Stanley Chu on Business in the Asian Region

Stanley Chu is the founder and Chairman of the Adsale Group which is an international trade media group located in Hong Kong. Members of the Adsale Group include Adsale Exhibition Services Ltd., Adsale Publishing Limited and Adsale online. Adsale has branch offices in Beijing, Shanghai, Shenzhen and Singapore and employs over 200 people. With a career that spans over thirty years, Stanley has developed an astute perspective on business in Asia-Pacific. In 2001 and 2003, he was the recipient of the prestigious designation of The Top Ten People in China’s Exhibition Industry. He is also chair of the Asia Pacific chapter of UFI.

Barry – What career path did you originally hope to follow?

Stanley – While I attended university I had not given much thought to my career path. I thought my undergraduate study would provide me with the foundation for venturing into different fields. Mathematics was always one of my favorite subjects and it motivated me to enter the University of Hong Kong Faculty of Science.

Barry – From the years 1973 (your graduation) to 1978 (the formation of Adsale Group) what jobs did you pursue and how did they impact (or influence) your decision to become publisher of trade magazines?

Stanley – After obtaining my first degree from the University of Hong Kong in 1973, I stayed at the University for one more year and earned a Diploma of Education. Then, I taught mathematics for four years at a secondary school in Hong Kong before I had to quit the job due to a consistent sore throat. At that time, with two partners, I established the Adsale Group, a small outfit with a 35sqm office and a modest capital of ten thousand USD.

It was not so much my teaching experience that guided me into the trade show industry, but rather my involvement in student activities during my years at university which attracted me to the China trade promotion services.

The early 70’s was an exciting time for University students in Hong Kong. It was the time of Nixon’s historical visit to China. China was starting to lift its curtain to the outside world after a few years of turmoil with the Cultural Revolution. I was a student leader and had already led a number of student delegations from Hong Kong to the Mainland.

Barry – In 1984 you received your MBA. How has having this degree influenced your work? How difficult was getting the degree while running a company?

Stanley – In the early stage of the Adsale business activities, I fully recognized my lack of commercial knowledge and experience. As a secondary school mathematics teacher and with undergraduate studies in Physics and Mathematics, I had limited business experience. The MBA programme widened my horizons and provided me with the necessary means to venture into the commercial fields.

It was a really taxing time in my life. I got married in June 1978 and we had our first daughter in April 1980. With the newly established company, I had to travel extensively overseas to solicit business. One of the trips lasted 47 days, starting from New York and ending up in London which also included the four Scandinavian countries that I covered in 5 days. Needless to say, it was tough for me to keep up with my studies in the MBA programme and my duties and commitments with the company and the family.

Barry – Was becoming involved with the exhibition industry part of your initial focus or an extension to your publishing activities?

Stanley – When we started in 1978, there was no commercial exhibition organizer in China. All the shows were government to government. With the open door policy officially adopted in November, 1978, Adsale Group vigorously supported international companies in their trade promotion activities in China. This included translation and production of their brochures and catalogues into Chinese. By the end of 1978 we also started publishing an industrial magazine, TECHNOVA with the sponsorship of advertising from the international firms. The aim was to introduce foreign technology and equipment to China. At the same time, we were appointed by prestigious financial newspapers, such as the Wall Street Journal, Financial Times, Handelsblatt, etc., as their exclusive media representative to solicit advertising for the promotion of Chinese exports overseas.
In 1979, China began to allow commercial exhibitions and in 1980 we staged our first exhibition on Tools and Machine Tools. Today we organize 18 international shows in China annually. These are much bigger in scale from those in the 80’s.

Barry – Many organizers have attempted to set up exhibitions in this region. Some have succeeded while others have failed. Of those organizers who have not succeeded, what, in your opinion, were the mitigating factors?

Stanley – From the early 80’s to recent years, China has been in the process of transforming itself from a planned economy to a market economy. In the 80’s and 90’s, many international organizers were lacking the knowledge and experience to work in a planned economy environment. In the planned economy era, the right of decision making was in the hands of a small number of bureaucrats and the import process, foreign exchange arrangements, etc. all had to go through the scrutinization of the State. Hence, to stage a successful exhibition during those dates, the international organizers would need to have connections to get the support from the State ministries. In doing so, they needed to retain international/local talents who could master the cultural difference between China and the international business community. However, these talents were difficult to find inside China in those days. It would have been much easier for the international firms if they had chosen to work in Hong Kong in the early days and move their operation headquarters to mainland China gradually.
The big international firms, such as Reed and UBM, have chosen to make up the time through acquisition of the established local organizers. Their approach has proven to be quite successful. However, the smaller international organizers who focus on a theme they have experience with in other parts of the world, face very keen competition from the established events which had existed long before their entrance to the China market. Furthermore, the organizers behind these established events are respectable competitors as well in terms of international exposure and capabilities.

Barry – Of those organizers, who have successfully expanded their businesses in Asia- Pacific what, in your opinion, were their keys to success?

Stanley – These organizers usually have a core competence in certain areas and then manage to find key local talents who have expert knowledge and connections in the local markets. These organizers can also locate and form strategic alliance with established local organizers.

Barry – What are the most important challenges facing the Asian region now?

Stanley – Conventionally, Asia is relying on exports to the West to support its continued growth. Right now, with the financial crisis in the United States and Europe which are the traditional importing countries for Asian goods, the exports from Asia are slowing down. This scenario will continue for a few years with the West undergoing a deleveraging process and a reduction in consumption.

Today Asia is looking for a new engine for growth. China and other Asian economies are betting on their internal domestic consumption. However, with uncertainties over their medical, education and housing affordability and with their welfare systems yet to be developed,consumers are hesitant to spend. On the other hand, the cost of production in Asia is on the rise with the awaking awareness of the environmental issues and labour protection. As minimum wages rise across Asia, profits will be squeezed.

All in all, the whole world will have to undergo a relatively long slow growth period for the coming five to ten years with lots of uncertainties and ups and downs. The economic situation will surely be reflected on our trade show business.

Barry – What changes are you implementing in Adsale Group to meet these challenges?

Stanley – In the beginning of each year, Adsale organizes an annual workshop for its managers. The workshop is mainly to identify key issues for the way forward. In 2012, the theme of our annual workshop was “Managing and Leading Changes”. We feel our market place will have many changes in the years to come and we have to adjust our mindset to embrace these changes and see them as opportunities for further growth.
The anticipated changes, obviously, will include changes in the behavior of our exhibitors and visitors as more and more Gen X’s and Gen Y’s taking responsible positions. The rise of social media, technology changes in our industry, alternative choices over exhibitions as a marketing channel for our exhibitors and visitors, competition landscape, and our own team staffing are just a few of the factors which we need to deal with. All in all, we have to institute a corporate culture within the Group and to accept constant and rapid changes as something normal and due to happen. We have to learn to manage and lead through innovation and motivation.

Barry – China’s economy has slowed during the past few years. Should organizers considering doing business in China wait and see if the economy picks up again or is there merit to entering this market now?

Stanley – I have been working as a show organizer in China since 1980. For the past 32 years, I have witnessed lots of ups and downs in the market. I would say getting into the China market is always a good idea provided you have a long term commitment. China is now the world’s second largest economy and still enjoys around 8% annual GDP growth even amidst the world’s financial and economic crisis. This is definitely a promising market for the long term. However, every participant in China’s exhibition industry has to evaluate soberly the competition it will be facing and whether its own team and resources can support its development and growth in the market for the long term. If one’s aim is a fast return, the China market is surely one to avoid.

Barry – An important consideration for companies planning to exhibit at a fair in China is their ability to handle logistics with a minimum of disruption and inconvenience. Have you seen this as being a barrier to foreign exhibitors?

Stanley – Exhibition space in the first tier exhibition cities, such as Beijing, Shanghai and Guangzhou during the high seasons is still in tight demand. It is not unusual for fairs to allow only 2 to 3 days for move in and even with the same day for closing and move out. Experienced and efficient stand fitters and freight forwarders are always available.

The main problem exhibitors encounter is the lack of sufficient back-up facilities for the venues. It is always difficult to find good dining facilities during lunch hours that would facilitate exhibitors in hosting business luncheons for their customers. Wi-Fi facilities are available only in limited areas. Finding taxis at fair closing times is always frustrating and parking space is insufficient. ecurity problems are an issue at some venues.
Nevertheless, it is fair to say, in many ways, the situation is on a par with venues around the world. There are now five star hotels in the neighbourhood of some venues that provide supplementary facilities to the exhibition venues.To overcome some of these logistical issues, many organizers will set up their own temporary e-mail centres, an exhibitor’s lounge, an overseas buyer’s reception area, a prayer room, press centres and shuttle services to mass transit.

Barry – The focus for many organizers is China but surely there are other opportunities in the Asian region. Can you describe some of the opportunities and challenges in China and other Asian countries?

Stanley – Asia is on the rise. It has evolved from predominately export processing countries to markets for international machinery and technology and even as in the case of China, for high end imported luxury goods. Of course the development of different countries in Asia is unbalanced. Hence, the focus of organizers is still on countries in the Region which enjoy political stability, rapid economic growth, a relatively large population and better still, where there is a potential to find a good number of local exhibitors.

As for challenges, I think the main problem is still with competition. Exhibitors are being stormed with invitations from tens to hundreds of similar fairs. Unfortunately, many organizers are making false claims and providing unreliable figures and statements. UFI Approved Events definitely stand out from the confusing scenario when exhibitors and visitors understand the UFI criteria for event recognition..

Barry – How do the opportunities in India compare to China?

Stanley – I do not know India well, so my comments may not be relevant. However, on the surface, India’s GDP per capita is less than one-third of that of China (USD1389 against USD5414 according to the IMF statistics for 2010-11). The number of foreign investment enterprises in India is much smaller than in China which introduced its market reform and open door policy more than 30 years ago. China is the world’s largest producer of machine tools, machinery for plastics, textile, printing, packaging industries and power generating equipment, though it is still lagging behind the Western countries in terms of technology. Today in China, we find the number of Chinese exhibitors and the area they occupy 3 to 4 times that of their international counterparts.

India and China are the two countries in the world with the largest populations. Both governments are advocating fast, sustainable economic development. It is no doubt India has the potential to catch up especially when better and larger venues will become available.

Barry – It’s easy to see how an investor (organizer) can find a billion people plus population appealing. But there has to be more than lots of people. What other factors must be considered? In your opinion how can these factors be ranked in importance?

Stanley – For an exhibition to be successful, it has to be operated in a market where there are substantial effective market demands. Exhibitors are joining a show to look for commercial success and it will only happen when there is market demand from the buyers. Hopefully this demand will be sustained and will rise. Other than the local demand, it will be ideal if the exhibition can radiate its influences to cover more adjacent and regional markets.

Secondly, it will be nice if there are a good number of local exhibitors. It is difficult to grow a show to one with substantial size if it has to rely totally on the support of foreign exhibitors.
Thirdly, the show should be well supported by the necessary hardware and software. For the hardware, the venue is the most important factor. But other than that, we have to look at the airport, the hotels, local transportation, the attractiveness of the city as a tourist spot, safety, law and order, import taxation, protection of intellectual property rights, trade services, such as banking, courier, professional services, etc.

Barry – Technology has played a significant role in the exhibition industry. Do you think it will continue to play this important role in the future? If so, what changes do you see for technology?

Stanley – I think the major change will rest on the popularity of mobile devices. In particular, I see more mobile apps will be launched and organizers will promote QR codes to exhibitors and visitors, so that they have easy access to the information and services of the fairs.

Barry – What role do you see social media playing in the exhibition industry?

Stanley – It will not be long before the Gen X’s and Gen Y’s will become our major group of exhibitors and visitors. They use social media to communicate and to connect as part of their everyday routines. Social media will definitely play an important role as a communication means and even as an activity platform for our industry.

Barry – During the past few years there have been a considerable number of facilities built with more now under construction. Is China at risk of becoming over saturated?

Stanley – According to UFI statistics, the world’s top three exhibition markets in 2011 were USA, PR China and Germany. The exhibition space of these three countries amounts to 6.7 million sqm, 4.75 million sqm and 3.37 million sqm, representing 21%, 15% and 10% of the world total respectively. However, in comparison with the figures of 2006, USA has an increment of 5%, China records a growth of 48% while Germany basically remains the same with only a 2% increment.

The rapid growth of exhibition space in China is supported by a strong demand for space especially in the first tier cities. With the worldwide financial crisis between 2008 and 2010, the exhibition space sold in US and Germany has decreased by 7% and 5% respectively while China still registered a growth of 6%.

However, I do agree that there is over building of facilities in the second and third tier
cities. The first tier cities, such as Beijing, Shanghai and Guangzhou have their visitors coming not just from their own cities, but attract visitors from the region and even from overseas countries. Hence, they are able to stage exhibitions in industries or sectors for which the city itself may not have the strength to do so. The second tier cities do have a few strong sectors but may not have the advantage necessary to compete with similar exhibitions in the first tier cities.

Barry – What words of advice would you give to anyone (organizers, facilities managers, exhibitors, contractors and the media) who is considering doing business in Asia?

Stanley – Every country in Asia has its long tradition and culture. The best approach is to find a local partner who can be trusted and willing to work with you for the long term. Trying to explore the market on your own and without a local competent hand will be both risky and ineffective.

Barry – Do you have any other comments that you would like to pass along to members of UFI?

Stanley – The business world has changed and will change further with its centre of gravity shifting more to the East. It will be worth your efforts to study the Asian market before either developing your exhibition portfolio there or getting more exhibitors and visitors to the exhibitions in your own country.

Barry– Thank you Stanley for your insights.

To learn more about Stanley Chu and the Adsale Group visit www.adsale.com.hk.