Asian Expansion: Messe Companies Fan Out

Heidi Genoist -- Tradeshow Week, 8/28/2006

Like so many global corporations, the German trade fair companies, or messes, are doing everything they can to expand their reach into Asian markets, particularly China.

Although most Americans have a vague notion of how pervasive German trade fairs are in Asia, many aren't aware of the strategies that went into developing them, or the markets they dominate.

Steve Sind, now an independent global consultant, went to China in 1981 to help his then-employer Reed Exhibitions set up operations there. He stayed in China through the 1980s, when the German fair companies began building up their presence in the country, mainly by partnering with Chinese shows for industrial sectors in which the messes excelled in Germany, and setting up pavilions for German exhibitors within those shows, Sind said.

"The (German) fair authorities started to look at the world and see the big U.S. and British tradeshow companies setting up offices around the world, and wondered if they were doing it the right way," he remembered. "Since they were already in shows, they started thinking about launching them."

A common strategy, said Sind, was for a messe to export its leading brands — take a show, put "Asia" on the end of the name, and plop it down in a city where there was a concentration of buyers for the industry in question.

According to Sind, this approach had mixed results. Seeing that they needed more of a permanent presence in the areas where they wanted to do business, the German fair companies in the 1990s began setting up shop around Asia.

In the way Germans are developing operations in Asia, one finds echoes of their typical domestic strategy: bring together as many of the services as possible that go into producing a fair — everything from the building, to the labor, to sales and marketing, to the ownership and operation of the shows. The messe companies increasingly are seeking partnerships with local venues and service providers to enhance their Asian business.

However, this isn't always easy. Dan Londero, president of Reed Exhibitions China, which today produces dozens of international shows there, noted that Chinese exhibition centers, in particular, present challenges:

• a low national average hall occupancy rate (about 15 percent)
• lack of space in major cities, coupled with excessive space in lesser-known secondary cities
• low operation capability that necessitates relying on local government support
• lack of professionalism in operation management
• duplicate construction and wasted resources

"More and more exhibition centers, especially the newly built ones, seek partnership with international suppliers of management, or invite bids internationally so as to introduce international operation management," Londero said.

Like many other companies from around the world, the messes have heeded this call for help.

One notable example is the Shanghai New Intl. Expo Center, a joint venture between World-Fair Consultants and three German trade fair companies: Messe Duesseldorf, Deutsche Messe (in Hanover) and Messe Muenchen (Munich). The facility has 100,000 square meters (1.1 million square feet) of indoor, column-free exhibit space.

Recently — perhaps with their success in Shanghai in mind — Duesseldorf, Hanover and Munich entered into a partnership to put their expertise up for hire. The three formed the German Exhibition Corp. Intl., offering comprehensive consulting services in Asia — everything from designing a facility, to running it, to filling it with shows.

They have a track record to build on. Opened in November 2001, the SNIEC has seen a steady rise in business since then. The facility's occupancy rate rose from 43 percent in 2002 to 71 percent in 2005, when it hosted 67 exhibitions, spanning a total of 2.4 million sq. m. (25.7 million sq. ft.), and attracting 46,182 exhibitors.

In 2006, operators expect 64-percent occupancy and the sale of 2.8 million sq. m. (29.9 million sq. ft.) of exhibit space. The facility itself will be getting bigger in the future, too, according to a master plan. It's slated to grow to 200,000 sq. m. (2.2 million sq. ft.) of indoor exhibit space by 2010. Two new halls adding 11,500 sq. m. (123,784 sq. ft.) are scheduled to open in September 2007.

That's one piece of progress Messe Duesseldorf is looking forward to, as it ramps up its business across Asia, especially in China.

Founded in 1999, Messe Duesseldorf China is another joint venture with World-Fair Consultants, which holds a 20-percent stake in the company. It has grown to 50 employees in offices in Beijing, Chongquing, Guangzhou, Shanghai and Shenyang, five of China's most active trade fair cities. The offices are there to organize international fairs, jointly organize fairs with local agencies, recruit exhibitors, promote events and offer exhibition consulting services.

They seem to be doing OK too. In 2005, MDC organized six international tradeshows in China, spanning 85,970 sq. m. (925,373 sq. ft.) and attracting 1,518 exhibitors and 109,060 trade visitors. That compares with eight exhibitions spanning 95,780 sq. m. (just over 1 million sq. ft.) and attracting 2,002 exhibitors and 108,327 visitors in 2004 (which, incidentally, saw a 13-percent increase in exhibitors over 2003).

MDC's 2005 shows were China Shoes, China Shoetec, China Med, CRC, China Beauty and China Pharm. In a statement this month on the company's expansion plans, MDC Managing Director Wilhelm Niedergoeker noted the 2007 launch of a Chinese version of Duesseldorf's successful glasstec in Guangzhou. He also said an offshoot of the fashion exhibition Igedo was in the cards for China.

"The Chinese economy has been tearing along in the fast lane for years now," Niedergoeker said. "Demand particularly for capital and consumer goods manufactured abroad continues to rise unabated."

Messe Duesseldorf isn't the only one with Asian expansion plans. Hanover's Deutsche Messe has been running its CeBIT Asia since 1999, drawing 433 exhibitors and 53,297 professional attendees to last year's event in Shanghai. It has exported other brands, too: PTC Asia, CeMAT Asia, Factory Automation Asia and Energy Asia. Last year, Deutsche Messe launched INTERKAMA Asia. Collocated last year at the SNIEC, the five industrial exhibitions maxed out the SNIEC and drew 53,000 trade visitors.

These longer-established companies are getting some new competition as well. A relative latecomer to the Asian scene, Nuremburg-based Nuernberg Global Fairs last year opened an Asian headquarters in Shanghai and named Axel Bartkus — who's been overseeing the company's Chinese business for two years — as its managing director.

Nuernberg is already involved in the production of six events in China: Fenestration China, GaLaBau China, Intl. Power&Bulk, IAC, TME & SENSOR and the China Intl. Pet Show.

But Bartkus has plans to move well beyond this list, which includes several partner events. Nuernberg has been laying the groundwork to extend its 15-year-old organics-industry brand, BioFach, to China with a Shanghai launch planned for this December. BioFach Japan (in Tokyo), BioFach America — Organic Products Expo (Baltimore) and BioFach America Latina (Sao Paulo) drew a combined 40,000 professional attendees in 2005, a 14-percent increase over 2004.

For 2006, Nuernberg counts six owned and/or partnered events in Asia (half of them in Beijing) and six contracts for pavilions.

"We have to be quick to catch up with new trends and market developments in Asia," said Bartkus. "The new subsidiary of NuernbergMesse in Shanghai will be in the right position to monitor what is going on in China, and to develop new shows according to market demands."

Although the company focuses on Japan and China — specifically Tokyo and Shanghai — it's investigating other potentially rewarding markets in Asia, Bartkus said. The company is presently developing a global strategy, drawing on its market strengths and looking for local partners.