Paul Woodward issues a stark warning for Hong Kong, where a global events industry success story's future is in danger of being sacrificed on the altar of a strict zero Covid policy:
This should have been a great week for the global exhibition industry. Messe Munich bravely pushed ahead with the imaginatively relaunched IAA ‘Mobility’ fair. It received great plaudits in how it has done so in one of the world’s most challenging trade fair sectors.
The Southampton Boat Show in the UK, which disastrously had the plug pulled on last year’s event by the local council the day before it opened, is taking place pretty much on its regular schedule and, on the south coast of France, the most glamorous end of the same industry is gathering for the Cannes Yachting Festival.
Big 5 is opening in Dubai as I write. Numerous other fairs are re-opening elsewhere around the world. Many are still somewhat smaller than pre-pandemic events but are reporting very positive feedback from participants.
It is not all good news, however, and my mind has been turning to the un-named US Army Major who told journalist Peter Arnett in Vietnam in 1968: “It became necessary to destroy the town to save it”. In this case, we’re not talking something as catastrophic as the Battle of Bên Tre but it’s a potentially sad story all the same.
The Hong Kong government, driven by policy in the rest of China and a desire to re-open its mainland China border, has zealously pursued a zero Covid policy. This has effectively kept a tight lid on new cases but at a very high price. One of the world’s most rigorous quarantine regimes requires a minimum of seven days strict hotel quarantine for a few countries, going up to 21 days for many major nations which normally provide the bulk of Hong Kong’s business travellers.
Trade fairs and other business events in Hong Kong are almost unique in the very high proportion of participants coming from outside the Special Administrative Region of China. In most cases, 70% or more of attendees, both visitors and often the exhibitors too, are from other places.
It is clear that almost no-one is going to be willing to undertake a 21day hotel quarantine when other markets are more open, particularly to fully-vaccinated travellers.
There are a few events which can go ahead with a local audience. and Informa Markets staged a local food and beverage fair, Hofex and Prowine, recently to some acclaim. But, as the indefatigable Stuart Bailey, an organiser and chairman of the local industry association HKECIA, clearly commented this week: “The can-do spirt of the local exhibition industry means that small but beautiful exhibitions are being held which, whilst not sustainable, remind us all about what we are missing”.
The key phrase there is “whilst not sustainable”. Hong Kong’s local market is too small to sustain a world-class exhibition industry. The free and unhindered passage of business travellers is its lifeblood.
HKECIA published survey results this week which called on the Hong Kong government to take urgent action to reopen the borders to qualified business travellers. “The convention and exhibition industry, which contributed over HK$58bn (US$7.46bn) to Hong Kong’s economy in 2018, has been in deep water since February 2020”. Strikingly, almost half of the HKECIA members who responded to the survey said that they would not be able to stay in business if travel was not reopened by the end of this year.
In the early days of the pandemic, Hong Kong appeared to be leading the way in providing financial support for the industry. Over HK$1bn was offered to support events with free venue rental a key benefit. Less than 10% of this has been used, HKECIA says. If your attendees can’t come, you can’t organise an event and the generous subsidy is of academic relevance.
So far, the Hong Kong government shows no signs of relenting. It’s single-minded focus on zero Covid means that some fear current quarantine regulations for major source markets in Europe and North America may remain in place for another year or more. ‘Saving’ the city from Covid may yet end up destroying one of the crown jewels of its business.
Hong Kong, of course, is not alone here and Australia remains mired in strict travel restrictions, local lockdowns and low vaccination rates which have not even successfully contained the latest Covid variants. Freeman was pretty blunt this week when it said that the closure of its Info Salons Australian business was “due to the effects of the Covid pandemic on the local market, where severe restrictions have been imposed on the whole events sector”. The fact that the company says “we do not anticipate live events here to return in the short term” clearly played a key role in that decision.
We are seeing great bounce backs in other parts of the world and it is possible that this may yet happen in Hong Kong and more certainly will in Australia. Hong Kong is, however, now deep into unknown territory. Almost nowhere in the world has ever experienced in peace time a two-year cessation of regular activity in its trade fair market. No-one knows what this will mean.
One industry veteran told us that he was taking some comfort from the fact that no other market in Asia can really replicate Hong Kong’s position on the edge of China with one foot in the Chinese world and the other in the global economy. But, we have to assume that those companies previously using Hong Kong’s business events will now be urgently looking elsewhere for their business marketing and lead generation opportunities. If they like what they see and get good results, they may never come back.
It will surely be cold comfort for a city to claim proudly that it has ‘beaten Covid’ better than anywhere else while looking at the smoking ruins of a once great industry.