Tradeshow Players Eye Massive Chinese Market

High growth rates and large population base lure market entrants

By Margo McCall -- Tradeshow Week, 4/12/2004

Lately, all eyes are on China. Since the world's most populous country joined the World Trade Organization in 2001, representatives from many industries – not just tradeshows – have scrambled to develop a presence there.

With 1.3 billion people and an economy that's growing by leaps and bounds, China represents a huge market opportunity. International tradeshow producer E.J. Krause & Associates has been a player there since the early-'80s. CMP Media, IDG World Expo, Reed Exhibitions, VNU – all are jostling to make inroads.

"It seems like China is the focus of every single major tradeshow producer. It certainly seems to be on everybody's radar screen," said John Gallagher, vice president of E.J. Krause & Associates, which typically produces from five to 10 tradeshows there per year.

David Cong echoes that assertion. His Silicon Valley company, meetexpo, recently branched out from online tradeshows to conferences designed to link Chinese and U.S. high-tech buyers and sellers. "Right now everybody is extremely excited about the Chinese market. Almost every market there has opportunity, not just high-tech," he said.

It's easy to see the attraction once you do the math. According to Stanley Chu, chairman of the Hong Kong Exhibition & Convention Industry Assn., China's exhibition industry included more than 3,000 events last year and has been growing at a 20-percent clip for the past 15 years.

Most of the country's trade-shows are held in Beijing, Shanghai, Guangzhoun or Hong Kong. And besides the influx of international companies, China's exhibition industry features an array of homegrown for-profit and association managers.

E.J. Krause's Gallagher said China mirrors the rest of the world in recently adding larger and more modern venues to its inventory. "You can go there and participate in a tradeshow and not see any discernible differences from anywhere else," he said.

The venues may be similar, but the numbers are not, especially when it comes to attendees. "The one thing China has in great numbers is people," Gallagher said. But, Cong pointed out, professionals among the masses of tradeshow attendees can be scarce, since many people turn out just to "stand in line to receive a free bag."

The Chinese government used to require foreign companies interested in penetrating China's markets to form joint ventures with local companies. Although such partnerships are no longer required, they're still recommended. "If you have a joint partner, you will have a better chance of success," said the Chinese-born Cong, who recommends that potential market entrants initially try collocating an event with a large, Chinese-produced tradeshow.

Gallagher said partnerships also ensure continuity in the face of bureaucratic turnover. "In all situations where you are dealing with the government, people change places. Those are the same pitfalls you find in any country," he said.

For its first foray into the Chinese market, McGraw-Hill is teaming up with the China Intl. Contractors Assn. Their joint Global Construction Summit will be held in Beijing April 14-16.

IDG World Expo President David Korse, who recently completed a tour of Asia, recommends a joint venture or local partner over trying to make inroads from a base in the United States. It's also important to understand the local market and both personal and business culture, he advised. "Things generally take longer to happen than we're used to in the U.S. Patience and understanding of the differences are very important."

Frequently, foreign show managers contribute a branded event, along with its vast sales, content and event-industry resources, while the Chinese partner contributes local knowledge and relationships, Korse pointed out.

International tradeshow producers have had varying success in establishing their brands in China. Penton Media expanded its Internet World show to China for several years, and MediaLive Intl. its COMDEX brand. But both companies pulled out of the market once high-tech declined. Deutsche Messe, however, still holds a version of CeBIT in Shanghai. The 2004 show, scheduled for April 26-29, is expected to attract more than 400 exhibitors and 50,000 attendees.

Foreign businesses venturing into Chinese markets shouldn't leave their common sense at the border, warns Mark Mechem, director of business advisory services for the Washington, D.C.-based U.S.-China Business Council. Many a foreign investor has calculated return on 1.3 billion customers only to find that just a small portion of China's population can afford to buy a particular good or service. In reality, he said, China's consumer population is 200 million, about the same size as Japan's.

As China moves through its WTO transition phases, increased regulatory transparency makes it easier for foreign companies to do business, he said. But foreign investors shouldn't assume that China is monolithic. Rather, Mechem said, there are wide disparities between geographic regions and rural and urban areas.

The 70 annual trade fairs held in the former British colony of Hong Kong tend to be international, centering around fashion, giftware, jewelry, watches and other consumer goods, Chu said. In contrast, Mainland China is mostly known for infrastructure and industrial trade fairs that attract more domestic attendees.

Cong sees vast potential for auto shows, since Chinese consumers are developing a love affair with the car. And because phone ownership rates are still low, the telecom market has been ripe for investment. Makers of wireless phones and equipment are particularly interested in selling their wares to the Chinese. Reflecting that trend, Rob Mesirow, vice president of conventions for the Cellular Telecommunications & Internet Assn., said an agreement is in place – when the time is right – to expand the Tradeshow Week 200 event, CTIA Wireless, to China.