Mainland Expansion: Moving Farther Out of Town

By Gary Tufel -- Tradeshow Week, 3/12/2007

The Hong Kong Convention & Exhibition Centre has decided that merely being the city's best-known tradeshow venue isn't enough. It's diversifying — taking on management of the new mainland Zhengzhou Intl. Convention and Exhibition Centre, planning similar ventures in other mainland Chinese cities and getting involved in construction projects in nearby Macau.

It's all part of a move into markets and activities beyond running a major international convention center.

The status quo changed in Hong Kong when AsiaWorld-Expo opened near the airport. The new center celebrated its first year of operations in January, holding 25 trade and public exhibitions in 2006 (compared to HKCEC's 123 trade and public shows in fiscal year 2005–2006).

Still, "AW-E has nothing to do with our expansion into China," said Cliff Wallace, managing director of HKCEC; chairman of Hong Kong — Shanghai Venue Management (VMZL); and incoming president of UFI — the Global Assn. of the Exhibition Industry. "They're not a major concern for us."

The real reason for the expansion is an old-fashioned one, Wallace said: the never-ending quest for more revenue sources.

He said NWS Holdings, which owns HKCEC, decided to expand to the mainland years ago because of what it believed was an unmet need for competent venue management. That's why it created Hong Kong Exhibition & Convention Venue Management, which in turn formed the VMZL joint venture with Intex Shanghai to manage the Zhengzhou facility. The Hong Kong and Zhengzhou facilities share the same management team.

"NWSH chose Zhengzhou, under my lead, due to its location in the central plains of China, and because it is a highway and rail hub that will serve as a catalyst for exhibition growth," Wallace said. "The mainland is growing from east to west, and we are confident in Zhengzhou's future as a major business center, with 250 million people within a one-hour flight. With 710,000 square feet of exhibition space, it is among China's best when comparing new venues in the secondary and tertiary markets."

The Zhengzhou facility had its soft opening in September 2005, and the HKCEC, which worked with the center on a pro bono basis, began formal management of the facility last June.

NWS Holdings is regularly asked to be involved in the management of venues on the mainland, Wallace said, because of the demand for experienced executives who can train mainland locals to manage and operate the venues themselves.

Sensitive to criticism concerning any cross-town rivalry with AW-E, Wallace said HKCEC began eyeing mainland China eight or nine years ago, well before anyone even dreamed another Hong Kong facility would be built. Zhengzhou was the first market considered because it offered entrée into the mainland Chinese domestic tradeshow market. (The Hong Kong center concentrates more on international shows — not necessarily those managed by international organizers, but those that attract international exhibitors.)

Already, it appears the Zhengzhou venue's relationship with Wallace is paying off by attracting international players it might not have been able to land on its own. Recently, the ITE Group signed an agreement to use the center for major exhibitions four to six times a year for the next three years. Tarsus will hold major themed expositions at the ZZICEC on an annual basis, and Montgomery, the U.K.-based show management firm, formally expressed interest in booking future consumer shows at the facility.

"Zhengzhou is the center of a huge population conurbation which is transforming itself into a major city in China," said Montgomery Chairman Sandy Angus. "Our events will concentrate in the consumer arena, but there can be no doubt that the facilities in Zhengzhou, and its strategic location, will make it a very attractive venue for companies wishing to reach large numbers of Chinese buyers."

Next up for the HKCEC is Shenyang, for the same reasons as Zhengzhou. It's a hub for another growing area, Northeastern China. There, in addition to managing and operating a new convention and exhibition center, HKCEC's parent company will design, construct and own the venue by way of its in-house construction company, Hip Hing.

Hip Hing, according to Wallace one of the largest construction companies in Hong Kong, built the original HKCEC and Convention Plaza (including the adjoining two hotels, and office and apartment towers) that opened in 1988, and was part of the joint venture that built the first HKCEC expansion in 1997. Its current HKCEC expansion is due for completion in late 2008 or early 2009. It's also built major properties in Macau, including the new Grand Lisboa.

AW-E Deputy CEO Allen Ha, a former HKCEC executive, said his company has its hands full with the relatively new convention center and has no plans to extend its reach to the mainland any time soon. He also downplayed any competition with the downtown HKCEC.

"The two venues can leverage on each other and together offer significantly more dedicated and well-specified convention, exhibition, concert and entertainment space to different types of events," Ha said. "This helps to affirm Hong Kong as the ideal gateway for access to the mainland market, as well as a springboard for mainland enterprises to venture into the global marketplace."

The polite "no comments" on the competitive atmosphere to the contrary, a look at both facilities' 2007 schedules reveals a number of shows in the same industries with nearly identical dates.

For instance, the Hong Kong Electronics Fair (Spring Edition) will be held April 14–17 at the HKCEC; the China Sourcing Fair: Electronics & Components April 12–15 at the AW-E. The fall editions of the shows will be held Oct. 13–16 and Oct. 12–15, respectively.

The Hong Kong Intl. Jewellery Show and Hong Kong Watch and Clock Fair ran March 6–10 at HKCEC; Hong Kong Watch, Clock, Optical, Parts & Accessories Fair ran March 7–10 at AW-E.