Abacus and Lai come home to China

24 October 2003

Abacus International's vice president for North Asia Patrick Lai considers his posting to China earlier this year a "homecoming" of sorts. Ten years ago, Lai was part of the team that made Abacus' first foray into China, signing up mainland Chinese carriers for the global distribution system (GDS).

Today, Lai is impressed at how much the Chinese market has learnt about GDSs since then, even though the market is still closed to full foreign participation.

"They have learned very fast in the last 10 years. The Chinese know the business well - I have been quite impressed," said Lai.

His impressions of the China market since moving there from Singapore in April are also about how diverse and big the market is. And how much potential business there is to glean from it.

Recognising that has resulted in the setting up of the regional office when Lai moved to Shanghai. The new office, staffed currently by four, complements the other two existing offices in Beijing and Guangzhou.

In a market that is still not open for full participation by international GDSs, Abacus has had to find other ways to establish itself in China.

"We are here to give agencies a sense of what Abacus is, and what we can offer. We are doing a lot of training and education - not just for agencies but also the airlines," said Lai.

Lai is also focusing his team on learning the market.

"We are trying to understand the market conditions here. The agencies here have very unique and different practices," said Lai.

The Chinese government has yet to fully open the market, allowing only foreign GDSs to establish their presence in China in a very limited scope. To date, foreign GDSs such as Abacus are not allowed to participate in the Bank Settlement Plan, which is, said Lai, "still the biggest limitation."

Abacus has a minority investment in TravelSky, China's own GDS, which it sees as a likely local partner.

"TravelSky could be seen as a competitor, but of course, it is still not an open market. TravelSky is definitely a potential cooperative partner for us in China," said Lai.

Lai said Abacus works very closely with TravelSky and the latter is already using some of Abacus' technology and solutions, such as its net fares solution FareX.

Because of the BSP limitations, Abacus does not do many actual sales in China. But hotel sales are picking up, said Lai.

"Corporate agencies here are starting to use the GDSs for hotel bookings. We have seen a strong interest in the market to use GDSs to book hotels, so we are doing a lot of education and training with the hotel chains," said Lai.

One likely sector that will take the lead in cultivating a "GDS culture" in China are the corporate agencies, but there is still a lot to be done before it happens.

"Travel management is still quite underdeveloped here in China. Most agencies here do everything - from corporate ticketing, to tours, to leisure groups. It is still the beginning stages here in China," said Lai.

He said corporations in China still did their travel bookings through their secretaries and it is very decentralised. "They don't practice centralised purchasing," said Lai.

He said before Abacus could even introduce their corporate technology solutions, it must first focus on helping the industry develop a stronger TMC culture in China.

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