Shanghai's largest commercial building will open officially in October. It is not a new office block in Pudong but a permanent exhibition centre in the western half of the city.
Shanghaimart is located in the Hongqiao Development Zone, close to the city's airport. With a total area of 280,000 sq metres, it will be the largest permanent international trade mart in Asia. This massive building is an imposing site in a fast developing area, just to the north of a new elevated express-way. A nearby subway station will open in 1999 and further improve access to the rest of the city.
The trade mart concept was developed in Chicago 60 years ago and today there are many such complexes across the US, Europe and Asia. The principle is simple. exhibitors have a permanent showcase for their products in a prime location, while buyers can visit a variety of suppliers under one roof.
Should it realise full potential, Shanghaimart will be a major attraction to buyers with 2,500 to 3,000 exhibiting companies under one roof. In addition to the showrooms, there are three exhibition areas including a 30,000 sq metre hall and a multi-purpose six-storey trade building. It is' also home to temporary exhibitions such as the East China Trade Fair ?an annual event and one of the largest fairs in the country.
Shanghaimart will help local and foreign manufacturers in China to make contact with buyers, retailers and wholesalers. It
hopes to have 600 companies installed by the time of the soft opening. By next June there should be 1,200 permanent showrooms available to lease.
Various service providers are being encouraged to set up branches within the complex, including customs, tax authorities, banks, couriers, forwarders and travel agents. There is also an information centre, complete with trade library, satellite communication network and electronic trade information network.
Shanghaimart is designed to be a showcase for Shanghai and central China. In the area of apparels and fashion accessories, it also aims to be a trading centre for the whole of the country.
Similar industries will be clustered together. For example floors three to five are reserved for companies involved in clothing, fashion accessories, leather goods, shoes and handbags. There will also be areas devoted to the likes of costume jewellery, leather goods, shoes, garden furniture, lamps and bicycles.
Costs and benefits
The success of Shanghaimart will depend on how many companies feel restricted by traditional exhibitions. Horizontal events, such as the Canton Trade Fair, are considered too general by many. Vertical ones such as a semi-conductor show are well targeted but they typically last just three to five days. Also, regional competition is very keen for example, gift shows in Taipei and Hong Kong take place at the same time.
One of the firms to sign up to Shanghaimart is Shanghai Pacific Optical, a specialised manufacturer of sun-glasses and optical frames. "We never go to exhibitions such as the Canton Fair," says general manager Mr Carlo Molinari. "We go to more specialised events. Not being in a very huge industry, we know all the big importers and optical chains." The company is looking to win business in developing countries such as in the Middle East and Africa, where it cannot justify attending specialist exhibitions.
Mr Robert Lim, chairman of Shanghai Pudong Young Lin Apparel, a US firm specialising in silks, has also decided to rent a small showroom. With a local production base, the company is eager to at-tract foreign buyers, especially from else-where in Asia. Lim says the company has permanent showrooms across the US and it is this experience which persuaded him to repeat the exercise in China.
Despite all the obvious advantages, the trade mart concept is not about to do away 'wilt the short-term exhibition or trade fair ?otherwise, it would have happened long ago. The main reason is cost ?the monthly rate of a Shanghaimart showroom is US$22.93 a square metre. For a standard showroom of 58 sq metres, this would work out at US$1,330 a month. On top of this, there is a US$1.80 per square metre management fee, electricity charged on a usage basis and a small service charge.
Companies must also factor in the cost of having at least one member of staff permanently on site. Then there are the de-
sign and equipment costs but at least these can be amortised over a longer period than for a traditional exhibition.
Mr Michael Chen, deputy general manager of Shanghaimart, says the all-in cost is equivalent to attending two or three temporary exhibitions a year. Molinari concedes that it is an expensive marketing vehicle, "but since we tare in the city, on its doorstep, we'll give it a try".
Chen says China needs an additional eight trade marts ?whether they will all get built will depend on the popularity of Shanghaimart.
The showrooms are available to manufacturers, agents, exporters and importers. Some 600 letters of intent have been signed already and the management should be especially useful in promoting Chinese businesses abroad. The project has the sup-port of the municipal government, being listed as one of 10 key. projects in the city and the only one to involve foreign in-vestment.