Paul Woodward talks to UFI’s Asia/Pacific Chapter chairman and long-term organiser of shows in China, David Zhong, and marks our cards for future opportunities and trends in a unique market that has been almost normally open for the past year.
David Zhong can be forgiven for being a little distracted. As much of the world continues to focus on China, the only major exhibitions market to have been almost normally open for the past 12 months, he became a new father again just last week. Much as his new daughter is clearly giving him great joy, he is also keeping an eagle eye on his business in China.
Zhong is the founder of one of the longest-established private exhibition businesses in China, VNU Exhibitions Asia, a joint venture with Jaarbeurs of Utrecht since the mid-1990s. He is also the chairman of UFI’s Asia/Pacific Chapter and founder of the UFI China Club. “Our business has changed tremendously,” he says. “It really was very difficult at the beginning.” Everyone, he says, was feeling confused and not a little scared. But, he says, “it’s actually turned out to be an opportunity to get more competitive and strengthen ourselves”.
In its Global Industry Performance Review (GIPR), the consultancy jwc is predicting that the Chinese market will be fully back its 2019 levels by the end of 2022. “Or maybe still earlier,” senior consultant and former Informa Markets Asia CEO Jimé Essink told a recent webinar for the report’s buyers.
That is certainly in line with the experience that Zhong is reporting at VNU. They have doubled down on their strongest shows, he says, eliminating up to 50% of the markets in which they were operating with smaller and weaker fairs. The overall result of the business, he says, was 70% of 2019 last year and should be back to 100% by the end of this year.
Like everyone else, the VNU team has been reaching out to its customer base with digital services. Zhong does not see this as likely to generate revenues but as serving to build confidence within the industries served and “to give us a stronger connection with the whole industry”. As face-to-face came back quite quickly in China, he says, “customers have more trust in us and have been willing to invest in our platform”.
The fact that fairs have been taking place in China means, he says, that even more attention has been focused on business there. He thinks this strengthens the position of the key shows in China versus their competitors in Europe and north America. He sees a double focus in many markets where a previously dominant show in the west is now matched and balanced by “an eastern meeting place” in China.
Of course, as well as the impacts of the pandemic, the last several years have brought challenges to Chinese business with a hostile trading environment in the US and, to some extent, in Europe and other international markets. These two combined have undoubtedly changed the focus of Chinese trade fairs. Essink points out that China was already pushing a policy of being less dependent on outsiders. “Coronavirus will strengthen that direction,” he said.
China is a market of continental proportions. Zhong expects that the focus of his business will continue to be Shanghai. That’s a prediction in line with the GIPR which suggests that the population and economic activity in the regions around Shanghai mean that it will continue to outgun its main rival area, the Pearl River Delta, which includes Guangzhou and Shenzhen, home to the new Shenzhen World mega venue.
However, he also thinks that his business will become more balanced between Shanghai, Beijing, and Qingdao where they run a Chinese edition of the global Viv livestock fair brand. He also thinks that the largest markets are now well served by the major organisers, limiting opportunities there for smaller players and new entrants to the market.
New approach needed
But China is a massive market and Zhong says: “we want to dive into second, third, fourth, even fifth tier markets”. He does warn, however, that it is isn’t necessarily easy to succeed in these regional markets where he has had several failures. “A new approach is needed,” he says. “It’s hard simply to clone events from the major cities. The secret is in the execution.” Some Chinese organisers are already going down this route with considerable success and Essink gave the example in his webinar of a Shenzhen-based company which is organising a series of tea industry exhibitions across 21 cities in China.
This potential for growth is backed by the findings of the GIPR which reports on a continued remarkable increase in venue capacity. Jwc has identified 35 venues totalling 3.3 million square metres now under construction with several others at the planning stage. Essink comments that, even though the recent and current waves of venue construction in China have generally been driven more by policy than market research, predictions that they would all sit empty have not been borne out. Much of the new space coming online will, he thinks, be filled by Chinese organisers who he sees becoming stronger.
Those Chinese organisers, Essink says, have learned very quickly and are investing significantly in their people these days. He admits to being very impressed by the sophistication of the current joint venture partners for the international organisers. “They’re completely different to those from 10 years ago,” he says.
Ongoing restrictions on international travel will constrain some of the growth for both those new generation local organisers and the big multi-nationals. “During the pandemic, the international part of our shows was the most hurt; the local part remained strong,” Zhong says. Essink agrees and suggests that in many cases local companies have moved in to take up space which wasn’t being used by internationals. That being said, a significant number of the international exhibitor companies have their own operations in China or well-established representatives and have still been able to participate in the important fairs.
Accommodating international visitors, who pre-pandemic had been an increasingly important part of some fairs, is proving more challenging. China remains very conservative on re-opening its borders and some of those to whom EW has been speaking on this issue believe that it will be at least another 12 months before we reach anything like normal, pre-pandemic travel into China from the rest of the world.
Despite that, and based on his many years’ experience, Essink is convinced that, “It’s easy to conclude here that China will continue to be the growth engine for our industry”.
An extended version of this article, including comments from other industry leaders, will appear in the August/September edition of Exhibition World magazine.
