Macau exhibits all the traits of being an exposition nemesis
Amid the mad rush to develop trade fair facilities in Shanghai, Guangzhou and Shenzhen, local exhibition venue operators and industry representatives say Macau is the one eating Hong Kong's lunch.
Rapid development in the gaming, entertainment and hotel sectors is helping the former Portuguese enclave become a venue of choice for trade fair exhibitors.
Macau is a 'tough' competitor, capturing the same market and offering venues at better prices, said Cliff Wallace, managing director of the Hong Kong Convention and Exhibition Centre (HKCEC).
'Exhibition space in Macau has the benefit of being connected to affiliated hotel rooms and casinos under the same ownership. So the objective is to draw people to fill hotel rooms and casinos,' Mr Wallace said.
'If the exhibition space can actually lure those people, then the exhibition space will be available at a much lower rate,' said Mr Wallace.
'It's going to make for really interesting competition,' he said, adding that Macau's exhibition operations were similar to those in Las Vegas that 'worked'.
Current exhibitions in Shanghai and Guangzhou, which are predominantly focused on a consumer market with the buying power of 1.3 billion people, would have a hard time stealing Hong Kong's service shows - especially expositions centred on overseas education.
Hong Kong and Macau are rapidly expanding their trade fair facilities to capture every dollar from the growing export and trade show markets led by the mainland.
The $2.35 billion, 70,000 square metre AsiaWorld-Expo (AWE) at Hong Kong International Airport will open on December 21 and the HKCEC will start its expansion in the middle next year. The $1.3 billion extensions will by 2010 add 19,400 square metres to the existing 64,000 square metres.
The Venetian Macau casino and hotel, meanwhile, will inaugurate its 75,000 square metre exhibition space in 2007.
The China Council for the Promotion of International Trade, the mainland's equivalent of the Trade Development Council, has agreed to manage the Venetian Macau's maiden trade fair in the second half of 2007 and Hong Kong industry representatives see the deal as a major blow to Hong Kong's ambitions of becoming the convention hub for China and the region.
The HKCEC and AWE have agreed to co-operate in the face of increased competition, Mr Wallace said.
Daniel Cheung Wai-kung, vice-chairman of the Hong Kong Exhibition and Convention Industry Association, said Macau's exhibition space was attractive, especially with its hotel facilities.
'From an exhibition organiser's point of view, the greater availability of space in the region is definitely good news,' he said.
While English proficiency and the professional management of exhibition venues put Hong Kong at an advantage, Mr Cheung warned that the lack of hotels was going to dampen its position as an exhibition hub.
'At peak seasons, there will be tens of thousands of traders in the HKCEC and AWE; where are they going to stay?'
AWE deputy chief executive Allen Ha said Macau had the potential to become a top player in the industry.
AWE is trying to enhance its competitiveness by introducing a concierge service team at the airport that would serve major international buyers and exhibitors as soon as they arrive, Mr Ha said. The team will provide services including everything from luggage handling, hotel bookings, 3G phone rental and management of executive lounges with shower facilities.
An industry source said the average hall rental for HKCEC was US$5.50 per square metre a day, Shanghai and Shenzhen at US$3 per square metre per day, Guangzhou at US$2.50 and Dongguan at US$1.50.
Mr Ha said the rental costs for AWE would be in a similar range to those at facilities in London, Frankfurt and Singapore. 'Sometimes higher and sometimes lower than the HKCEC,' he said.
While there is every chance a price war will erupt, both the HKCEC and AWE have made it clear that they would not lower the prices significantly.
Some mainland cities are practically giving away facilities to exhibitors, although this is meaningless if there are no buyers, Mr Ha said.
He advised caution when looking at mainland charges, saying exhibitors were sometimes hit by service fees apart from the rental.
Floor size calculation can vary; some venues use gross floor area and some use exhibition space, Mr Wallace said.
While Hong Kong is renowned for hosting trade shows for electronics, jewellery, watches and clocks, Mr Wallace said there was a growing market for cosmetics, pointing to the Cosmoprof Asia 2005 exhibition, held this month in HKCEC.
'Cosmoprof came here with some degree of risk since cosmetics did not necessarily have a big market here,' Mr Wallace said.
'What has happened is it [the exhibition] has exploded here ... there's huge demand in the region - not just Hong Kong but the mainland and other Asia countries.
'Hong Kong will become a pan-Asian international base for cosmetics.'
The AsiaWorld-Expo calendar over the next year is packed with 32 events starting in January next year with the focus on 'signature' events, Mr Ha said.
Although the AWE is heavily subsidised by the government, Mr Ha said its operations were increasingly moving towards making it a business concern and mainland operators were following suit.
A Trade Development Council (TDC) spokesman said it was its responsibility to fill the exhibition halls at HKCEC and AWE.
He said TDC, an owner of the HKCEC, was well aware of current space limitations and an expansion plan was envisaged.
The AWE said it had already reserved the land adjacent to the venue in Chek Lap Kok for future expansion.
Good news did come along with the opening of the AWE. Nasdaq-listed trade facilitator Global Sources has decided to move its two biggest trade fairs from Shanghai to Hong Kong's AWE next year.
'Guangzhou has a great exhibition area but few hotels. In Hong Kong, we have lots of hotels and now the best exhibition site in south China. Our shows in Shanghai were doing very well, but we outgrew the space,' chairman Merle Hinrichs said this month.
Global Sources had hosted the two shows in Hong Kong before moving them to Shanghai in 2003. As far as the industry in Hong Kong is concerned, not all the commentators are pessimistic. Some said Hong Kong could still leverage its brand and infrastructure. Growth in recent years has been driven by mainland exhibitors.
According to the Hong Kong Exhibition and Convention Industry Association, the number of mainland companies displaying their products jumped from 3,257 in 2002 to 6,350 last year.
Industry observers also said there was no need for the government to follow Singapore's example of subsidised events that met certain government requirements.
Mr Cheung of the Hong Kong Exhibition and Convention Industry Association said one of the major criteria in choosing exhibition venues was respect for intellectual property.
Even in Hong Kong, it is known that certain exhibitions allowed only invited clients to enter in an attempt to prevent product designs being copied by potential competitors. Both the TDC and Mr Cheung said buyers went only to the biggest shows for a particular sector.
'There is no such a thing as the second-biggest show in any given sector. Buyers go to the biggest one and that's it. The exhibition industry is such a hero-or-zero game,' said Mr Cheung.
SPACE RACE
China?s largest exhibition halls
Exhibition space (sq metres)
Guangzhou International Convention and Exhibition Centre
Guangzhou
186,000
Chinese Export Commodities Fairground
Guangzhou
170,000
GD Modern International Exhibition Centre
Dongguan
135,000
Kunming International Convention & Exhibition Centre
Kunming
120,000
Jinan International Convention & Exhibition Centre
Jinan
110,000
Shenzhen Convention & Exhibition Centre
Shenzhen
103,109
Hangzhou International Conference & Exhibition Centre
Hangzhou
100,000
Shanghai New International Expo Centre
Shanghai
80,500
China International Exhibition Centre
Beijing
70,000
AsiaWorld-Expo
Hong Kong
70,000
Langfang International Convention and Exhibition Centre
Langfang
70,000
Zhengzhou International Convention and Exhibition Centre
Zhengzhou
67,120
Hong Kong Convention and Exhibition Centre
Hong Kong
64,000