A route towards new sales?

FIDUCIA ANALYSES RECENT TRENDS IN THE BUSY TRADE FAIR ENVIRONMENT OF HONG KONG

During the Fall of 2008, the number of exhibitors at the biggest trade fairs in Hong Kong are sending a clear message. Whether at the Hong Kong Exhibition and Convention Centre, or the China Sourcing Fairs at the Asia World Expo, trade fairs present record numbers of exhibitors. The Global Sources Electronics fair has now grown fivefold in just five years, from 563 booths in its inaugural show in 2003 and 73% are from mainland China alone. Trade shows held in downtown Hong Kong are also bursting at the seams. With more than 2,600 exhibitors, the HKTDC Electronics Fair attracts tens of thousands of buyers from more than 150 countries in a period of five days. And while the quantity of trade booths and visitors is impressive, qualitative changes are noticeable.

The hustle and bustle at a trade fair.

IP protection
All fairs take an active approach towards IP protection. Taking photographs inside the exhibition halls is prohibited and large signs warn of the potential consequences for Intellectual Property Rights (IPR) violation. The show organisers offer on-the-spot legal advice from reputable law firms. Such professional legal advisors can assist in IPR disputes. Moreover, the event organisers publish IPR policies and procedures for supplier listings well ahead of the trade shows. According to these rules, suppliers are vetted before the exhibition and the consequences for infringements are enforced. Relationships with a supplier can be broken off after two IPR infringement claims are brought against a supplier in any one year supplier verification programme. During this programme a team visits suppliers in person at least three times, perfor- ming credit checks. Exhibitors also undergo a supplier audit by a professional audit firm. This ensures that those with innovative product ideas are protected, which guarantees demand for exhibiting space, not only from China manufacturers.

Shift from OEM to brand ownership
As the trade fairs are open to exhibitors from all countries, a substantial number of foreign-managed HK companies, who in the past had a strong focus on Original Equipment Manufacturer (OEM) business, have begun exhibiting their products under an own brand. Consequently these companies are getting access to new customer groups in markets that were previously not on their sales list. This two pronged strategy - developing an own brand name while continuing with OEM sales - can help to balance lower order volumes from established markets. Venturing into the unknown may hold concealed benefits. Learning from the OEM demand and applying the same design and colour patterns as well as requested design features to the own brand may help to improve value and boost sales.

Product development presentation
Besides new sales patterns, Chinese mainland factories are becoming more and more sophisticated in packaging and design. The experience in how to present products has been increasing significantly over time. Trade fair organisers even encourage exhibitors to innovate their booth designs by presenting "Best of Show Awards" to honour those who have the most creative booths. Not everything is visible at first sight though, as some exhibitors show only a limited amount of products in the area open for the public. Product novelties are displayed in a smaller separate room reserved for special buyers. One challenge, however, remains: in order to determine whether an exhibitor really is a manufacturer (and not a trading company), a trip to China to see the factory with your own eyes remains critical.

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