Europe Poised for New Growth: Prosperity for Some, But Not All EU Members

By Gary Tufel -- Tradeshow Week, 6/14/2004

The 10-year-old European Union last month experienced a landmark: 10 new members. This largest-ever expansion — to 25 nations with a combined population of 455 million — turned the organization into the world's most significant trading bloc.

The new members are a decidedly mixed lot when it comes to the pace of their economic development and potential as trading partners. What will their presence in the EU mean for trade fairs?

"This will be a major factor for European shows (and organizers) in the competition with the U.S. and Asia," said Ruud van Ingen, president of the Paris-based Union des Foires Internationales. "While most of the former EU countries show shrinking numbers of visitors and exhibitors, the new members will bring a new and much-needed boost to the European shows. The German shows will likely benefit most from this development."

For one thing, van Ingen said, closer ties with more countries translate into more visitors from these countries to international shows throughout Europe.

Ernst Raue agrees. A member of Messe Hannover's management board with responsibility for its CeBIT technology show, Raue will discuss the expanded EU and its effects at UFI's Zagreb meeting this month.

Although he doesn't see a major immediate change for UFI due to expansion, Raue said new EU members mean broader markets and greater access to them. "That's good for business, and it's clear that this will also be good for trade fairs," he said. "There's no question that all big trade fairs will benefit."

That will help Messe Hannover and other German organizers that have been hurt by a weak German economy. The new EU countries, with their lower-paid workforces, will likely bring fresh products and services to German shows and will eventually export them on to the American and Chinese markets. However, he added, it may take some of the less advanced new member countries five to 10 years to catch up with the more industrialized, Westernized EU additions.

Thomas Kallman, CEO and president of Kallman Worldwide, called EU expansion a positive step and, in conjunction with the recent NATO expansion, very good news for the region's aerospace and defense shows.

"But many of the new EU Eastern European members don't have industry sectors mature enough to support large standalone shows yet. It'll be better for them to go to the big German fairs at first," Kallman said. "There will be lots of pressure to get these countries up to EU standards, but you have to crawl before you can run. In time, there will be more opportunities."

Virtually everyone interviewed for this story saw Poland, Hungary and the Czech Republic as the Big Three — the countries most likely to have a timely impact on the trade fair business. The Baltic countries (Estonia, Latvia and Lithuania) are smaller but have some economic potential. But "everyone who lived behind the Iron Curtain for 40 or 50 years is very eager to catch up. They want to earn money and to spend it," Raue said. "It's going to take some longer than others, but the less-advanced nations are the ones who need new products the most."

Still, Messe Hannover has no plans to launch tradeshows in these countries. The company has invested heavily in its own facilities in Germany, and produces massive shows that attract participants from all over. Even if it wished to change its present strategies, other than Poland the new EU countries typically lack suitable tradeshow venues.

"We are more interested in attracting Europeans to our fairs in Hannover than in producing shows in other countries," Raue said. "Hannover is our main focus. We try to hold our fairs on each continent, not in each country, or else the market is split, and that makes no sense. We want international flagships, not regional events." Van Ingen noted that Germany is a close neighbor of the three significant players — Poland, Hungary and the Czech Republic — with limited cultural differences (something that could also benefit the Dutch).

"Exhibition organizers without their own venues (such as Reed Exhibitions, VNU and Montgomery Exhibitions) will be more flexible in entering these markets," he said. "The big question is which market offers sufficient volume."

It is very unlikely large trade fairs will develop to serve all the Balkan countries, for instance. "The new markets will be national markets with national shows," he said.

Some show organizers are already serving those national markets. In Poland, there's Poznan and Biuro Reklamy; in Hungary, Hungexpo; and in the Czech Republic, BVV. Expomedia is also looking to gain a foothold in those countries, Raue said, and American companies such as IDG World Expo and Reed Exhibitions are already active with smaller events in many of the new member countries.

Van Ingen cautioned that doing business in Europe won't offer quick profits for Americans looking to benefit from the expanded EU, but requires a thorough understanding of each nation's specific culture and business practices. "Don't assume," he said, "that because the distance may be similar, doing business in Copenhagen or Madrid shares similarities in the way you would find between Chicago and Minneapolis."

The new EU members are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.