Nothing goes without "favour in high places"

Klaus Michael Hilligardt, chairman of the supervisory board of BMC AG, Stuttgart and Beijing, on his experiences, strategies and visions in the Chinese exhibition market.

You have organised exhibitions in the Far East since 1988. What fascinates you so?
Even as a tourist, the foreign cultures and Far Eastern countries exert a huge fascination. But it's only as a businessman that you really get through to the people as well. I had the good fortune to get to know the so-called cultural triangle of Japan, Korea and China.
From 1967 to 1972 I worked for the mechanical engineering firm Traub. During that time I struck up friendships with lots of Japanese. Even then I was close to, and able to form trustful relationships with, many of them. Later on, that was always useful in my work for Mesago. The next stop was Korea. Then came China, where they get down to business quicker. That makes it very important to have contacts with credentials. These give you access to important decision-makers. Our network is our capital. It extends up to the highest echelons. Gaining favour in high places puts projects on a firm footing. That still holds true even today.

How has the Chinese exhibition market changed over the years?
The state authority CCPIT (China Council for the Promotion of International Trade) used to have a monopoly on fairs and exhibitions. Some were also organised by ISTIC, the Institute for Scientific and Technological Information China. As chance would have it, through this institute we were able to begin operating on the Chinese market very early on: Klaus Stubenrauch, a Mesago employee, and Song Jian, chairman of the ISTIC science and technology commission, studied mechanical engineering and rocket technology together in Moscow. Guanxi - the network of relationships interpreted very much in the Chinese business world as "you scratch my back, I'll scratch yours" - played the crucial role here, too. As a result, we were already able to take off in China ten years ago without a joint venture partner. Then gradually, in addition to the subsidiaries of the big German exhibition companies from Munich, Frankfurt and Düsseldorf, Reed, CMP and VNU also entered the market with Chinese partners. The CCPIT is still the trailblazer in China, although the associations have grown stronger with the passage of time. They are even overtaking the ministries in terms of their importance. For exhibition organisers and exhibitors they are the key partners.

Which brings us to the subject of exhibitors: Given the flood of fairs currently swamping the Chinese market, how can they be sure of choosing the right one?
Lots of Chinese are out to make a profit with one show or another, and it's practically impossible to keep track of them all. Chinese exhibition brochures are of little use to companies: the information they contain describes their partners or exhibitors of choice but often reflects only a fraction of reality. A company should therefore devote a lot of thought and exhaustive research to where it exhibits. It must address questions such as: what fairs are on offer and from which organisers? The m+a Messeplaner/Tradeshow Directory is a good preparation tool. I would absolutely recommend comparing one’s own findings with what market insiders have to say or, ideally, travelling to China and taking a look at various exhibitions as a visitor.

Can't you just rely on well-known organisers from abroad?
You can't really generalise like that. There are Chinese who can deal with a theme much better than a foreign organiser. Incidentally, this quantitative development in exhibitions isn't to the Chinese government's taste either.

What does the government plan to do about it?
There are moves to improve transparency with credible exhibition statistics. An institution similar to the FKM Society for the Voluntary Control of Fair and Exhibition Data, which is currently being set up, will be tasked with this. Work is ongoing on a system into which organisers input their exhibition statistics themselves. Auditing is conducted by another agency, and afterwards the two are reconciled.

What is being done in terms of quality?
There has been an enormous quality leap at many fairs in China. The Chinese have learnt a lot. Some show organisers are full members of the UFI.

How important is that?
In China it's very important. Chinese judge the quality of a fair by such criteria. The number of modular or special stands at a show is also significant. The more conventionally built stands there are, the better they consider the show. But word of mouth works best - word gets round which are the best exhibitions.

You have bought shares in exhibition companies in Shanghai, Guangzhou and Peking. Why?
For strategic reasons. We first want to position ourselves on the east coast and need teams there for our projects.

Why do you only acquire just over half?
The acquisition of 51 % has to do with the fact that we are a listed company: we can fully consolidate the companies. What is more, we can show that by cooperating with us, sellers earn more from their smaller stakes than they did before from their full ownership.

How do you achieve that?
As an international show management company, we guarantee a certain number of international participations, which in turn bring in 300 per m2 alone. The quality increase is guaranteed, so exhibitors also derive greater benefit. Word of that soon gets round, and the fair grows.

You are looking to set up on the east coast. Which other cities do you have your eye on?
Macao, Hong Kong, Shenzhen and Dalian. We are seeking to cooperate there with organisers or venues that suit us thematically.

And after that?
The next step is to buy more exhibitions and develop proprietary events. Our aim in each case is to introduce the leader fairs in the industries that we serve onto the Chinese market. In addition we are launching appropriate trade publications, comparable to the successful English strategy pursued by Reed, for example. We already publish two trade magazines for cosmetics under licence. We are also working on complementary internet portals that fit in with our shows, as trade platforms all year round.

Are those your growth areas?
Yes, but it's important always to focus on the fact that we are a media company. We therefore recently beefed up our core media competence through the acquisition of 51 % of a company called Flying Dragon that has specialised in airport advertising. So far Flying Dragon has operated in Peking - other airports still offer huge potential in this respect. What we’re aiming for is cross selling - why should we only ever sell square meterage?

What is your vision?
We want to become one of the key players on the Chinese exhibition market within three years and also be a notable actor on the stock market. Our distinguishing feature is impeccable quality in all our products. Interview: Christine Seizinger

m+a report Nr.8 / 2005 vom 08.12.2005
m+a report vom 8. Dezember 2005