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25 Jun, 2012

European Giants Will Wipe Out Local Firms In ASEAN Exhibitions Boom

BANGKOK – The rapid expansion of European exhibition conglomerates in the ASEAN and Asian regions could drive local exhibition companies to “extinction,” the head of the Asian Federation of Exhibition & Convention Associations (AFECA) warned last week.

Speaking at the first Thailand MICE International Forum (TMIF) 2012 on June 21, Mr. Edward Liu said that the exhibition sector will clearly benefit from the increased trade and economic opportunities offered by the ASEAN Economic Community and the opening up of Myanmar.

“However, beyond 2015 it is more than likely that the entire exhibition sector will be dominated by European exhibition organisers such as Reed Exhibitions, GL Events, UBM and the German groups,” he said.

“As many Asian organisers are unable to compete with their foreign counterparts in terms of expertise, resources and market connectivity, many are likely to face challenges or extinction in the years to come. If you are not prepared with these challenges, you will be left with the crumbs.”

He said that Asian organisers will be left with the choice of being bought out or forging “strategic partnerships” with the global groups.

His comments echoed those of Mr. Iqbal Abdullah, Chairman of Indonesian Congress and Convention Association (INCCA) who said: “They try to buy everything, like all the companies, events, maybe soon they will buy our people. But that is business. If you have money, you buy, if you don’t have money, you sell.  Nowadays, you cannot work by yourself, you have to have a network.”

In his opening speech, Mr. Phongsak Assakul, Chairman, the Thai Chamber of Commerce and the Board of Trade of Thailand, also warned of the drawbacks of ASEAN economic integration.

“We can definitely anticipate more competitors and tougher competition.  As ASEAN member states basically share similar export structure, businesses will have to be more competitive or  they will unavoidably be affected, or even be obliterated, by the removal of trade and investment barriers which, unfortunately also benefits foreign business.”

He added, “Our Thai services sector will be affected by the fact that foreign investors from ASEAN can now get hold of more equity.  The possibility of more foreign investment will be even higher according to the provision of 70% foreign equity participation in the future.”

The TMIF was organised as a side-event of the 7th Annual General Meeting of Asian Federation of Exhibition & Convention Associations (AFECA). It was heavily supported by the Thailand Convention and Exhibition Bureau which also flew in trade buyers from emerging markets like India and Russia for a small business-to-business event with Thai sellers.

According to Mr Pravit Sribanditmongkol, President, Thai Exhibition Association (TEA), the Thailand exhibition sector will benefit from both the AEC and the opening up of Myanmar.

“With world-class exhibition and convention centres in Bangkok and other major cities in Thailand, as well as international-standard professional service providers, we are certain that Thailand will be one of the most promising gateway or exhibition industry professionals to expand into ASEAN and other parts of Asia,” he said.

Mr. Liu noted that Thailand also has a major demographic and industrial advantage, excellent infrastructure, competitive costs and superb service standards. It also has a high level of expertise in organising industry-specific exhibitions such as those catering to the tourism, energy, agriculture and automotive sectors.

However, Mr. Liu also underscored the competitive impact of the new wave of European organisers who are now moving more rapidly into Asia as their home markets are being affected by the Eurozone crisis.

He said, “In order to gain faster entry into the vast Asian market, some of them are now actively exploring mergers and acquisitions in the region. As the China market is fairly saturated, ASEAN will become the next battleground for M&As. There are at least 10-20 European organisers ready with their cheque-books.”

He noted that in China, both Reed and UBM have already bought up lots of exhibitions, and are following suit in India. Japan, Korea and Taiwan will also attract both local and global organisers.

Within ASEAN, Mr. Liu said, Indonesia is likely be the new battlefield amongst the local organisers, the foreign players and the new entrants. Singapore, with its new tourism landscape and additional exhibition facilities, will continue to attract new organisers, especially from the U.S. Beyond 2015, Vietnam, along with the Philippines, will draw more interest, Mr. Liu said.

The discussion highlighted the obvious weaknesses within ASEAN and Asia in dealing with this wave of foreign competition.

The marketing power of the global conglomerates gives them the flexibility to play off one capital city against another in seeking subsidies from the many convention and exhibition bureaus, which means that Asian taxpayers land up offsetting part of the costs.

The lack of unity amongst ASEAN exhibition companies and their poor negotiating postures also prevents them from seeking a quid pro quo at the global level. For ASEAN policy-makers, the challenge is clear: Helping local and regional companies to deal with competitive muscle of the global giants will have to become an over-arching priority.