An analysis of the role played by the ‘China Import and

Export Fair’ in Cantonese community

Foreign trade fair is a temporary platform for exhibitors and investors to show their

products and services to attract investors, and they play a critical role in promoting the

economy in China. Nevertheless, the influences of trade fair upon local community

vary from region to region. Among the trade fairs that have been organized, one of the

most successful trade event is the Canton Fair in China, which was established in

1956. Over its more than 50-year history, the China Import and Export Fair (CIEF),

usually recognized as Canton Fair, has become the most significant Chinese hosted

international trade event and stands as a growing symbol to the rise of China and the

opening up of its economy (Xie and Perley, 2012).

Canton is located in the southern part of China, which is a modern place and famous

for its flourishing economy and multicultural society. Moreover, Guangzhou is the

biggest city in Canton, and due to its ideal geographical location that is close to Hong

Kong and Macao as well as close and friendly long-term relationship with overseas

companies. It is not exaggeration to state that, the 50-year development of China’s

foreign trade was built on the exchanges taking place at the Canton Fair, which is

widely regarded as a testament to China’s development of its external economic

relations, representing the distinguished achievement of trade exchanges and

mirroring the evolution from a planned to the market-oriented economy.

As Canton’s stage for foreign trade, the positive effects of the China Import and

Export Fair on Canton’s recent economic development outweigh its negative effects.

In this essay, a brief history of CIEF and a description of the development of its

management will be presented, follow by, the examination of the both economic and

social impacts of this fair upon the Cantonese Economy.

Brief history of the Canton Fair

Between1957 and 1977, the Canton Fair was the only place where overseas buyers

could find sellers in China during this period. In addition, this period laid a solid

foundation for the reputation of the Canton Fair. According to CFTC (2006a), the

fair’s duration was 30 days and at times lasted as long as 45 days. Since the Canton

Fair was the only place where overseas buyers could find sellers in China, so if people

missed the opportunity to attend, they would certainly have to wait for the next

session. Even in the late 70s when the Chinese economy was beginning to reform,

there were few buyers and suppliers.

After China started the economic reform in 1978, the economic growth rate

continuously increases. Having experienced distinguished political and economic

status, the Canton Fair had become an “incubator” of foreign trade enterprises and

enormous economic benefits for both exhibiting enterprises and the host city.

From1992 to 2007, the expansion in fair space is significant, such as a dramatic

increase in the number of exhibitors and buyers, adjustment in exhibit groupings, and

the establishment of a new exhibition center. In order to adapt to the rapidly changing

technological world, in 1996, Canton Fair Online, the B2B service platform, was first

launched, serving as a sourcing supplement for the on-site fair (Jin et al, 2008).

The development of the Canton Fair’s management

From its inception until now, the Canton Fair has been a trade show that is operated

by government and an affiliate of the Ministry of commerce, China Foreign Trade

Center (CFTC). In 2008, the Canton Fair underwent significant reforms. These

reforms included a amendment to a three phases per session structure, with each phase

lasting 5 days (instead of 2 phases of 6 days as was previously the case) and separated

by four-day intervals. Major changes in product categories (34 to 50) and exhibition

sections were also formalized (D, E, 2012). Along with these reforms, the new Canton

Fair complex was inaugurated in 2008 and named the Guangzhou International

Conference and Exhibition Centre. The largest modernized exhibition center in Asia,

it is located on Pazhou Island in Guangzhou.

The new infrastructure has allowed a considerable upgrade in size and length of the

event and helped the Fair further to secure its position as the largest trade show in

China and one of the largest in the world, a testament to its ongoing efforts to

maintain its status and keep up with the continuous growth and evolution of the

Chinese economy. While having always been more export oriented, it also features an

International Pavilion as of the 101st edition in 2007, which welcomes importers from

all over the world.6 According to the organizers, the complex is a perfect integration

of human and ecological concerns, and high technology and, ' sparkling the world like

a shining star ’ over a totally built area of 1.16 million square meters.

During the fair’s 50-year history, exhibit categorization and operating body having

taken place, but its basic operation system remain unchanged. The quality of the

exhibitor database and control could be affected, due to the lack of direct contact

between organizers and exhibitors. However, the workload of handling 14,430

exhibitors directly poses difficulties and reluctance for management change (Jin et al,

2008).

Community impacts

Fair benefits the regional economy driven. The Canton Fair brings direct economic

benefits for the 5.525 billion RMB, 10.797 billion RMB for the indirect economic

effects, direct effects and indirect effects of a combined 16.322 billion RMB each

year. The year of two direct and indirect effects of the Canton Fair total 32.644 billion

RMB, accounting for Guangzhou, 4% of annual GDP, the Canton Fair in

Guangzhou's economic pull factor is about 1:13.6. In addition, the Canton Fair in

Guangzhou every year to bring 400 million RMB of tax revenue; directly contributing

to full-time or part-time employment to 11 million people, 1.94 million people

employed indirectly drive. These figures demonstrate that the Canton Fair not only

has been established an indispensable platform for foreign trade, but also had a

tremendous impact in the local economy growth. (Max watt Battery, 2009)

Fair tends to significantly boosts local hotel industry. According to the statistics, 33%

of the hotel annual revenue comes from the Canton Fair. Particularly, the influence of

Guangzhou fair to Guangzhou hotel's price is significant every year. The average

house prices of April and October are higher than average house prices more than

50%. Especially the turnover of some high star hotels accounts for about a third of the

annual turnover. It is said that, in 2011, the Oriental hotel revenue was 310 million

RMB, and two Canton Fairs each year brings the revenue nearly 100 million Yuan

(Ejetgroup, 2012).

The Canton Fair is the Gold Period for local hotel industry. Convention and

Exhibition industry and Hotel are an upstream, and downstream relationship, the

development of Convention and Exhibition industry is beneficial to the hotel's

turnover. Moreover, the hotel's size can increase the attractiveness of the Exhibition.

In fact, with the development of the Canton Fair, the increasing number of

international exhibitions will be held in Guangzhou.

The Canton Fair has a significant impact on local hotel industry, especially, the

increase in room rate and its total revenue. However, the fair make no difference in

local tourism. During the peak season, the Canton Fair appeal to numerous business

travelers, and consequently, some negative issues, such as over-crowed transportation

traffic congestion and increased criminal rate, might become significant. Because of

the limited rooms, the high room rate and transportation fee as well as traffic

congestion in fair period, ordinary visitors’ travelling cost probably increases, which

lower tourists’ satisfactions. Hence, in this regard, the Canton fair has crowding out

effect on Cantonese tourism.

Furthermore, since the majority (66.6%) of hotel’s income annually comes from the

Canton Fair, the local hotel industry tends to over dependent on it. Once the enormous

economic impacts have become significant, a growing number of hotels are under

construction or planning. Thus, the intense competition in a local hotel industry may

generate some negative impacts. It is believed that, in 10 years, the total number of

five-star hotel in Guangdong rose from five to more than 20. The rapid growth has

begun to deviate normal development trend of the industry, and the growth rate of

consumer source fully cannot keep up with the pace of the hotel expansion

(Ejetgroup, 2012).

One substantial advantage of holding Fairs is the consistently increase in investment

from both government and businessmen, in terms of public transportation, facilities

and various industries. Compared with the fair in the starting stage, numerous

attentions had been paid to the importance of fair in today’s fast developing economic

society.

In the early 1970s, Guangzhou underwent a serious shortage of hotels and

transportation to accommodate international merchants. Compared with the ordinary

national and international visitors, the businessmen attended the Canton Fair would

stay for a longer duration and had the higher daily expense. In 1972, Chinese

government had offered various supports to solve the pressing accommodation and

transportation problems. ‘Special funds of RMB 60 million were provided to

Guangzhou city to build three hotels. Amid the difficulties, the Chinese Export

Commodities Fair venue— the Liuhua complex—with an indoor exhibition space of

170,000 (sqm), was built and put into operation in 1974’ (CFTC, 2006b). Until the

late 1970s, international buyers faced difficulties to find sufficient accommodation as

only a limited number of hotels with standard facilities were designated to

accommodate foreigners. In addition, the quantity and quality of hotel beds were far

from meeting demand. Jin et al (2008) claimed that, because at that time, many buyers

had to stay overnight on cots in corridors of designated hotels, so complaints were

reported by some foreign press, and consequently, the reputation of the Canton Fair

and Guangzhou were damaged.

The Central and Guangzhou government had to seek alternative sources and external

investments to build luxury hotels to cater to the needs of attendees. Thus, in the early

1980s, it is obvious that there is an improvement in the number of flourishing and

leading hotels in the city, such as the White Swan Hotel, Garden Hotel, and China

Hotel Guangzhou. At that time, Guangzhou was the city with the highest number of

five star hotels, per capita GDP, and joint ventures in China. With the development of

the Canton Fair, the impact of the Fair on the hotel industry continues. Some figures

could demonstrate the hotel industry situation five years ago: ‘Guangzhou has more

than 200 star-rated hotels (including 11 five-star hotels) in 2007, with an average

occupancy rate of about 60%. However, even with as many as about 220,000 hotel

beds, the city still cannot accommodate 190,000 buyers and 300,000 exhibitors during

the Canton Fair. Many buyers and exhibitors have to commute to Guangzhou from

nearby towns and cities, such as Foshan, Dongguan, Shenzhen, and even Hong Kong,

or they have to find cheaper lodgings in budget hotels or even in temporary

apartments. More hotels are under construction or in the planning stages to support

the Canton Fair in the future’ (Information Times, 2007). In addition, the opening of

Pazhou Complex in 2004 led to a rise in property value, construction of exhibition

halls, and hotels in the peripheral region. Apart from that, the Canton Fair also has

some other positive effects, especial for the construction of the underground system in

Guangzhou. The multiplier effect of the exhibition industry in China is estimated to

be 1:9 (A. L. K, 2005). In terms of its scale, the number of exhibitors and visitors, the

Canton Fair contributes approximately RMB 20 billion to Guangzhou each year (Jin

et al, 2008).

Apart from the supports from government, the investments from both domestic and

overseas businessmen also contribute to the Cantonese development. The reason why

the investors are able to recognize the bright future of Canton is that the Canton Fair

stimulates the majority of local industries.

Fair is likely to create a growing number of job opportunities in the local area, which

ease the serious unemployment situation. Each period of the Canton Fair directly

generate 5461.3 million full-time or part-time jobs and indirectly create 109,2million

full-time or part-time jobs. The auxiliary industries driven by the Canton Fair include

retail, hotel, catering, transportation, shipment, exhibition establishment and

advertisement. Specifically, catering, retail and hotel industry are primarily affected in

terms of employment. Apart from that, people who are well equipped with foreign

language tend to be highly demanded. For example, language experts get attractive

jobs during the event, because the fairs require such professions to interact with local

businessmen. Nowadays, the unemployment rate in the local area, to some extent, has

been decreased.

Competition among the fairs in China

With the rapid development of local economy and trade exchange, it is possible for the trade show become increasingly popular. During the process, most of fairs would face fiercer competition than before. Because of the growing number of trade shows organized by private companies, joint ventures, and multinational companies.

Various exhibitions are held simultaneously, or during the same period of the Canton Fair in its neighborhood city and region, more importantly, they have the equivalent content, including toys, gifts, consumer goods and textiles. Hence, April and October are the main buying seasons for international buyers engaged in China trade.

However, the positioning of these exhibitions is somewhat different. For example,

Hong Kong and Macao exhibitions aim at higher-end markets and more international exhibitors, exhibitions in Shenzhen target lower-end markets, while the Canton Fair focuses at midrange markets. Moreover, a number of similar trade shows are organized in smaller venues, and people could walk to the two exhibition halls for the Canton Fair within several minutes. However, the Canton Fair is still incomparable due to its strong reputation and irreplaceable social status, which has an audience of about 200,000 professional buyers. Furthermore, given the additional space available in Pazhou in 2008, exhibitors and buyers would concentrate on Canton Fair, adding a further competitive advantage to the fair. Nonetheless, the Canton Fair organizer needs to pay attention to competition and possible cooperation (Jin et al, 2008).

It is clear that, although some the negative side effects are linked to the Canton Fair, the positive aspects outweigh these. There have been claims that the development of Fairs has benefits on the local economy, especially the improvement of the hotel industry and employment situation. Another line of research worth pursuing further is to examine the importance of this fair for exhibitors and buyers. As always, this essay has a number of limitations to be considered in comparison with the similar situation about the fair in other Countries. The potential and status of the exhibition industry of a country is essential to its economic strength, market capacity, and impact on other

countries and regions. Canton Fair has been the ‘ incubator ’ of enterprises and

entrepreneurs in China. The tremendous success of Canton Fair has set an example for other exhibitions in this country, also representing the economic progress of China and its exhibition industry.