Melbourne, 29th October: The expansion of the Melbourne Convention and Exhibition Centre (MCEC) has been approved by the local government. An additional 12,000 m2 of exhibition space will be integrated into the existing Melbourne Exhibition Centre (30,000 m2) and the Melbourne Convention Centre (5,500 m2).
Shanghai, 28th October: China South Publishing and Media Group, a state-owned Hunan-based company involved with the printing, publishing and distribution of various media, has completed its initial public offering in Shanghai raising an estimated US$264 million.
Founded in December 2008, China Publishing Group follows a series of mainland publishers venturing into the capital markets such as Time Publishing and Media Group, and Xinhua Media. The company issued a total of 398 million shares at a price of RMB10.66 (US$1.6) per share with a PE ratio of 41. The listing was on the Shanghai Stock Exchange. The stock closed at the end of the first day at RBM13.80.
The South China Morning Post (SCMP) reports today that "Stronger yuan bites into trade fair receipts."
According to the SCMP, fear of a stronger yuan combined with increasing commodity and labour costs had an effect on the recent Canton Fair.
The only evidence the SCMP cites is a 2.3% dip in visitors compared to the April edition - of course, this change could have been the result of a wide range of factors. In addition, most organisers would be quite pleased with 199,266 visitors.
The SCMP, however, is not alone in thinking about this issue. In September, Global Sources released a survey of 239 Chinese exporters. Close to 70% of the respondents said that they expect (Chinese) exports to decline if the yuan appreciates. 32% expect their business to be negatively impacted even if the yuan only appreciates 1%-2%.
These fears seem overdone. Where are buyers from the U.S. and Europe going to shift their orders? Perhaps Indonesia or Vietnam. But switching manufacturers comes with costs - especially if the manufacturer is in another country. Buyers are unlikely to make such a drastic move because of a 2% or 3% increase in the value of the yuan. In the end, China's manufacturing capacity has become so massive, there is no real alternative to China.
It is true that the largest buyers from Europe and the U.S. have already hedged their bets by setting-up some alternative manufacturing bases outside of China. For those large buyers, switching is easier, but that is unlikely to have a material impact on B2B exhibitions which are visited by buyers of all sizes.
In the last decade, China has become the manufacturing base for the rest of the world and in support of that it now has a portfolio of 500+ B2B exhibitions. Vietnam and Indonesia have less than 50 trade fairs. A stronger yuan may help drive some growth in those markets, but it is likely to be incremental growth - not at the expense China's trade fairs. We expect net sqm sold at Chinese B2B exhibitions to lead the region in 2010 and 2011 - despite the inevitable appreciation of the yuan.
Over the past two and half years at B2B exhibitions in Asia, there has been an unmistakeable spike in visitors from other Asian markets. This has been a trend reported by organisers across multiple markets in Asia.
In 2009 in the midst of the global recession, UBM Asia’s Hong Kong September Jewellery Fair reported a decrease in visitors from the U.S. and Europe, but that was offset by an increase in visitors from India and China. At what is now the world’s largest jewellery fair, UBM’s Chinese visitors hit nearly 6,900 – up 14%. Indian visitors increased by 12% reaching 2,200. Organisers including Global Sources and the HKTDC reported similar trends at their exhibitions.
Global Sources is clearly tapping into this trend with its launch of exhibitions focused on bringing exhibitors from China to markets such as India and more recently to Singapore next month. The last edition of Global Sources’ exhibition in Mumbai reported a 76% increase in visitors and featured 800 booths with the vast majority from China. Global Sources’ inaugural event in Singapore in November will feature 600+ booths.
Now, key free trade agreements are set to reinforce and bolster this trend. The China-ASEAN free trade agreement came into effect in January this year. At UBM’s 4th Annual Trans-Pacific Maritime Asia Conference in Shenzhen this week, delegates heard that China-ASEAN trade was up double digits in 2010. The South China Morning Post reported from the conference:
“Bronson Hsieh Chih-chien, chairman of Evergreen Marine, said there was a 47.2 per cent increase to US$185.4 billion in trade between China and Asean countries from January to August. Asean countries include Singapore, Malaysia, the Philippines and Thailand.
The biggest impact was felt by the Asean countries, which saw their export volumes to China surge 54.2 per cent to US$97.3 billion, Hsieh told about 600 delegates at a transpacific shipping conference in Shenzhen.”
The agreement results in a zero tariff rate for 90% of Chinese goods. It has slashed the average tariff for Chinese goods from 12.8% down to an inconsequential 0.6%. By 2015, the agreement will extend to all ASEAN members including the four newest members Vietnam, Cambodia, Laos and Myanmar.
The rise of intra-Asian trade at B2B fairs in Asia is going to be one of the key trends to shape the exhibition industry in Asia over the coming few years. B2B exhibitions in Asia will become less reliant on U.S. and European buyers and organisers that tap into that trend will uncover significant growth opportunities with both new and existing events.
