"Local teams close to local market.” That’s been Reed Exhibitions’ mantra from the word go, according to chairman and CEO Mike Rusbridge.
In the world of forming international relationships, there is no one-size-fits-all solution. Everything a company sets up has to be individualised to suit requirements, and more importantly, the end game should be built around more than financial reward.
When Reed moves into new markets, it quite often finds itself starting from scratch. In Russia, the company was built around and developed by Gregory Zaraisky and has since become a sizeable business. Zaraisky was appointed as regional MD when there was nothing there, not even an office.
Compare this with Reed’s business in North America, where it already has an established position, and where it tends to ‘buy and bolt-on’; acquiring a company and integrating it into its business, run out of the organiser’s operation in Norwalk, Connecticut.
“We’ve got people on the ground now in Mexico, senior people who know the markets,” says Rusbridge. “In the vast majority of cases, in any of our businesses, we hire local management. It means we get as close as possible to the market and have a grasp and understanding of the culture. With the best will in the world, if you’re piloting someone from the US into these countries, the time it takes to get involved in that circle is just too long.”
It’s clear Reed is not afraid of choosing partnerships over acquisitions. In the developing exhibition destinations Turkey, China and (until recently) Brazil, the company expanded its business through partnerships. In terms of the exact nature of the deal arranged – there’s no single approach.
“The key, and where there is a difference from us and a number of other people – is that where we’re entering these new markets, we like to have partners,” says Rusbridge.
Establishing gatekeepers
“Turkey is a good example – lots of people diving in and lots of people buying individual shows. We have an aspiration to be in a leading position in the countries in which we operate,” says Rusbridge. “In Turkey it really came down to one choice, which was Tuyap. Frankly we would have walked away from Turkey, as attractive as the market is, if we didn’t do the deal with Tuyap. And the company knew that.
“We had a very frank conversation with Tuyap and explained the situation, and got to know each other over a two-year period, and I’m delighted to say it’s proven to be a partnership that we hope will lead to bigger and better things.”
Tuyap is not a small player, it doesn’t have to work with Reed and it doesn’t need the money. What the venue is looking for is either, ultimately, a long-term plan, which is maybe more difficult on its own. The management may have reasons for saying they want an exit at some point, but actually they need to make sure they’re happy they can do business with us.
Rusbridge says he plans to build the company into a much bigger venture than just its components, and then the two companies will discuss the next stage of their partnership. “On both sides, we’ll work at it. I’m already pretty confident that it will be successful. At the end of two years we’ll look again and see if we want to go to the next step.”
In China Reed works with nine partners. In each case the partnership was made on a sector-specific basis, so there’s no overlap, or conflict of interest. With each of those partners it’s moving those concepts and brands into other parts of the country.
“A number of our partners in China have now stayed on longer than the agreed period, because they’re finding it of value,” says Rusbridge. “If you’re running businesses as we are in China, with nine partners, it is more complex than if it was all your own business.
“The trade-off is that you’ve got people who are intimately acquainted with their city, their region or their industry, who basically know how things work on the ground, and we’ve found that immensely helpful. For that reason, we’re pushing into Turkey, Saudi Arabia and Indonesia via partnerships.”
Sectors and geographies
Rusbridge looks at globalising Reed’s business through two means, geographies and sectors. In his words, his job is to see where he can “join the dots”. Reed may enter one country that may lead to multiple shows, or it may enter via a single event.
“A number of years ago we partnered on a big aluminium show in Germany,” he says. “We bought a business in Germany and it’s proven to be – on its own – a very successful show. Now we have six aluminium shows around the world. Again, every time we look at these things, in themselves they are a long-term attractive, quality business, and the question is then where else we can take them.”
Alternatively the issue may be what other shows Reed has in other sectors or geographies that may enhance what it’s just done in that country. “It’s really about how you create those synergies. How does one and one equal three?” Rusbridge says.
“Our perspective is that if you’re moving into either a new sector or geography, it’s a very high risk strategy to dismiss the knowledge, experience and proximity to market that either the owners or the management team have. There may be occasions where you have no choice, but certainly from our point of view we value those highly.”
He claims this is part and parcel of why Reed takes years to do some of its deals. “It’s part of getting to know each other. I’m very impatient, but by the time we get together we’re much more comfortable and we know how to operate together.
At any one time – and not limited to acquisitions – this work ethic necessitates discussion and debate with lots of people at once. As Rusbridge points out, some will work and some will not.
Some will take a lot longer than others, and there are certain countries where Reed knows exactly which partners it must work with to become the dominant player.
“We put a huge deal of time and effort into finding the people who we think have the same sort of standard, of aspiration, as we do. We’ve turned down lots of opportunities which were financially attractive but where we didn’t think the culture fit was there. So it takes us a little while longer, in some cases a number of years, to find the appropriate entry point.
“It took us seven years to work on a joint venture on one show. In the past, people have said: ‘Well it seems a bit slow’ but success can take a long time,” says Rusbridge. “We focus on doing our homework and forging relationships. It doesn’t matter how good the deal is if the relationship isn’t there.”
This was first published in the Issue 1/2013 edition of EW. Any comments? Email exhibitionworld@mashmedia.net
