Exhibition industry about to overcome its growing pains

CHINA'S TRADE SHOW INDUSTRY HAS EXTRAORDINARY GROWTH RATES, BUT ITS STRUCTURAL PROBLEMS ARE NOT MUCH SMALLER.

The good news first: China's exhibition industry is growing, all current industry figures (2006) indicate a significant rise. The 3,800 fairs and exhibitions in China made the industry's direct sales volume jump up to RMB 14 billion, a year-to-year increase of over 20%. All over the country, new convention and exhibition centres spring up like mushrooms with the result that China's exhibition space of around three million square metres has exceeded the one of Germany (2.6 million sqm), the original "kingdom of exhibitions".

Tough challenges in the exhibition industry

The problem is that the industry is not ready for its own boom. Amongst the many obstacles exhibitors and professional visitors currently face, a prominent one is the fact just mentioned: the lack of controlled and strategic growth. In 2004, Shanghai alone hosted 5.5 exhibitions per week. In the same year, more than 50 exhibitions on (consumer) electronics took place, the number of trade shows on automotive and components or on pharmaceuticals and medicinal products was even higher. The oversupply of trade shows in China is striking. Germany on the other hand, with its long and successful trade show history, only hosts about one tenth of China's exhibitions a year, but amongst these are the world's biggest IT exhibition (CeBIT), automobile show (IAA) and book fair (Frankfurter Buchmesse), all organised by exceptionally professional exhibition companies.

The bottom line is simple: quality counts.

While exhibition space might not be scarce in China, sensible planning is. Beijing and Shanghai could easily use more space whereas many of the shiny new halls in second-tier areas are frequently running under capacity. Mostly built as symbols for the success of regional projects, their actual necessity is questionable at the least. Inconvenient locations, impractical constructions and insufficient infrastructure support (in vital areas such as accommodation, transportation, or communication) lead to an unsurprising result: a low number of international companies attending Chinese trade fairs. Even though the focus is slowly shifting, the majority of exhibitors and buyers remains Chinese. The poor efforts of some organisers to "internationalise" fairs by simply relabelling them attests to nothing but an obvious lack of professional management.

The main reason why many international companies shy away from a trade show engagement in China, however, is a "usual suspect" on the country's international to-do list: IP theft. Legislation in this field has improved constantly over the years, yet implementation remains the problem. If a foreign company cannot be sure about the safe exhibition of patent-loaded products, why should it even consider displaying its know-how on Chinese ground?

No lost cause

Despite all these difficulties, there is hope for China's trade fair industry. The enormous potential the market undoubtedly has, is beginning to show. First steps towards professionalism are visible.

One of the industry's most urgent needs, the consolidation of the scattered market, is being tackled: Explosive growth rates attract main players such as Messe Frankfurt or Koelnmesse from Germany or US-based Reed regardless of the momentary market conditions. And in turn, it is the entry of these exhibition experts that gives a much-needed professional boost to the industry: in terms of management, structures, skills and, most importantly, market shares. The rapid and unregulated industry growth over the last decade produced a mostly unconsolidated market and the government's support for some prestigious yet unsuccessful fairs and exhibitions created artificial competition. But with the market entry of international exhibition organisers the industry will become more mature, more professional and more attractive to an international audience.

The problem of seemingly uncontrolled distribution of convention and exhibition centres all over the country, has been approached on by the PRC's government. Its strategic solution aims for the sensible establishment of "exhibition belts" focusing the attention on China's main industry centres. More regulatory control on exhibition assignments by an industry-wide umbrella organisation will further reduce redundancy in both numbers and topics: a move benefitial to exhibitors, visitors and organisers.

As for IP infringement, China's trade show organisers are willing to take on the fight. They implement IP protection on a more private and direct basis. The theft of technical know-how from exhibition booths is tackled through stronger security presence onsite and a stricter enforcement of already existing rules and regulations. The most important measurement, however, are thorough access controls to premises and special sections of fairs. Only registered attendants are allowed to enter, an effective way of keeping the number of "product pirates" at a low.

On its way to professionalism, China's trade show industry can learn a lot from its "smaller brother" Hong Kong: the Special Administrative Region has been considered Asia's exhibition hub for years. Hong Kong has built its success in this area on invaluable industry-related assets such as top-quality venues with high efficiency rates, experienced management by professional staff, and excellent peripheral services. But also general business perks such as international connectivity and an advantageous location at the heart of Asia help Hong Kong maintain its prime position amongst competitors on the continent.

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