Afternoon of June 21

Panel Discussion: Exporting Exhibition Venue Management

Moderator: Michael, General Manager of Shanghai New International Expo Centre

Panelists: Monica Lee-Muller, Managing Director of Hong Kong Convention and Exhibition Centre Management Ltd.; Li Yong, President of the Sichuan Convention and Exhibition Industry Association; Tracy Short, SMG Vice President for China Region; Tang Xue, General Manager of Hangzhou International Expo Center.

Moderator: We are now discussing exhibition venues. We have invited several venue management experts. I would first like each expert to introduce their venue.

Monica Lee-Muller: The Hong Kong Convention and Exhibition Centre opened in 1988. It is owned by the Hong Kong government, and we are the management company. Over the past 30 years, more than 47,000 events have been held there, attracting over five million visitors. Many organizers across Asia have held exhibitions at our venue.

Ensuring the successful operation of an international venue is not only the responsibility of the management company; it also requires full commitment from the government and the venue owner. First, the surrounding area must have enough hotel rooms and convenient transport. Professional advisers and consulting teams should be involved from the design stage. Second, the manager must communicate with the owner immediately and continuously. No matter what the initial contract says, the venue owner must continue to invest. Third, venue managers are taking on more responsibilities, including building management, traffic attraction, talent training, and talent retention, which is increasingly difficult. Security is another major issue, especially under the pressure of very large crowds. Fourth, venue managers must build a very sincere partnership with the local government and the venue owner.

Li Yong: I would like to share two observations. First, the main battlefield for exporting venue management in the future will be second- and third-tier cities. There are three reasons. After 20 years of rapid growth, first-tier cities have moved from dominance by a single venue to multiple venues in one city. Except for a few cities where exhibition space may still grow, first-tier cities will be basically saturated over the next decade. China currently has more than 200 venues under construction or planned, with roughly 10 million square meters of exhibition area. This is an astonishing figure. The rentable area of operating venues in China has already reached 12 million square meters, and a similar amount may be added in the next five to ten years. The markets faced by venues in Beijing, Shanghai, Guangzhou and Shenzhen are different from those in second-tier and lower-tier cities. Beijing is the national political center, Shanghai the economic center, Guangzhou the commercial center, and Shenzhen the frontier of reform and opening-up. These are basically seller's markets where venue operators have pricing power. In second- and third-tier and lower-tier cities, pricing power is in the hands of buyers.

Therefore, the future market for China's venue-management export lies in second-tier cities and even below. Second, regarding the focus of future competition in exporting venue management, the most important competition in China will be operation. The reasons are that second-tier cities have a huge number of venues under construction, and investors, whether central state-owned enterprises, local state-owned enterprises or private companies, have high expectations and pressure for returns. Thus, the future focus of competition will be operation rather than management.

Tracy Short: I have only just begun learning in China, so I will share what I see now; perhaps my view next year will be different. SMG's management term for the Shenzhen venue is 20 years. We can introduce international best practices, and the Shenzhen government understands this very clearly. In venue design, we made sure that it would not only be an exhibition center but also a conference center. This is easy to say but very difficult to achieve. We turned a very large exhibition hall into a conference center with 5,000 seats. There are also 36 meeting rooms that can be converted into a large banquet hall, as well as another hall that used to be purely for exhibitions and has now become a multi-functional display hall. The venue now has a 14,000-seat conference-center function. This was a clear requirement from the Shenzhen government and our partners.

We focused on design for two purposes: improving operating efficiency and enhancing security. If the design is not done well, future delivery becomes very difficult. As SMG, we bring an international perspective, but we are also open-minded and want to listen to local voices and seek a balance between internationalization and localization. Because we operate in China for the long term, we need to adapt to the new environment. If you want to do this work well, you must think according to local ways of thinking. Differences are not bad; the issue is not good or bad, but whether things are the same or different.

Tang Xue: I have paid close attention to venue-management export in recent years. Hangzhou International Expo Center is our largest management export project in recent years. We have managed ten venues with a total area of more than 2.6 million square meters. I have three points.

First, venue construction is now very active. Taking Zhejiang Province as an example, Taizhou, Yuyao and Shaoxing are all building convention and exhibition centers. In the next few years, Zhejiang may add two million square meters. As private capital enters the field, investors pay increasing attention to return on investment and increasingly want professionals to do professional work.

Second, the relationship between the owner and the manager is like a marriage, and management export is like marrying into a wealthy family. What owners care about is whether you can bring international exhibitions, professional exhibitions and international conferences. At the beginning, they usually do not talk about the level of operation and management. They talk more about how many exhibitions and conferences can be brought in, what industry resources and client resources can be introduced, and only later do they pay attention to venue operation capability.

Third, there should be a pursuit of professional managers. Domestic venue-management companies are currently copying the hotel management model. Hotel management has developed in China for decades and is very mature. Its strengths lie mainly in brand value, systematic and standardized systems, business philosophy and internationalization, and it ultimately cultivated a group of international professional managers. This is the most important point. Likewise, to operate a venue well, professional managers are crucial.

Moderator: Your cities are different. Competition will be more intense and there will be more venues in the future. How are you preparing?

Monica Lee-Muller: To do professional venue management, we need to develop and expand, but first we must find the right people. We have a venue in Shenyang, where there were no suitable local talents. We started recruiting five years ago and sent them abroad for training. The venue only opened last year. One key word is education, and we must retain these talents.

The next issue is the venue and facilities themselves. Our venue has a 30-year history and needs upgrades and maintenance. This year we invested in Wi-Fi facilities, a new building management system and a monitoring system. We invested HKD 100 million in these three systems. If you want to be among the most advanced in the world, these preparations are necessary. This is what our clients value. Without these things, we cannot compete. Our venue is actually very small, only 90,000 square meters including meeting rooms.

Li Yong: Many people only pay attention to operation after a venue has been completed. Based on nearly 20 years of personal experience, the venue operator's overall design concept should run through project planning, general planning and design.

Especially for venues in second-tier and lower-tier cities, if they are built only as convention and exhibition centers, they will face very high market risks and operating pressure over the next decade. Therefore, the most important thing is to conduct future market analysis and consider how to operate the project at the planning stage, which lays a good foundation for operation after completion. After a project is completed, strategy is most important. To operate a project well, victory must come from strategy, including enterprise management strategy, cultural strategy, human-resources strategy and business strategy. It is not a single operating method but a combination of operating methods.

Dialogue Session

Moderator: Is Qingdao a third-tier city, a fourth-tier city, or a city with first-tier potential? How should Qingdao be classified?

Li Yong: In China, many venues are the service provider in the market, while organizers are the clients. From a market perspective, Qingdao can only be a second-tier market and cannot be a first-tier market.

Tracy Short: Shenzhen currently has enormous potential, and this is a learning curve. One excellent point is that Shenzhen had already brought in the operator during planning and design. For second- and third-tier cities, we should evaluate the whole market first, and then build venues that match both the current and future market.

Moderator: Speaking of the Belt and Road, Shenzhen does not seem to be on that list. I think Shenzhen is absolutely closely related to the Belt and Road. Thank you. Let me ask Ms. Tang: is Hangzhou a first-tier or second-tier city?

Tang Xue: Hangzhou should be considered a quasi-first-tier city. After Hangzhou International Expo Center opened successfully and hosted the G20 Summit, Hangzhou's convention and exhibition industry developed rapidly and has taken major steps toward becoming an international first-tier city. In terms of the convention and exhibition industry, it is positioned as quasi-first-tier.

Exporting convention-center management should involve three aspects. First, we must pay attention to planning efficiency. From the initial design stage, we should consider how to reduce operating costs. Investors often only consider maximizing operating area and do not consider the feelings and experience of employees, including staff cafeterias, locker rooms and storage rooms. As a result, we encountered many difficulties in operation. A venue may look grand, but organizers may find it hard to use, visitors and participants may have poor experience, and employees may not rate it highly.

Second, opening preparations must be done with high quality, including procurement, recruitment and salary management. In particular, market positioning must be clear. What will the convention center bring to the city? Should Hangzhou focus mainly on meetings or exhibitions? I think it may currently lean more toward meetings and less toward exhibitions, but in the future it will certainly become a first-tier city where meetings and exhibitions advance in parallel.

Third, operating quality must be optimized. This requires consideration of diversified operations, smart venue development and monetization of traffic.

Moderator: Another question for Ms. Tang: what is the most important competitiveness for you?

Tang Xue: The city we mainly benchmark against is Shanghai, and the most important competitiveness is talent. Most of the staff structure at Hangzhou International Expo Center should have convention and exhibition backgrounds. For us, talent is the biggest bottleneck.

Moderator: This is a problem facing the entire industry. If this problem is not solved, the industry cannot make progress. Tracy, your venue has not yet opened. What changes do you think will make venues more competitive in the future?

Tracy Short: The key is to talk with clients, understand their concerns and understand their future opportunities. That is the first thing I need to do.

Moderator: I think that is not difficult; it is about listening to what our clients are thinking.

Li Yong: Talent is absolutely the soul of an enterprise. We have nearly 20 years of history in venue planning, design, construction and operation, and have accumulated much experience and tasted many lessons from failure. These experiences are very important. Ms. Tang mentioned what hotel-management export depends on. It depends on a complete system. A five-star hotel has a five-star system, and a four-star hotel has a four-star system. Different venue management models also form their own systems, and this is part of an enterprise's core value. The needs of organizers are constantly changing, so training and learning are endless processes.

Monica Lee-Muller: The world is progressing. In the era of big data, if we do not move forward, we fall behind. We need enough talent and good systems to manage venues. In talent management, we send senior managers to the United States and Europe for study and interaction. We also tell organizers that our venue will be renovated in the coming years and may affect their booth setup, but all this is preparation for the future.

One more point is very important: business integrity. Fairness, justice and integrity are extremely important to us. Only in this way can we ensure that organizers and clients do not need to face unnecessary risks, that they are well protected in our venue, and that we have transparent and fair policies and fee policies.