The Rise of Foreign MICE Enterprises in China

Looking back at the year of 2013， Meetings， Incentives， Conferencing and Evenings’（MICE） enterprises had a hard time coping as the Chinese government cracked down on the luxurious conduct of formal Chinese business events. Then followed the reforms of turning operating tax into value-added tax， increasing their tax burden to a level they could hardly afford.

While these Chinese MICE enterprises were struggling to keep their heads above water， the international giants relentlessly began acquiring foreign assets through mergers and acquisitions（M&As）. These formidable foreign firms taught the local Chinese compa- nies a strong lesson about M&A behavior， making it clear that market-oriented MICE industries are only a precondition for capital expansion.

Foreign MICE enterprises entered the Chinese market in the early 2000’s， and have witnessed a faster development pace than in any other European or American country.

In fact， the merging of Chinese MICE enterprises by foreign companies was a major concern when they initially broke into the Chinese market. Initially seeking to acquire the capital operation of Chinese companies， before moving to project cooperation. Gradually they began to take control of the events in popular industries. Their efforts blossomed in 2013 when they finally acquired several Chinese MICE enterprises.

This also reminded the Chinese MICE industries that China， as an emerging economy， is becoming a new“paradise” for foreign MICE companies， which are trying to turn China into a central hub for mergers and acquisitions.

The Increasing Frequency of M&A Cases

In the middle of last December， UK-based Informa Group announced the acquisition of shares in the China Beauty Exposition hosted by Shanghai Baiwen Exhibition Co.， Ltd. Neither party have revealed any details but the troubling fact is that the China Beauty Exposition is a conglomerate， consisting of several sub-events； China International Cosmetic Washing Product Expo， Shanghai International Daily Chemical Packaging & Machinery Exhibition， and Shanghai International Hairdressing Conference.

While people were starting to focus on the increase in M&A cases， Shanghai UBM SinoExpo Co.， Ltd （UBM SinoExpo） announced the agreement with Shanghai Tiansheng Exhibition Co.， Ltd（Shanghai Tiansheng）： the two companies are going to co-sponsor the China Vending & Kiosk Show scheduled for 2015， as well as the Shanghai Digital Signage Show.

In addition， UBM SinoExpo also reached an agreement with Shanghai Jingcheng Exhibition Service Co.， Ltd（Shanghai Jingcheng） to sponsor the Shanghai International Starch Deriva- tives Exhibition in 2014， putting their combined forces into the eight-year-old annual event.

UBM SinoExpo is a joint venture co-founded by Shanghai China Exhibition Co.， Ltd and UK-based UBM Group’s subsidiary company UBM Asia.

On top of the joint venture， UBM Asia also signed a contract to acquire NOVOmania， an international fashion show in China， in March 2013. It founded a joint venture UBM NOVOmania with NOVOmania’s original exclusive sponsor Novo Mania. Supposedly， UBM Asia was the majority shareholder owning 60% of NOVOmania’s stocks.

In December 2013， UBM Asia formed a partnership with China Convention & Exhibition Society in order to host a workshop for participating MICE industries， stating its purpose is to train these future associations to introduce the Internet and social media into the marketing side of the developing MICE industries of China.

So， what can be seen clearly is that UBM has become a renowned and respected firm in China through its acquisition of Chinese companies， founding joint ventures and co-sponsoring important events. In May 2013， David Levin， CEO of UBM Group， visited Beijing， Tianjin and Shanghai， during which he talked with governmental officials and practitioners in local MICE industries. The spokesman for UBM Group confirmed that David Levin reaped a lot from his visit.

The Game of “Expansion”

The UK Company， Reed Exhibitions has played an indispensable role when it comes to the M&A cases in the domestic Chinese MICE industry. In 2013， Reed Exhibitions accelerated its pace of expansion in China， especially in the Yangtze River Delta.

On December 9， 2013， Reed Exhibitions staged a Summit of Reed Greater China in Shanghai， which was the first time that this British company held this annual event in Shanghai instead of Beijing. This move was considered to be a signal for its determination to increase its presence in the Yangtze River Delta’s surrounding towns and cities.

Mike Rusbridge， CEO of Reed Exhibitions， said in the latest Summit of Reed Greater China， that the company had seen a 6%-7% growth in its global business and the Greater China area（including Mainland China， Hong Kong， Macau and Taiwan） could keep its busi-ness soaring at double-digit growth rate in the next few years. He confirmed that there would be increased pressure from his firm to speed up the development of Exhibitions in Shanghai.

Reed Greater China has also made a name for itself through sponsoring the China International Oceanic Tech& Equipment Show. As the CEO Wang Hongguo also pointed out， they funded the China Children’s Book Fair the first professional exhibition for children’s books in its history.

According to Wang Hongguo， this Chinese book festival is the sister exhibition of the Shanghai Book Fair and the London Book Fair. After its success， Reed Exhibitions， as the exclusive sponsor of this event （with minor assistance from Chinese governmental departments and state-owned enterprises）， has shown how prosperous its company and their plans for the future will be.

Wang Hongguo also said that Reed Exhibitions would be introducing four new international exhibitions in China， including a fitness exhibition， based on the cooperation with a German company.

However， the company must also be defined by its other ventures. Reed Exhibitions is unlike any other major foreign MICE enterprise that could only be successful in Beijing， Shanghai， Guangzhou and Shenzhen； major cities which are host to many large and powerful companies. Reed Exhibitions was also the first foreign MICE enterprise to host an event in the lesser cities of China. At the beginning of June 2013， Reed Exhibitions founded a joint venture with a Henan-based company called Xinda Industrial Co.， Ltd. The new company， called Henan Reed Hongda Exhibitions Co.， Ltd （Reed Hongda for short） is located in Zhengzhou. It established its professional prowess only a month after its foundation by throwing the incredibly successful China International Auto Aftermarket Fair in Zhengzhou. The exhibition covered 220 thousand square meters and immediately became a symbolic landmark of auto fair in North China.

After seeing its success， Reed Hongda decided to bring the event to Shanghai. The Shanghai International Auto Aftermarket Fair will be held in October this year. What makes this so rare is that usually an exhibition hosted in lesser cities of China never has a counterpart in the more developed cities.

Lack of Evaluation System

There are many more foreign MICE enterprises active in China which have been overlooked because they are smaller and have not been participating in events financially substantial enough to be compared to companies with as huge a success as Reed Honda， but their expansion pace is still fast and they should be taken note of for the future.

Estimating from the data collected on the subject， all foreign MICE enterprises have had M&A experience in China， in one way or the other.

This change has caused a lot of complaint， as people argue that the price is now too high compared with the previous offers from M&A cases， which could be given the headline for the exhibition if they surpassed 100 million yuan. The professionals have countered these claims by arguing that these new offers are high because the previous of- fers were far too low.

This led to the conclusion that there is no， or at least no complete， evaluation system in China to tell how much an exhibition or a MICE enterprise is really worth. A survey made by China Trade Weekly last November proved that many practitioners in the Chinese MICE industry did not know whether there are verified third-party evaluation organizations in China. In comparison， a lot of third-party organizations are still running private assessments of the exhibitions and the MICE enterprises in the world.

Therefore， the internationalization of exhibitions in China should be based on a complete and efficient evaluation system， as without it the Chinese MICE industry is threatened with collapse.