-sized enterprises also have a very interesting place, that is, differentiation is also more serious. Some small and medium-sized enterprises are in a more high-end place. They will say that all our services need to be provided, and they must be well served. But some small and medium enterprises say that we only need online services, and we do not need the whole set of services. This is also something we need to pay attention to.

Just now, we also have the use of our own online tools. This tool has been launched in the US and Europe. This year we hope to launch in the Asia Pacific region, such as Hongkong and Singapore, Australia.

In China, the small and medium-sized enterprises that we define may be large enterprises in the definition of our friends.

In terms of water flow, about 300-500 yuan per year in Renminbi is small and medium-sized enterprises. This level of enterprise is a large customer for many local travel agencies or local small TMC. We have more than more than 200 small and medium-sized enterprises with such a scale.

At present, the acquisition of Chinese enterprises is not yet considered.

Twenty-first Century: can you understand your latest organizational restructuring and reorganization of M & a information?

Elias Murad: in October 1st, the new CEO of our express business has just arrived. Its name is Paul Abbott. In the industry, he is a business leader with a very good reputation. He started his career from British Airways, and then joined the American Express business team. He has been director of American Express's global business travel for the past four years. Now he has become our CEO. We believe that his participation can inject fresh blood into us and help our enterprises succeed.

As for mergers and acquisitions, we bought HRG last year, and now we are further promoting integration. In September 4th, we completed the acquisition of a German business travel company called DER. The flow of their travel business in Germany is about $600 million, which is a very large company.

We invested Kanoo in the Middle East and planned to complete the acquisition later this year or in the first quarter of 2020, and set up a joint venture. We have other mergers and acquisitions, but there is no way to tell you now, because it is confidential information. In general, we are continuing to do some M & A actions, either alone or with other companies or our partners.

Twenty-first Century: do you consider buying Chinese companies when you buy so many foreign companies? If not, why did it stop you from doing so?

Elias Murad: first of all, if you know which company is more suitable, you are welcome to tell me. In general, if we want to buy a company, it will certainly bring some additional value to our company, such as bringing new technology, or new customers, or we are not doing well in a particular sector. The acquisition of this company will bring additional benefits to us. All the acquisition transactions I have just talked about are in line with these requirements.

I just did not mention it. For example, three years ago, we bought a company related to exhibition and activities, and acquired other technology companies. All of these are decisions that we need to expand and enhance our company's business based on such thinking.

In China, after we bought HRG last year, because HRG also has business in China, we are now integrating HRG's Chinese business. This integration is also part of our global acquisition and global business integration. So in general, our attitude towards M & A is completely open. If we can find such a company, it can provide better service for our customers, and it is also in line with the development concept of our company now. Of course, we are willing to do such a consideration.