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| Many of the consumer shows in Hong Kong are drawing more and more visitors from the PRD, the richest area of China and in the proximity of Hong Kong. |
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Following the impressive recovery of China's economy from the global recession, the international city of Hong Kong, one of China's special administrative regions in the south, is benefiting from the much-enhanced consumer activities.
China has overtaken Germany as the world's largest exporter last year, and latest figures show that China’s export and import in January increased by 21% and about 86% respectively year-on-year, indicating that China has returned to a steady growth track.
As China maintained its position as the world's most important country for manufacturing and exporting consumer products, sourcing fairs staged in Hong Kong are expected to do as well.
Stanley Chu |
Stanley Chu, Chairman of Hong Kong Exhibition and Convention Industry Association, confirms that Hong Kong's exhibition industry is growing fast at the moment.
"There is a common feeling that most of the fairs in 2009 suffered a 5% to 15% reduction in turnover compared with 2008. But in 2010, we should see a 15% to 20% increase in turnover compared with last year," Mr Chu says.
"By now, it seems that the worst time is behind us. We are seeing a return of purchase orders as buyers now have to replenish their inventory and the banks are back to business."
Banking on consumption power of Mainland Chinese
Hong Kong is famous for its consumer products sourcing fairs. Buyers are coming from around the world to the city for sourcing consumer products produced in Mainland China, where many export-oriented factories are actually owned by Hong Kong manufacturers. At one time, Hong Kong-owned factories employed more than 10 million workers in the Pearl River Delta (PRD) region in southern China.
"For Hong Kong, our strength is still with our consumer sourcing fairs, which target buyers from around the world. For international buyers, they welcome the one-stop-shop in Hong Kong for consumer products manufactured in Asia, especially those from Mainland China," Mr Chu continues.
"The manufacturers in the region also find it more cost-effective to look for international buyers in Hong Kong fairs than in consumer products fairs overseas."
More than 20 million tourists from Mainland China visit Hong Kong each year, mainly to shop. The consumption prowess of Mainland Chinese breathes new life into the recently slackened consumer markets.
Many of the consumer shows in Hong Kong are drawing more and more visitors from the PRD, the richest area of China and in the proximity of Hong Kong.
On the other hand, Hong Kong exhibition companies organizing industrial shows in China are faring well. For example, Adsale Exhibition Services Ltd, of which Mr Chu is the Executive Chairman, will be hosting the mega show, Chinaplas 2010, in Shanghai from April 19 to 22. The show will have about 2,000 international exhibitors showcasing their advanced technologies for the plastics industry in a total exhibition area of 150,000 square metres.
Chinaplas is now the largest show of its kind in Asia and the third largest in the world after the K Fair in Germany and NPE in the US.
Mr Chu attributes the success of Chinaplas to the fair's position of catering for both Chinese and international buyers. Out of the 72,000 buyers of the Chinaplas show in 2008, more than 12,000 were international buyers from more than 115 countries and regions.
Crisis and the fixes
Mr Chu considers the period from the fourth quarter of 2008 to the first quarter of 2009 as "the worst time for the industry". Threatened by the global economic crisis, buyers had stopped placing fresh orders and concentrated on selling inventories to enable cash flow, while the banks refrained from lending to businesses.
As a result, export business faced a steep downturn, leading to about 10% drop in buyers at shows held (by various organizers) during that period. This is in spite of the fact that the crisis has less effect on exhibitors, who still need to promote their products to keep their operations running.
As the US, the most important market of the world, is facing a high unemployment rate of 10% as well as a surging saving rate, China cannot rely on exports to the US for a quick economic recovery.
In late 2008, China invested US$576 billion to support 10 key areas of its economy to motivate local consumers to spend more.
Annual growth of China's economy from year 2000 to 2010 (click to enlarge) |
For example, incentives were given to consumers to purchase new automobiles in the cities and electrical appliances in rural areas. There were also measures to better the social system, including provisions for medical services, education and housing to alleviate people's financial burden in these areas.
The government has also loosened restriction on bank credit. Total bank loan in 2009 has increased to more than RMB9,500 billions from RMB5,800 billion in 2008. "Some of the money had gone to the stock market and the property market. The Chinese government has to tighten control to avoid an asset bubble now," Mr Chu comments.
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