Trade fairs accurate barometer of demand
IF you want to measure demand for commodities in China, look to trade fairs, says the man who opened the mainland exhibition market.
''In exhibitions people know exactly what to show . . . according to China's needs . . . because we find all these things out beforehand,'' said Adsale Exhibition Services managing director Stanley Chu.
He said the bulk of work done by organisers was market research. The company asked officials to provide a detailed buying list, which was compiled by the government every year.
Based on the shopping list, organisers knew what kind of exhibitions to stage and could then contact related associations and potential buyers.
The motor vehicle industry was a good example. Although there was only one car owner for every 100 people, there were indications the industry would take off in the next few years.
Last year more than 300,000 motor vehicles were imported for the Chinese market.
The size of the annual Auto China show, alternately held in Beijing and Shanghai, had more than doubled in the past two years.
More than 900 exhibitors took up 52,600 square metres this year in Beijing, compared with 24,145 sq metres for the previous show in the capital.
This year more than 400 foreign companies from 23 countries exhibited at the show, with 700 domestic exhibitors from 16 ministries, vehicle groups and corporations.
Adsale held the first commercial exhibition in 1980 in Guangzhou. Before that, Beijing did not allow commercial exhibitions and only one or two fairs were held annually.
Because all import decisions were made by centralised bodies, foreign firms had no contact with end-users. All transactions were done through the import arms of the foreign trade corporations under the former Ministry of Foreign Trade.
That policy changed in 1979 with Deng Xiaoping's new economic and open door policies.
Before the reforms were introduced, most imports for provinces were financed entirely by the State Council through industrial ministries which scrutinised each import request.
After the decentralisation policy was introduced, provinces were allowed to retain a percentage of export earnings to finance imports, and received allocations of foreign currencies.
The first trade fair to be held on the mainland was the China Export Commodity Fair in Guangzhou in 1952, showcasing China's export goods to foreign visitors.
Some government-sponsored trade shows were still held today, but on a much smaller scale than commercial events.
The number of organisers shot up from only two in 1980 to about 80 by 1987. The number of exhibitors today, including those organised by mainland ministries, was difficult to accurately determine, Mr Chu said.
The number of commercial exhibitions jumped from six in 1980 to more than 150 in 1985, and now there were close to 300 exhibitions a year in China, with the numbers increasing monthly.
Hong Kong Exhibition Services, a member of the London-based Montgomery Network, was scheduled to stage its first China exhibition, Food and Hotel China '94, in Beijing late in September.
The exhibition space of 12,000 sq metres has been fully booked by 600 participants.
Organisers expected 30,000 visitors during the three days, and the second annual event had already been scheduled for September 5, 1995.
The organisers planned to stage four shows within the compound simultaneously to attract greater attendance, said marketing services and public relations manager Andrew Chan.
The format would also allow companies with a diverse product range to participate in more than one show, he said.
Adsale organised 15 yearly exhibitions throughout China. The size of the mainland, and its largely undeveloped infrastructure made exhibitions the most efficient and cost-effective form of promotion, bringing the largest number of sellers and buyers together, Mr Chu said.
In addition, overseas companies tended to be overwhelmed when trying to negotiate China's bureaucratic maze. Not knowing the right buyers to target, coupled with a language barrier made setting up difficult, Mr Chu said.
The Hong Kong Trade Fair Group understood the importance of setting up business relationships in China, and relied heavily on mainland partners to deal with administrative details.
It staged the only officially approved marine industry fair in China. The company was recently acquired by trade publications and fairs giant United News, for US$44 million.
United News would use the group as its focus to push into the China market, said exhibitions and sales manager, Chris Cotton.
The group was negotiating four trade shows with Chinese partners.
''It takes a long time to establish the right background in contacts and information to create a successful trade show,'' said United News managing director Graham Wilson.
The company's strategy was to cement its business relationships during the first two years, he said.
Holding an exhibition was expensive. In 1984, a 12 sq metre booth in Beijing cost $7,000 while a booth at a computer fair in 1985 cost $4,500.
The average going rate now was about $300 a sq metre.
Adsale's mainland business generated turnover of HK$100 million last year and was expected to rise to HK$120 million by the end of this year.
While it was difficult to quantify the full extent of market growth, it would continue to rise as overseas interest in China grew, Mr Cotton said.
''The main thing is there is still very much a growing interest in the mystical China market. With recession in Europe and in the United States, people are wanting to get into China.''