About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
Save As PDF Email this page Print this page
Qzone

Smooth Sourcing(HKTDC Enterprise, Vol 06,2007)

 

 

Photo
Trade exhibitions were first staged in Hong Kong more than 30 years ago, but today make up a key economic driver recognised by no less a personage than the premier of the People's Republic of China.

Speaking at his meeting with HKSAR Chief Executive Donald Tsang in early 2007, Premier Wen Jiabao recognised for the first time Hong Kong's role as the "country's convention and exhibition hub", affirming the city's capability and standing in organising international conventions and exhibitions.

Much of this success is undoubtedly due to the efforts of the Hong Kong Trade Development Council (TDC), which organises 33 international exhibitions in Hong Kong every year, attracting more than 25,000 exhibitors and 530,000 buyers.

They comprise a major segment of the 100-plus trade fairs that are held in Hong Kong every year and serve as stepping stones and major business platforms, enabling tens of thousands of small- and medium-sized enterprises (SMEs) to deal in external trade and export their products to overseas markets.

The first exhibition organised by the TDC in Hong Kong 30 years ago was held in a hotel where all the rooms were converted into exhibition booths, recalls TDC executive director Fred Lam.

"There were many constraints due to the small scale," he admits. "We realised from those early days that scale is all that matters if Hong Kong exhibitions were to reach international dimensions."

The need for scale was further driven by Hong Kong's phenomenal economic growth, which resulted from the twin advantages of the low land and labour costs in the Pearl River Delta (PRD) region in the 1970s.

"While the PRD served as the production base for Hong Kong SMEs, trade fairs in Hong Kong were clearly equally important launch pads for breaking into the international market," Lam maintains. "The two complement each other in powering the export miracle of Hong Kong's SMEs."

One of the key factors in Hong Kong's continuing growth was, therefore, the development of Phase One of the Hong Kong Convention and Exhibition Centre (HKCEC), which was completed in 1989.

"Trade fairs in Hong Kong are associated in many people's minds with the imposing HKCEC, which is strategically located in Victoria Harbour and has become a new Hong Kong landmark since the Phase Two extension was completed in 1997," Lam says.

Today, the HKCEC is one of Asia's leading exhibition facilities, covering 248,000 square metres and housing five exhibition halls, two convention halls, two theatres, 52 meeting rooms, 1,350 parking spaces and seven harbour view restaurants.

However, Lam admits that the presence of such an impressive exhibition venue alone does not trigger the development of the exhibition industry in a region. "The success of Hong Kong's exhibition industry is to a large extent attributable to the city's natural advantages," he maintains.

These advantages can be summarised into several major areas:

  • Hong Kong is a free port where most imports are exempt from customs duty and valued-added tax, providing simple and speedy customs clearance and tax regulations that allow international suppliers to bring goods to exhibit in Hong Kong
  • centrally located in the booming Asian region, Hong Kong is less than five hours flying time from any major regional city within the "three-hour economic radius" of the PRD
  • more than 6,000 companies from around the world operate regional head-quarters and offices out of Hong Kong
  • the city is also home to the sourcing arms of hundreds of leading international firms and serves as a major regional sourcing and distribution hub
  • one of the world's leading air transportation hubs with flights serving more than 160 cities worldwide, Hong Kong has visa-free agreements with more than 130 countries

In addition, Lam notes, Hong Kong offers a full range of well-developed business services. "Presently, modern services account for over 90% of Hong Kong's GDP," he observes. "Hong Kong's robust service sector provides excellent support for business people who come here to exhibit or make deals at trade fairs."

Finally, Hong Kong offers a sound legal system that comforts Western entrepreneurs. "Hong Kong people have a high level of English proficiency, and there is a large of pool of Hong Kong entrepreneurs well-versed in international trade," Lam adds.

These myriad advantages provide a strong foundation that has allowed Hong Kong's exhibition industry to flourish. "In fact, when some mainland cities pursue the development of an 'exhibition economy', they often begin with the construction of large exhibition venues - some of which are even modelled on the HKCEC," Lam marvels.

The HKCEC's contribution to Hong Kong's progress is clearly reflected in the statistics:

  • Hong Kong has risen from the world's 23rd-largest trader in the 1970s to 11th today
  • exports totalled more than HK$2,400bn and total trade was in excess of HK$5,000bn in 2006
  • the number of traders has increased 2.8 times from 35,000 in 1986 to over 99,000 in 2006 - 98% of whom were SMES

However, Lam believes the presence of bigger and more impressive-looking structures alone is not sufficient if the fundamental conditions do not exist for the development of the exhibition industry in a certain city.

"By applying stringent selection criteria and categorisation during the exhibitor recruitment process, we aim to make sure buyers can get in touch with the largest number of most qualified suppliers effectively within a short period of time," he explains.

Hence, the quality and replenishment of suppliers are very important considerations during exhibitor recruitment. "A certain balance is maintained between large- and small-scale exhibitors, all of which have undergone stringent screening," Lam assures.

He is equally keen to stress that exhibitions offer a marketplace, but exhibition organisers should not consider themselves as a 'sub-landlord' only.

"Rather, they have the obligation to maintain market order at the fairground, such as a certain buyer-exhibitor ratio, so that each exhibitor has reasonable opportunities to secure orders," Lam reasons.

The supply and demand of different products should also be well-balanced. "While a good measure of competition should be present, vicious competition has to be avoided because it might trigger improper conduct and disrupt the overall market ecology."

Lam is particularly proud that Hong Kong is the first exhibition city in the world to engage the services of legal advisors on-site. "A mechanism is in place to handle the intellectual property rights (IPR) of exhibitors and their products and handle IPR infringement complaints," he says.

Lam observes that product competition is increasingly intense in the globalised economy, and specialisation is now the international exhibition industry catchword.

He insists Hong Kong has excelled in this respect. "Hong Kong's exhibition industry is divided into 43 industry sectors, compared with 58 among the three major trade fair cities in Germany," Lam notes. "Compared to similar trade fairs held in the region, Hong Kong's light industrial exhibitions offer more specialised and targeted product categorisation."

Moreover, buyers and sellers no longer rely on one or two exhibitions to place or take orders because product cycles are getting shorter and orders are placed after an exhibition is concluded.

"Exhibitions should therefore strive to become more specialised and 'informatised' so that buyers can not only keep abreast of market and product trends but also the latest moves of other industry players - hence the informative and extremely popular seminars held at TDC trade fairs," Lam adds.

Helpful innovations such as these were introduced because Hong Kong exhibitions have a relatively short history compared with their longer-established foreign counterparts.

"That's why from the very beginning when we planned each exhibition we took pains to go the extra mile to nurture customer loyalty by offering various value-added services on-site," Lam recalls.

These include prayer rooms for Muslim visitors, restaurants offering different cuisines, the Dragon Lounge for VIP buyers, express buyer registration and interview arrangements for international media organisations. "These services have become a major characteristic of Hong Kong exhibitions," Lam believes.

Supporting services outside the exhibition venue are also very important. "Like travel agents, exhibition organisers should strive to provide a one-stop service covering hotel, transportation, shipment, entertainment and restaurants," Lam remarks.

"Ultimately, buyers and exhibitors will definitely want to come back if they enjoy their stay - and they certainly keep returning to Hong Kong in ever-increasing numbers."

Winning Advantages

There are several excellent reasons why Hong Kong is a leading international exhibition centre.

  • it is a free port where most imports are exempt from customs duty and valued-added tax
  • it provides simple and speedy customs clearance and tax regulations that allow international suppliers to bring goods to exhibit in Hong Kong
  • centrally located, Hong Kong is less than five hours flying time from any major city in Asia and within the "three-hour economic radius" of the PRD
  • more than 6,000 companies from around the world operate regional headquarters and offices out of Hong Kong
  • the city is also home to the sourcing arms of hundreds of leading international firms and serves as a major regional sourcing and distribution hub
  • one of the world's leading air transportation hubs with flights serving more than 160 cities worldwide, Hong Kong has visa-free agreements with more than 130 countries
  • Hong Kong offers a full range of well-developed business services and a sound legal system
  • the city has risen from the world's 23rd-largest trader in the 1970s to 11th today
  • total exports worth more than HK$2,400bn and total trade in excess of HK$5,000bn was recorded in 2006
  • the number of traders has increased 2.8 times from 35,000 in 1986 to more than 99,000 in 2006 - 98% of whom were SMEs