Right Place, Right Time

The man behind AsiaWorld-Expo is convinced there's room for one more venue in East Asia

Staff -- Tradeshow Week, 4/4/2005

The new convention center near Hong Kong Intl. Airport, AsiaWorld-Expo, will open in December. Already booked for the first year are nearly two dozen major trade fairs, but the plum is the world's largest telecommunications exhibition, the triennial ITU World Telecom that will be held in December 2006 outside of Geneva for the first time in 33 years.

The decision to build AsiaWorld-Expo was made just months before Hong Kong submitted its bid in October 2003 to host ITU.

Having 30 months to build a major new facility is "a tight schedule," conceded Nicolas Borit, AsiaWorld-Expo's CEO, who has been involved with the project since the Bouygues Group, the French conglomerate he works for, began investigating a partnership with the Hong Kong government on the project in late 2002.

While it is certain Hong Kong could not have landed ITU without the assurance that AsiaWorld-Expo would be ready for it, the convention center likely would not have taken shape so rapidly without such a huge show.

Borit spoke recently with Tradeshow Week Editor in Chief Michael Hart about the rapid progress of the center, the trade fair environment in East Asia and the controversy that has riddled the Hong Kong press, as the operators of the Hong Kong Convention & Exhibition Centre plan their own expansion in an attempt to keep pace with their new competitor.

Question: Will AsiaWorld-Expo be ready on time?

Answer: It's a very challenging project because it's a very short construction duration when compared to the size of the venue. We're talking about 132,000 square meters (1.4 million square feet) of constructed area. That also includes a train station. All in all, this is a very challenging construction project, and the duration for the whole thing is 30 months.

We'll definitely be ready by the end of December 2005. That, of course, is one of the key things because, without the venue, as an operator we cannot do much.

Q: Why the accelerated schedule?

A: The schedule was tight for two reasons. One, because, according to the government, previous marketing studies identified that the market would be there for a new venue by the end of 2005.

Number two, there was a constraint which was dictated by the fact that Hong Kong was in the process of submitting a bid for ITU World Telecom 2006, which is the largest telecom show in the world, usually held in Geneva. ITU was asking for bids not only from Hong Kong, but Istanbul (Turkey), Madrid (Spain), Milan (Italy), Singapore, a lot of cities in the world. Basically, the venue had to be ready by 2006 to be able to hold the show.

Q: Was the commitment to accommodate ITU made before the decision to build AsiaWorld-Expo?

A: Not exactly. Construction started at the end of August 2003, and the official bid for ITU was submitted in October 2003. After long negotiations with ITU, (the show was awarded to Hong Kong) in June 2004.

It was a gamble but, to be fair, there is a market for this kind of exhibition center. ITU was a plus, but not the justification for the building. One show is not enough to justify it.

Q: Besides construction, what are other big tasks ahead of you?

A: Well, the second big task for us was to establish our calendar of events for 2006, 2007 and 2008. It's a bit pointless to have a wonderful new facility with nothing happening inside.

This also is well on track. We have, to date, secured 22 exhibitions for 2006 alone. Most will be recurring shows because they have signed, most of them, for two or three years.

Starting from 2006, we will have five shows that will take up the entire space of the center, 70,000 sq. m. (753,474 sq. ft.) of usable space. One of the five is ITU Telecom in December 2006, but there are four other shows that have booked the entire area available at the center.

Q: ITU Telecom World has been in Geneva for 33 years. How did Hong Kong manage to land it in 2006?

A: There are two key elements that convinced the ITU board to make the move to Asia. First of all, they've been facing some logistical problems in Geneva for the last two editions of the show. The show is massive in size and requires lots of hotel room capacity, which was not the case in Geneva.

In 2003, some of the big telecom players didn't want to come because they could not organize the show in good condition to welcome their clients, or even their staffs. There were a lot of accommodation issues in terms of hotel capacity, also with the pricing of hotel rooms.

The second point was the key one. It was that the market is here. The market for the telecom industry in the next 10 years is definitely somewhere closer to Asia than to Europe.

Q: What other kinds of shows have you scheduled for AsiaWorld-Expo?

A: It is no mystery we have booked the venue with many organizers of sourcing shows. That's the logical market for Hong Kong. It is the gateway to China, has always been, still is, and it's the perfect window to sell products to China and to buy products from China.

Now we are starting to book some more industrial-type shows, machinery shows. Those were not held in Hong Kong before because there was not a venue that could accommodate that type of show. It was a question of venue characteristics, accessibility, and the venue downtown (the Hong Kong Convention & Exhibition Centre) could not accommodate those requirements.

It is our mission to bring back to Hong Kong some of those machinery shows that are now in China, that could not be held before in Hong Kong anyway.

Q: Where are the shows that you're booking being moved from?

A: All of those shows are not officially announced yet. I think I can say the second big client we have is Global Sources. Global Sources has booked AsiaWorld-Expo to organize four shows during the first year — two in April and two in October — which are massive exhibitions dealing with gifts, toys and home products. Another one deals with electronics. They are already very successful in Shanghai.

Q: Who do you see as your competitors?

A: There is, of course, to a certain degree, Hong Kong (Convention & Exhibition Centre). We more complement each other than compete against each other. A good demonstration of this is that out of 22 shows that will be held at AsiaWorld-Expo in 2006, only one has decided to move from the downtown convention center to AsiaWorld-Expo. The rest are all new.

We are in competition with some of the dynamic exhibition places in Asia, namely Shanghai (China), Singapore and Bangkok (Thailand).

Then we are, on a case-by-case basis, in competition with the world, and the best example is ITU. For big exhibitions, we are basically in competition with the world to attract those exhibitions that move from one place to another.

Q: What can you tell me about the controversy over competing with HKCEC?

A: We are opening a new venue. I think it was a legitimate expectation on our side to give our project a chance to establish itself. We did react when there were announcements of plans to arrange temporary space for additional exhibition space downtown, whereas we were opening a state-of-the-art, brand new exhibition center right in front of the airport.

We thought that was not the best way to develop the business. We wanted also to establish a relationship with the Trade Development Council, which is the largest exhibition organizer in Hong Kong.

At this very moment, we have booked some space for the Trade Development Council to host exhibitions at AsiaWorld-Expo. This is a great move and we will coordinate with the authorities in Hong Kong. There will still be a degree of competition between the two venues, with a lot of cooperation as well.

Q: Then are press accounts accurate that AsiaWorld-Expo feels it was not treated fairly?

A: Our question was: Why is it that both the government and the private investor are spending $2.4 billion on the new venue if, at the same time, we are expending capacities downtown via temporary arrangements? Of course, we reacted strongly to this. We said, "Wouldn't it be better to investigate the opportunity to join forces? To make the best use of the permanent venues in Hong Kong?"

Q: But HKCEC is still going ahead with a temporary addition downtown while it conducts its own expansion, right?

A: There are things which are not decided on their side. We have what we want, which was to initiate a true relationship among the players in Hong Kong, and I know they have not finalized their plans about the other project they have considered downtown.

Q: Over the long term, how will AsiaWorld-Expo fit into the trade fair landscape in Hong Kong and the Guangdong Province?

A: As far as the convention center and ourselves are concerned, there is not one venue that specializes in doing one type of show and the other specializing in another type. For those who may think that the jewelry show might only be hosted downtown, I'm glad to announce there will be a show at AsiaWorld-Expo starting from year one.

The reality is that the convention center downtown has a great asset (in that it can) host conventions, where AsiaWorld-Expo has more limited capacities on this. But we have the capacity to welcome large industrial, heavy machinery shows, which would be difficult to host at the HKCEC. Both centers can deliver a top-class service to the market.

What we will see is that AsiaWorld-Expo and the Hong Kong Convention & Exhibition Centre will form a very strong offer for this market, and we'll compete directly together with the neighboring cities.

Q: Why does the construction of AsiaWorld-Expo make sense, when there is a well-known oversupply of exhibition space elsewhere in China?

A: In Hong Kong, the decision to move ahead with this new center was prompted by demand, because the Hong Kong Convention & Exhibition Centre was heavily booked at some periods of the year and couldn't accommodate the growth of some of its shows and could not welcome new clients.

But remember that we are in Hong Kong, one of the key cities in the world for this business. I have a lot of doubts when I look at development of venues everywhere else in China, in the top cities in China where they have gone for big investors in exhibition centers, but they have no clients.

It will be a lot more difficult for some other cities that invested heavily in exhibition centers. There are too many, but China is booming. Each and every city is now willing to have its own airport and exhibition center, and the market is not necessarily there for that.

Q: So there is a market for exhibition space in Hong Kong, but not in the rest of China?

A: It's not a mystery that the exhibition business develops well in cities that have strong attraction power for visitors and delegates. Hong Kong is one of those cities in the world, like New York, London or Paris. It's a little bit more difficult for other cities in China, except Shanghai and Beijing, to develop this type of international image.

(For) most of the 20 secondary cities in China, I'm sure that 99 percent of people in the world cannot even tell you their names. Some of those cities are bigger in population than the great capitals of the world. That's the reality, but you don't know where they are.

Q: The Germans and the British seem to have been quite successful in entering the Chinese trade fair market. Is there room for organizers from other countries in China?

A: There is room for anyone, provided you are ready to take some risk. The Germans have proven to be very successful in developing the new Shanghai exhibition center. They are in a 50-50 joint venture with a local player in Shanghai.

They have invested a lot to develop this project, which has proved to be very successful. They have paved the way and have made a wise investment decision. But at the time they did it, I doubt very much there were many candidates in the world prepared to do it.

Q: You have spent most of your career in construction and development. With construction winding down toward the end of the year, how much longer will you be involved with AsiaWorld-Expo?

A: It's been a long process for me here. It all started in 2002 when we looked at this with the Hong Kong government to see how we could participate. I'm passionate about what I do today, and I'm definitely willing to continue to develop this industry.

This is a great industry, a profitable industry, provided you develop an exhibition center at the right place, at the right location, at the right moment. My task is to launch this venue, to make sure everything is operating well, and then to look at some new developments in this industry.