The Russian economy was one of the hardest-hit in the 2008/09 global economic crisis, as oil prices plummeted and the foreign credits that Russian banks and firms relied upon dried up. During the recession, the country spent one third of its US$600bn international reserves, the world’s third largest, in late 2008 to slow the devaluation of the rouble.
The Russian exhibition industry, faithfully reflecting the market, also lost ground. The slowdown compounded existing problems not so much in the exhibition hub of Moscow but in the more remote districts of the country.
Venues and organisers in the more sparsely-populated regions of the country face not only the aftershocks of the economic downturn, but a lack of proper infrastructure, unenthusiastic or non-existent support from local governments, as well as the simple logistical drawback of being half a continent away from potential clients. After all, although Russia is a single country, it covers one-ninth of the planet’s surface.
“The number of exhibitions conducted in Russia has been severely affected by the reduction of business activity as a result of the recession,” says Sergei Alexeev, president of the Russian Union of Exhibitions and Fairs (RUEF), director general of St Petersburg’s Lenexpo and member of the UFI board of directors.
However, the economic hurdles faced by exhibition organisers worldwide are not the only problems in the Russian market. “At present the Russian exhibition market is facing a number of specific problems,” says Alexeev. “These include problems within the industry such as unfair competition, exhibition duplication, counterfeit and others.
“In terms of international problems, we can see a low post-crisis recovery in other countries, which has a restraining effect on the foreign participation in Russian exhibitions. International competition grows stronger year after year, and Russia takes all measures to improve the country’s image in the eyes of the world business community.”
According to the RUEF, Moscow is the biggest player in the Russian exhibition market. Together with St Petersburg, the total net exhibition space for RUEF exhibitions is 918,800sqm. This is almost two-thirds of the country’s total exhibition space.
“These two cities attract just over half of all Russian exhibitions, and are in the lead by the number of participants with 54,860 companies,” says Alexeev.
Although Moscow and St Petersburg are the two obvious exhibition choices to someone outside Russia looking in, there are also many regional centres where the exhibition industry is seen as a significant part of their economy. These include Kaliningrad, Samara and others.
Crocus International Exhibition Centre is by far the biggest venue in the RUEF. Standing in Krasnogorsk outside Moscow, it boasts 266,400sqm of exhibition space.
Assistant director of Crocus IEC, Maria Tikhonova, says the crisis has not had a dramatic effect on business. The venue added 11 new projects to its portfolio in 2009 and although there has been a slight decrease in overall performance, the outlook is optimistic. The venue welcomed more than 1.2 million visitors last year.
Other venues in and around Moscow include the All-Russia Exhibition Centre with 132,700sqm, Expocentre with 85,000sqm, and MVK with 33,000sqm of indoor space.
According to Elena Tarasova, spokesman for organiser Primexpo in St Petersburg, the infrastructure is underdeveloped, especially in the more remote parts of the country not associated with a big city.
“The exhibition industry is a reflection of the situation in the economy and the global crisis has meant changes,” she says. “The past year has forced many companies to change their marketing policies. As a result, exhibitors have begun to approach their choice of exhibition project and stand design more carefully.”
“The construction industry was one of the first to feel the effects of the crisis. As a result, construction companies have been forced to cut their advertising budgets by ceasing to participate in exhibitions. However, there are now positive trends in the industry.”
Some industries flourish in times of crisis. Security exhibition SFITEX, for example, showed growth. “The difficult financial and economic situation in the country has, of course affected the criminal situation,” says Tarasova. “This has given new impetus to the development of security equipment.”
According to Pavkina Al’fiya Ansarovna, general director of the JSC District Exhibition Centre, venue and organiser in the Khanty-Mansiysk autonomous region, much of the region’s exhibition business centres on local industries. “In 2009 our exhibitions were visited by 77,700 people, about two-thirds of whom were specialists in different branches of the autonomous region’s industry,” she says.
“Exhibition measures conducted in the Khanty-Mansiysk autonomous district play a significant role in the process of renewal and modernisation of the industrial potential of the region. Our exhibition company tries to cover different subject areas reflecting different sectors of the region’s industrial production and social and cultural aspects of local life.”
Exhibitions in the oil and gas sectors have special importance to the region because the extraction and processing of these is central to the area’s economy.
“The building sector exhibitions have sustained heavy losses due mainly to the state of the Russian economy,” says Ansarovna, “compounded by the fallout of the global economic crisis. Exhibitor and visitor numbers, as well as total exhibition space, have decreased.”
Ansarovna says support from local government is scarce and undervalues the industry, highlighting the absence of any sort of local development programme.
Multiple exhibitions were cancelled in 2009, including Information Technologies of the 21st Century, UgraTour, Ugra Ecology, and Investment Forum. These exhibitions were mainly organised by the executive branches of power in the Khanty-Mansiysk autonomous district.
However, several shows were launched in 2009, including the World of Beauty and Health, Municipal Services, Housing and Communal Services, and Business of Ugra 2010 shows. The District Exhibition Centre saw an eight per cent increase in visitor numbers compared to 2008.
According to a spokesman for Siboexpocentre in Irkutsk, the most common difficulties of organising exhibitions in Irkutsk include not only the financial crisis, but also the remoteness of the region and its poorly-developed industry.
At Siboexpocentre, 2009 visitor numbers remained stable at about 210,000. However, income generated from exhibitions dropped dramatically, by about a third.
Although no exhibitions were cancelled, many reported a drop in total space.
Exhibitions hit hardest include Car and Truck in Siberia, Techmachexpo, Forestry Management and Wood Processing Industry of Siberia. Unlike in Khanty-Mansiysk however, construction-sector shows bucked the trend by showing growth.
As would be expected, Russia’s international exhibition industry is focused in the large, well-known cities of Moscow and St Petersburg. But the vast regions, with their wealth of natural resources, are natural staging grounds for powerful national-level industrial shows.
Despite the remoteness of regional urban centres, coupled with lack of local government support and poor infrastructure, the Russian exhibition industry outside the major cities has the potential to tap multiple heavy industries and boost business in the wake of the recession.
