With good facilities and a flourishing nightlife, Shanghai has become China's favourite place for hosting meetings and exhibitions. However, the recent Sars outbreak could cause a log-jam in the industry.
Mou Wenyi doesn't have much time to chat. The deputy general manager of Beijing Zhonghui Exhibitions Co is busy making sure the 360 exhibitors at this year's China International Glass Industry Technology and Equipment Exhibition are happy. That means a lot of running around for Mou – the exhibition originally reserved more than 12,000 sq metres at Shanghai's New International Expo Centre, but the response was so good that Zhonghui had to set up a large tent outside to accommodate the overflow.
It hasn't always been this way. In the old planned economy days, Beijing was the preferred site for exhibitions and meetings. But China's move to a market economy has made commercial-minded Shanghai more alluring as a meeting place. "Beijing's exhibition business used to be bigger than Shanghai's," says Mou. "A lot of state-owned groups had exhibitions there. The government approved them and they were really big. Now, Shang hai is developing really quickly, and more and more commercial businesses are participating in exhibitions here."
Long a draw for tourists because of its exotic mix of eastern and western culture, Shanghai is now a hot spot to host meetings, incentives, conventions and exhibitions (MICE). Last year, 20,000 companies exhibited in Shanghai, including 5,000 from overseas. And that does not even include many of the smaller events. "For meetings, Shanghai is probably the hottest city in China," says David Katemopoulos, director of sales and marketing for Pudong's St Regis hotel.
The city's thriving economy is a big draw. In 2002, Shanghai's GDP grew 10.9 per cent on the previous year to Yn540.9bn. Clients like IBM are especially interested in Shanghai's thriving high-tech industry, according to Vivian Wang, manager of the Shanghai office of event organiser ETG. "They have heard a lot about Pudong," she says, referring to the semiconductor plants and a high-tech zone located there. "They want to take a look and see if they can do business here."
But companies also want atmosphere when planning events. In addition to Shanghai's historic appeal, there's now a flourishing nightlife, epitomised by the Xintiandi restaurant and club complex built in the style of a 1930's residential lane. "When I talk to organisers, [Xintiandi] is a good selling point," says Katemopoulos. "Organisers look at the business side of things during the day, [but] almost always they will ask for recommendations of what to do after the meeting."
MICE need facilities like hotels and convention centres. Shanghai has more than 20 five-star hotels, and dozens of three and fourstar establishments. Until the recent outbreak of severe acute respiratory syndrome (Sars), all the five-star hotels had occupancy rates of at least 70 per cent. MICE played a big part. That business segment has been growing by about 5 per cent a year for the last three-tofour years at the three Starwood-managed hotels in Shanghai, says Qian Jin, vice president of Asia-Pacific and area managing director of China and Taiwan for Starwood Resorts & Hotels. "Particularly in the St. Regis and Westin, 20 per cent of their business is MICE," he says.
It can be a lucrative business. Lulu Uy, director of marketing for Shanghai's Portman Ritz-Carlton has been working on an incentive package to pitch to a cosmetics firm that would fill 150 rooms for two nights. Such packages usually include a room, meals, a city tour and a welcoming gala dinner, to the tune of around US$1,200 per person.
New exhibition facilities
Shanghai also has six large exhibition centres, the newest of which is the Shanghai New International Expo Centre, where the glass industry event was held. It already has 65,000 sq metres of space available, which will eventually grow to 265,000 sq metres. SNIEC hosted 44 expos in 2002 and has 50 scheduled for this year. Other exhibition sites include Shanghai Exhibition Centre, a Russian- architecture delight across the street from the Ritz-Carlton, and the Shanghai International Convention Centre, perched on the riverbank in Pudong.
Two-thirds of the glass industry show's 360 exhibitors were local, and local business is increasingly part of the MICE business in Shanghai. "In the two years I have been here, there has been an increase in demand of 40- 50 per cent in the domestic sector," says Katemopoulos. Government connections are helpful to win local business. "Our hotel has a history of being very close to the Shanghai government," says Chen Jian, sales manager of the Jinjiang Hotel. "In general, if the Shanghai government has a meeting or there is an important national government meeting in Shanghai, the government officials will choose to hold it in the Jinjiang."
Government policy still plays a role in the MICE business in China. Though nothing is in writing, major event organisers are told to alternate between Beijing and Shanghai, industry sources say. This year is Shanghai's year to be favoured. However, even in the years when Beijing is pushed, there are plenty of events in Shanghai, points out Starwood's Qian. The municipal government is also beginning to promote the city as a MICE destination. The Shanghai Tourism Administration Commission recently formed a conventions and exhibitions department, which meets monthly with hotel marketing managers to strategise.
Building for the World Expo
Shanghai got a lot of practice in self-promotion during its successful bid for the 2010 World Expo. Hosting the Expo will further improve the city's infrastructure. "You can use these events as an excuse, often political, to build infrastructure that would otherwise not be possible," says Shanghai-based Christopher Choa, a partner with HLW architects, which helped to plan part of the North Bund development project. The Expo site, which straddles the Huangpu River, "will develop the underdeveloped side of Pudong", says Choa. The city forecasts 50m Expo visitors and Yn11.8bn in direct economic benefit.
The 2010 Expo will put Shanghai in a spotlight that can also shine on other aspects of the city, like the Universal Studios amusement park planned for completion in 2006. "There is going to be almost a supernova effect that is going to take place in Shanghai in the next 10 years," enthuses Choa.
However, Shanghai still has a way to go to before it is an ideal MICE destination. For example, the city's new convention and exhibitions department was reluctant to provide information to CER and couldn't send comprehensive details when it finally did. "The infrastructure is developing fast, but the city needs to look at the mentality," says Starwood's Qian. "Compared with a few years ago, the mentality has changed into more of a market concept, but it is still based on the old planned system."
While five-star hotels provide top-notch service, the three- and fourstar ones aren't always up to scratch, says the Ritz-Carlton's communications director, Michelle Wan. Shanghai could also use more space for mid-sized events, says ETG's Wang. Planning an event for 4,000 people that includes a meeting and dinner would be a logistics nightmare, what with moving all the people from the meeting to dinner. "I'm not sure we could find a suitable venue," says Wang.
While few think Sars will have a long-term negative impact on Shanghai's image,Wang sees a possible Sars-induced log jam ahead in Shanghai's MICE industry. An info technology event that ETG was planning has been postponed because of Sars, but venues are already fully booked months in advance, she points out.
For hotels, Sars may mean a refocus of their MICE marketing efforts towards local companies, at least for the next few months. The St Regis is down to 45 per cent occupancy when it expected 80 per cent, says marketing communications manager Hwee Ping Yeo. Other five-star hotels report similar drops. "We are trying to look at domestic companies," Yeo says. "When we were fully booked we had to turn away some. This is a good chance to go back to them and say 'look, why don't you try us out now?'"
It might work. Local companies aren't scared – Mou had only four cancellations at the glass show, all foreign exhibitors.