Exhibit Halls: China Redefines Second Tier

By Heidi Genoist -- Tradeshow Week, 5/29/2006

Quick: Name a Chinese city with 5 million people and a 1 million square foot convention center that will host more than 100 tradeshows this year.

If you're like most Americans, you'll guess Beijing, Hong Kong or Shanghai. And you'll be wrong.

While these first-tier cities are bustling international tradeshow destinations, they are flanked by a host of lesser-known sites that, in some cases, have more space than their more famous counterparts.

Consider Shenyang, the seat of Liaoning province in northeast China. With 4.8 million inhabitants and the massive, five-hall Shenyang Intl. Exhibition Centre, the city hosts three annual international exhibitions for plastic doors and windows, transport and logistics, and equipment manufacturing.

And, said He Qing Xue, exhibition department director for the Shenyang Sub-council of the China Council for the Promotion of Intl. Trade, those three major exhibitions will be joined by some 150 smaller shows this year.

Yet, by Chinese standards Shenyang is second tier. Not necessarily because of its size, but because it has yet to develop its tradeshow industry to the level of Beijing, Hong Kong and Shanghai.

Shenyang is just one example of the Chinese exhibition industry's scale, one that is difficult for most Americans to comprehend.

Guangzhou, the 6.7 million-inhabitant capital of Guangdong province on southern China's Pearl River Delta, has for years offered the country's largest exhibition center and largest trade fair — both once known interchangeably as the Canton Fair, which celebrates its 100th anniversary this year.

Michael Duck, senior vice president of CMP Asia, said, "Guangzhou has attracted new exhibitions to its center, perhaps not as fast as Shanghai, but it's growing well and the local government is putting a lot of effort into the trade fair industry, as it sees the enormous benefits our industry brings."

Guangzhou officials are not alone in this.

China's secondary cities — which are growing at staggering rates — are jostling to get a larger slice of the country's international exhibition pie. If they're successful, they could cause a major shift in the county's trade fair business. Still, they face some challenges.

For starters, there's simply too much exhibit space available.

In addition to Shenyang and Guangzhou, there's a long list of second-tier cities with expansive, modern exhibition facilities. Dalian, Dongguan, Nanjin, Shenzhen, Suzhou and Zhengzhou are some in the 500,000- to 1-million sq. ft. range that leap to organizers' minds.

Ho Koon Dow, senior vice president of Pico World Expo (the main show services contractor in China), went so far as to say, "Practically all major cities in China have large convention and exhibition centers."

Why so many? Jime Essink, CEO of VNU Exhibitions Asia, said many new centers have opened and been modernized in the last three to five years as part of China's redevelopment.

"Like in some European countries, the development of a modern exhibition center has become a prestige project for local government in many Chinese second-tier cities," Essink said.

But these governments did not plan infrastructure expansions to accompany the space expansions. As a result, many of the centers are having trouble attracting enough exhibitions to break even — let alone turn a profit.

"The Pearl River Delta (Guangzhou, Hong Kong, Shenzhen and Dongguan) has an enormous oversupply of venue capacity, due to the many new venues built in the last three years," noted Essink. "Also, most of the second-tier city venues are unsuccessful in their bookings."

Some, noted Ho Koon Dow, have found solace in locality and flexibility, catering mainly to regional shows and building space that accommodates events in addition to exhibitions.

But to compete with the big three, all will have to look abroad.

One problem with attracting global exhibitions is name recognition. He Qing Xue recently embarked on a European tour with the mayor of Shenyang to drum up international business.

In addition to branding themselves better, some cities will have to revamp their infrastructure. Duck noted that more have international airports, but lack good exhibition contractors and venue managers.

All this is leading to increasingly heated competition among suppliers.

The joint venture Hong Kong-Shanghai Venue Management in May took over operations of the 750,000 sq. ft. Zhengzhou Intl. Convention & Exhibition Center, which claims to have received $4.4 billion in foreign investment last year.

"The market for managing the convention and exhibition centers is opening up," said Ho Koon Dow, whose own firm is getting into the game, co-managing the Chongqing Intl. Convention & Exhibition Centre with U.S.-based Global Spectrum. The two also will co-manage a new center to be opened in Xian in 2007.

While some centers look to outsource management locally, more and more are looking abroad, he added. And as the marketing and service improve, interest from overseas should follow.

"The competition for international business will be more intense, as organizers will be pampered with the variety available," predicted Ho Koon Dow.