The arrival of Hong Kong on the landscape of international exhibitions can be attributed, perhaps unsurprisingly, to two major events in China. The Canton Fairs, which still exist today, were established in Guangzhou (formerly Canton) in the Guangdong province in 1957. Taking place every spring and autumn, these huge events provide arguably the most comprehensive offering of any truly international exhibitions and are responsible for linking a numerous and diverse group of exhibitors with a global set of buyers. The exhibitions created countless business leads and generated some of the greatest retail business turnover in China.
Reaching the Guangdong province from overseas required a port capable of handling vast numbers of visitors on the way in, and a vast amount of products on the way out. It demanded, and still demands, straightforward and amenable import and export practice, accessibility and – equally importantly – an ability to accommodate and cater for a wide variety of international travellers.
Enter Hong Kong. One of two Special Administrative Regions (SARs) belonging to China, alongside its Pearl River Delta neighbour Macau. The city has seven million inhabitants and crucially, around eight per cent of these (570,000 people) hold foreign passports. Both Chinese and English are accepted as official languages here, harking back to the city’s British rule until the handover in 1997. The Canton Fairs may still have the space and the volume but, for now at least, Hong Kong has the service and the quality.
And it has certainly found a niche for its premium product trade shows.
In 2010, Hong Kong International Airport handled 51 million passengers and 4.1 million tonnes of cargo, carried by 95 airlines from 160 destinations. Every day 489,000 people and 44,000 vehicles cross from the mainland, while a further 60,000 people make the trip by ferry. Lo Wu, a town in the middle of Hong Kong’s border with China, handles a quarter of a million migrants every day.
Being home to such an influx of international visitors, it wasn’t long before some of the city’s entrepreneurs took the liberty of tapping into the passing trade with exhibitions of their own. As time passed, major international venues such as the Hong Kong Convention and Exhibition Centre (HKCEC) rose on the islands with 66,000sqm of dedicated exhibition space) and AsiaWorld-Expo (AWE) with more than 70,000sqm. Both were built to handle large-scale events, served by a carefully considered public transport system.
Of the two it is the HKCEC that sits on the more attractive real estate, located in Hong Kong Island’s colourful Wanchai district as part a mixed-use development titled ‘Convention Place’.
Located on Lantau Island in the west, AWE can make the claim of being the larger venue, located more conveniently beside the airport. Its size is also an attractive factor and a key reason why Messe Berlin chose to move its produce fair Fruit Logistica from HKCEC to the Lantau venue.
Loose parallels between the venues in Hong Kong and Singapore are appropriately drawn, with AWE sharing much in common with Singapore Expo both in location and profile, while HKCEC more closely resembles Suntec or – location-wise – Marina Bay Sands. Expand that comparison beyond the venues however, and the similarities diminish.
An independent report by corporate assessment firm KPMG claims expenditure effects relating to exhibition and conference activities at AWE rose 25 per cent from 2009 to 2010, to HK$13.4bn (US$1.72bn). In total, AWE’s economic impact to Hong Kong’s economy is claimed at HK$54.2bn for the period 2006-2010. Tax revenue is HK$1.8bn and away from the profit and loss account, the centre generated 19-26,000 full-time equivalent employees throughout the five-year period.
Much of this can be attributed to the boom across the border. Visitors from mainland China accounted for 34 per cent of total international exhibition visitors at AWE in 2010, up from 26 per cent the previous year. More importantly, these visitors accounted for almost 40 per cent of total international exhibition visitor expenditure, up from 31 per cent the previous year.
Average per-visit retail spend by mainland China visitors to Hong Kong rose dramatically in 2010 to HK$10,900. This is more than double the figure for the next biggest spender, Taiwan, and dwarfs that spent by visitors from Europe, Africa and the Middle East at HK$4,700 and those from the Americas, who parted with HK$3,100 on average, per visit.
Far from drawing attention from Hong Kong, the surrounding region’s increased wealth is having a positive impact at the city’s exhibition turnstiles, not only in terms of the number of regional companies represented on the show floor.
Hong Kong’s profile
Invest HK is a quasi-governmental organisation responsible for bringing new business to Hong Kong. Director general of investment promotion Simon Galpin, a director at AWE, says companies of all sizes are attracted to Hong Kong because of the security, protection of intellectual property rights including recourse through established international courts, and low tax rates. All factors that impact the full spectrum of companies from the very large to very small.
“One of the misconceptions about Hong Kong is that we’re only for big buyers,” says Galpin. “But actually it’s for SMEs and microenterprises. To begin a company in Hong Kong you need one director, one Hong Kong dollar (minimum start-up capital) and one hour to register your company online. Getting set up on the mainland would take months.”
Galpin spends a lot of time identifying companies that should have a base in Hong Kong, and interestingly it’s not just companies heading for China but companies heading for South East Asia that are showing interest. While Bangkok and Singapore present more obvious claims to the title of regional hub, he believes Hong Kong has the market and the prerequisite qualities of market infiltration and accessibility.
In addition, and contrary to other countries where the practice is more complicated, it is possible to extract the full stock of your company once the timing is right without penalty. Effectively here today, gone tomorrow if that’s all part of your plan or – woe betide – the market spits you out.
Regional development.
The Pearl River Delta (PRD) in which Hong Kong sits, is an incredibly fast-growing and populous region. In 2011 the Chinese Central Government announced a vision for the area’s development; the ‘Outline of the Twelfth Five-Year Plan for the National Economic and Social Development of the People’s Republic of China’.
More than simply a snappy title, this plan envisions the creation of a dynamic pan-delta metropolis that will further expand one of China’s most powerful regions of national and global economic growth. It will link Hong Kong to Macau and Zhuhai by an immense trans-delta bridge; to Shenzhen, across the border in China, by the Shenzhen Western Express high-speed rail line; and beyond that to Guangzhou via a new Guangzhou-Shenzhen-Hong Kong Express Rail Link, taking passengers from Hong Kong to Guangzhou in 50 minutes, halving the current journey time.
The new links will place all three economic powerhouses within 20 minutes reach of Hong Kong, affording the region tighter integration and seamless cross-border collaboration. Ongoing projects and development schemes in these cities include the Hengqin Development Zone in Zhuhai; the Qianhai Development Zone in Shenzhen; and the Nansha Development Zone in Guangzhou.
But are these neighbouring destinations likely to take a slice from Hong Kong’s pie? Cliff Wallace, managing director of HKCEC management firm Hong Kong Convention and Exhibition Centre Management, thinks not.
“Taiwan, Hong Kong and Macau can be independent when China needs them to be,” he says. “Even the second-tier cities have changed. This market is big enough for other cities to enter the mix. Strong markets build more business than lesser markets.
“But it’s not like the US, where big cities pounce on each other. It’s only fair to talk about the success of Beijing, because we’re getting more business for the same reason they are. Business breeds business.”
The Henquin development zone, Zhuhai, is strong in the fields of business services, leisure and tourism, technological and industrial innovation. Qianhai, just south of Shenzhen, is destined to become an important service production centre for the entire Asia-Pacific Region, encouraging future growth in China’s advanced logistics services, IT services, financial services and showcasing Hong Kong/Guangdong region tertiary expertise. Nansha, north of Gunagzhou, has been earmarked by China’s Economic Affairs Department and Ministry of Foreign Affairs as an ‘intelligent, low-carbon demonstration city’ for trade, business services, technological innovation and education. It’s also a location where port-related industries can flourish.
To provide some context for the contribution this is expected to make to the region, the Hong Kong-Zhuhai-Macau bridge is expected to carry 50,000 vehicles and 240,000 passengers every day by 2035. Add this to the 97 million passengers Hong Kong International Airport is expected to handle every year and it’s easy to see Hong Kong’s increased appeal to anybody running exhibitions and events.
Forecasts by the Bauhinia Foundation Research Centre claim the gross domestic product of this prospective metropolis, in terms of purchasing power parity, will exceed US$5.5trillion by 2038, surpassing that of current leaders New York, London and Tokyo.
As it becomes easier to develop products to specification at a cheaper price, the need to attend the Canton Fairs with their high volume product lines is lessened. This will be a threat to Hong Kong as the easier manufacturing process weakens China’s production role, and by extension Hong Kong’s role as a window into China manufacturing.
Daniel Cheung is general manager of Hong Kong Exhibition Services, part of the AllWorld Exhibitions Group, and chairman of the Hong Kong Exhibition and Convention Industry Association (HKECIA). He believes Hong Kong stands out from the international competition because of its focus on lifestyle and export-oriented consumer products. Key exhibition markets served by the city state include light consumer goods, toys, electrical products, gifts, fashion and jewellery.
“Hong Kong has the largest global fairs in the following sectors: electrical products, gifts, watches and clocks, jewellery and commercial aviation,” he says. “In Asia it can claim to have the largest fairs in the beauty sector (Cosmoprof), fashion (Hong Kong Fashion Week), film and television (Filmart), as well as homeware, toys, licensing, wine and spirits, and antiques and arts.”
He also maintains that Hong Kong remains a key location for getting your products across the border, while going direct to China can still end in frustration.
“It’s still not easy to distribute in China, even if you could find a buyer. Why not use Hong Kong, which is the accepted market route into China?
“People have two common complaints with trying to make it work in China,” Cheung continues. “Their import licence only works in one province, or the company they are dealing with doesn’t trade in overseas currencies. So why not let Hong Kong represent your products?”
As Cheung points out, multinational companies may be able to set up in China, but not the majority of SMEs – the most common exhibitors at international events.
It brings to mind the comments of Invest HK’s Simon Galpin – the one director; one dollar; one hour registration process for SMEs looking to set up in Hong Kong.
“Come to Hong Kong because we will have the connections to buyers from major Asian cities,” says Cheung. “The big shows often attend here, rather than Greater China.”
And the supply chain works two ways. China still sees Hong Kong as its route to the international marketplace. The major factories in Shenzhen and Dong Guan use Hong Kong as a platform to export.
Of course, the big manufacturing shows, such as plant machinery exhibition Bauma China, which will use up to 300,000sqm in and around the Shanghai New International Exhibition Centre, takes place in November, have no place in Hong Kong. But then this colourful destination is not looking for this kind of business. It has big fish of a different kind to fry.
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THE ORGANISER’S VIEW: STAGING EVENTS AROUND THE PEARL RIVER DELTA
Preecha S Chen, president of Reed Exhibitions Greater China, on the relationship between international exhibitions in Hong Kong and the mainland.
Do Reed’s Chinese shows compete directly with events in Hong Kong?
When we select where to base a new event, we choose the location based purely on market need and how well equipped we are to ‘win’ there. What is the size of the market? How intense are its needs? Which of our competencies can we leverage to satisfy that demand? Most of the answers to these questions are based on direct feedback from exhibitors and the density of buyers in the region. So, the challenge for Reed is not to outdo a similar, regional event. Rather, it’s about how we can maximise our capabilities to make the most of what we deem to be an excellent opportunity.
Take Nepcon South China, for example. This is an exhibition we established in Shenzhen as part of our series of electronics manufacturing industry events. This show would not thrive the same way in HK, despite the two cities being separated by just a few miles, as there is no market there.Shenzhen is where the manufacturing base is and proximity to market, even if just in terms of a few miles, is key. For this reason, I wouldn’t describe the relationship between what we do and what Hong Kong exhibition organisers do as competitive, in the strictest sense. Although the markets for so many industries are similar, they are not identical. There are the obvious differences between the mainland and Hong Kong in terms of language and scale, as well as more subtle nuances when it comes to business culture, market volume and customer demand.
We, as Reed Exhibitions, observe a different way of doing things and use the Hong Kong shows’ achievements as references from which we boost our own performance. And I’m sure they’ll tell you that they, too, learn from us by watching how we put together our Hong Kong events.
Will Reed take advantage of either the new Hong Kong-Zhuhai-Macau Bridge or the new Guangzhou-Hong Kong railway?
We certainly will. The enhanced connectivity brought about by the Hong Kong-Zhuhai-Macau Bridge will improve the flow of labour, goods and capital between China and the rest of the world. That means better communication channels, magnified trade opportunities and extended global reach.
Our exhibitors and buyers can now travel between Kowloon and Guangzhou in just 48 minutes. That means more Hong Kong buyers can make easy trips to our shows in Guangzhou and Shenzhen, without even having to consider overnight accommodation. Vice versa, our shows in Hong Kong will attract more buyers and exhibitors from mainland China.
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A major ICC for Hong Kong?
If one area remains underserved in Hong Kong, it is the ability to cater for the giant roaming international conferences increasingly accompanied by international exhibitions. An International Convention Centre (ICC) would be a major boon to the Hong Kong exhibition scene.
AsiaWorld-Expo can provide seating for 13,500 at the AsiaWorld-Arena, but it’s not a purpose-built conference venue. And while the HKCEC ’s location in the city makes it an attractive site for an international convention centre, there simply isn’t space on Hong Kong Island.
“We’ve long maintained the need for an ICC,” says the HKCEC’s Cliff Wallace. “We’ve plenty of events we want to attract to HK and an ICC would be key to winning them. Delegates and buyers come to a city because of its amenities, and Hong Kong has them all. An ICC, located somewhere in the harbour, would be a major marketing tool for us.”
One possible solution lies just across Victoria Harbour from the HKCEC.
A long-mooted development titled the West Kowloon Cultural District (WKCD), could be the answer. A multi-purpose concert hall could, in theory, serve as an ICC, observers claim.
However the HKECIA’s Daniel Cheung, who sits on the WKCD advisory board, says despite talks, such a multi-purpose venue remains purely a propect.
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Key facts:
➤ CURRENCY
The Hong Kong Dollar is the official currency, and HK$7.8 is worth US$1.
➤ POLITICS
Hong Kong’s constitution provides for the development of democratic processes, however Beijing can veto changes to the political system, slowing reform to the chagrin of pro-democracy forces.
➤ ECONOMICS
Buoyant. Although interestingly, once seen as having wealth far beyond that found on the mainland, Hong Kong residents are now faced with the reality of hugely wealthy mainlanders visiting its shopping malls with newfound income.
➤ GROSS DOMESTIC PRODUCT
GDP is US$225bn; GDP per capita is US$31,836; average wage is US$1,544 per month.
➤ LANGUAGE
Both Chinese and English are accepted as official languages, making it easy for most visitors to get by without a phrase book.
➤ RELIGION
Buddhism and Taoism, both of which will be hard to find in practice on the showfloor of a busy exhibition.
➤ NUMBER OF INTERNATIONAL EXHIBITION VENUES
Two; AsiaWorld-Expo on Lantau Island and the HKCEC on Hong Kong Island.
➤ AVERAGE PRICE OF A BURGER
US$2.12 will buy you a Big Mac.
➤ AVERAGE PRICE OF A BEER
US$5.5 for a pint on Hong Kong Island. The price drops significantly as you head out west to Lantau Island.
➤ BUSINESS HOURS
9am-5pm for office workers. Shopping malls are open between 10am and 9.30pm. Unfortunately for HK traders, stockmarket trading hours have just been extended to make it more competitive with Asian cities.
➤ WEATHER
Hottest month of the year is July (28.7C); coldest month is February (16.1C).
This was first published in the Issue 2 2012 of Exhibition World. Any comments? Email exhibitionworld@mashmedia.net
