New Rules for Shows in China?

A new set of regulations proposed by the Chinese Ministry of Commerce regarding foreign tradeshow organizers has, at best, confused companies that have worked in the country for years and may, at worst, seriously limit their ability to continue to do so.

On Jan. 11, the ministry began circulating a proposed set of requirements pertaining to exhibitions held in mainland China that have at least 20-percent international participation in terms of either exhibitors or attendees.

While foreign show organizers have always been required to work with local partners and have their events licensed by the government, it is possible that, if enacted, the new regulations could go much further.

Besides having to obtain approval to stage an event of at least 2,000 square meters, international organizers may have to work with several other requirements:

• having a “domestic legal person” as a partner
• filing an application at least six months before the event
• complying with rules that dictate what the show's name can be
• getting advance government approval for advertising and promotional materials
• holding no more than two exhibitions in the same sector in the same city in a single year, and making sure that no more than four are held by all organizers in the same year

Chinese Ministry of Commerce officials did not respond to requests for comment from Tradeshow Week. However, Western industry association officials and tradeshow professionals with experience in China disagreed on the motive behind the ministry's proposed regulations. Some said it was an attempt to limit foreign competition for domestic show organizers. Others thought it was merely part of an effort to improve standards in a fast-growing industry.

“We believe the proposed regulations are the result of pressure brought on the Ministry of Commerce by local organizers who do not want competition from international organizers,” said Steven Hacker, president of the Intl. Assn. of Exhibitions & Events.

Stephen A. Sind, president and CEO of Global Event Strategies, said the proposed regulations were the likely outcome of an increasingly competitive market.

“Over the years, with all the new companies and the upsurge in the exhibition industry, everybody was getting into the act,” Sind said. “It's been overwhelming for the local organizers. Maybe they've complained, and the regulations are being promulgated as an equalizer.”

On the other hand, others with experience in China said it was an attempt on the part of government officials to modernize and update practices in the exhibition industry.

Jo-Anne Kelleway, CEO of InfoSalons, an Australia-based registration company that provides service for many shows in China, said, “They're trying to professionalize the industry, instead of the slapstick way things have been going.”

Stephanie Selesnick, executive vice president of Intl. Trade Information, said of the commerce ministry, “They're just trying to get a grip on the industry. It is a developing, emerging market, and they're still learning how to do stuff.”

Kelleway's and Selesnick's views are consistent with comments Chinese exhibition industry officials made during the China Expo Forum for Intl. Cooperation held last month in Chengdu, China. There, they said they expected the fast-growing industry to slow down a bit in 2008 and become more “rational.”

“Organizations will further be improved so that overall competition will become more organized,” said Wang Jinzhen, vice chairman of the China Council for the Promotion of Intl. Trade. “Growth in C&E (conventions and exhibitions) will become more rational.”

Regardless of the reasons for the proposed regulations, many foreign organizers who would be affected by them were struggling to understand their implications.

“Like most Chinese regulations, they're very vague,” Sind said, “so they can adjust any given regulation to any given situation.”

Sind pointed out that, as written, it wasn't clear what was meant by the “domestic legal person” that an organizer would be required to partner with. For some time, foreign organizers have partnered with local organizations or governmental entities. How, he wondered, has that changed?

“You don't know if (by domestic legal person) they mean a human or something recognized as a legal entity,” Sind said.

Kelleway said she had requested a Chinese-language version of the proposed regulations, thinking perhaps the description of a domestic legal person might have lost something in translation.

Terry Friesenborg, senior vice president of international development for InfoComm Intl., in comments he sent to the commerce ministry, questioned the need for prior approval of exhibition promotion materials in an atmosphere as competitive as the tradeshow market.

“They can hold up our application for promotion materials to be approved while allowing our competing show's materials to proceed,” Friesenborg said. “We are concerned that the newly proposed China exhibition regulations are vague and may make the proper promotion of trade events in China difficult.”

Almost everyone was confused by what was meant by the term “international exhibition.” The proposed regulation said it is one “if its overseas participants (excluding foreign-invested enterprises in China) or overseas exhibitors account for more than 20 percent of all participants and exhibitors.”

In his comments to the commerce ministry, Hacker wrote, “There is an infinite number of partnership structures that parties might choose to enter.”

Sind wondered if wholly owned foreign enterprises (essentially local subsidiaries of global companies) would qualify as the foreign-invested enterprises mentioned.

Others did not seem worried at all about the ambiguity in the definition.

Susanna Hinds, director of corporate communications for IDG World Expo, said, “IDG's tradeshows in China are produced by Chinese exposition companies, so we do not believe the proposed regulations will impact our tradeshow activities.”

The Chinese government extended the period during which it would take comments on the proposal to Jan. 28, but when and to what extent the regulations would be enacted were unclear.

“It remains to be seen whether they'll follow up,” Sind said.

Selesnick predicted some of the measures would be enacted and some not.

“The fact that they asked for comments means they're taking it quite seriously,” Selesnick said. “The Chinese really like to take their time and study all the ramifications before making a decision.”