Trade wars are poison for our industry. I think this is a statement the majority would support.
By Tesi Baur, CEO MBB-Consulting Group
Exhibitions rely on free-trade, on a non-political platform for open discussion, on building relationships with customers, suppliers, partners and even competitors. The opportunity to trade without the constraints of suffocating red-tape, to conduct business in foreign regions without complex bureaucracy and to have the opportunity of forging partnerships to break into new markets are the basic foundations for our industry.
Developments that can impact the exhibition industry negatively are not new. We have been watching for a while how unable our governments are to find an organised and structured way for the United Kingdom to exit the EU and equally how unable the remaining countries of the EU are to agree to common political sense amongst one another. However, as trade wars are not calculable and less predictable they carry a much more dangerous element for our industry than developments such as Brexit. The disruptive impact of new tariffs, sanctions and other business barriers can change entire industry ecosystems overnight with a direct impact on the trade shows, venues and suppling services that serve these affected industries.
Talking to industry experts over the last few months clearly shows a shift of opinion on how the current situation should be judged. Whilst a couple of months ago people hoped that politicians were only flexing their muscles and using the possibility of potential trade wars as part of their negotiations, we now know that this was not just a negotiation tactic. It has become reality which means long-term industry disruption is more likely. The awareness is shifting from a scenario in which trade wars are a “short-term hiccup” to a wider opinion that trade wars can have a much more negative impact and even change industries completely long term.
A recent survey we conducted reveals that many industry players have now changed their behaviour on how to deal with the situation from watching the global political situation to analysing the impact for their shows and defining concrete actions at show level to face the impact of a trade war. Whilst unsurprisingly the majority see the current and upcoming trade wars as extremely negative many participants of our survey have now started to explore and review possible positive impacts that could come through trade war scenarios for their shows. Every closing door in a trading chain can open another door for somebody else to step in and fill the trading gap.
The independent media analyst Alex de Groote says “The implications of wider protectionism are of course more of a concern, but also an opportunity for the fleet-of-foot. Japanese cars for example are seeing a resurgence in China. Trade show operators able to nimbly address such business opportunities could thrive.”
Another example of how the trade show industry can adapt and even come out stronger after a disruption is provided by Sergey Alexeev (President of Russian Union of Exhibition and Fairs (RUEF), Vice-president of Expoforum International) who explains that “the Russian exhibition industry has already faced the negative impact of such measures. Since 2014, the situation in the Russian exhibition industry has become more complicated due to the introduction of sanctions, retaliatory sanctions and currency problems”.
According to Alexeev, when the first anti-Russian sanctions were imposed, they observed a decline in all key figures of the exhibitions organised by RUEF members. In 2017 the situation stabilised. By the end of the year they experienced a growth of key figures, including an increase of foreign exhibitors (+ 3.3%), and for the first six months of this year it has increased by 16%. So they observed a replacement of their traditional partners from Europe with new ones from Asia.
Another good example of positive effect is shared by Rafa Hernandez, chairman of CoExpo and the World Meetings Forum in Mexico: “The Trump effect is helping the Latin American region. The organisers of many events that were initially planned for launch in the US are now looking to Latin America due to his policies with immigration and trade. It’s really making people rethink their approach to the Americas.”
These examples nicely demonstrate how senior exhibition managers in affected regions deal with the situation of trade wars and find opportunities even in a situation that is rated as extremely negative by more than 95% of all participants in our survey.
In our conversation with Sergey Alexeev he underlined the fact that the exhibition industry should try to remain detached from any political agenda. “Trade shows and industry associations like UFI, The Global Association of the Exhibition Industry, are great instruments to prevent trade wars by communication and cooperation”, says Alexeev.
Personally, I strongly support Alexeev’s view. Economies are built on trust and relationships between players in an industry. I take pride in having friends in Russia, China, USA and Europe among other places of the world and no trade war will change this. Exhibitions bring people face-to-face so that they can build trust and do business. Trade shows are affected by trade wars but – as we are a people’s business – our industry offers also the best platform to help to overcome trade wars.