Andreas Gruchow, Deutsche Messe
Release Date: 2009-12-16
Owning and operating the world’s largest fairgrounds can be a competitive edge in economic boom times, but might have created some concern in the current economic climate. Has the current economic situation affected Deutsche Messe more than other trade fair organisers in Germany?It has affected us as it has affected others. As you mention, driven by history our venue in Hannover is by far the largest in the world, with nearly 500,000 square meters of indoor exhibition space. One of the reasons for its size is the fact that our HANNOVER MESSE – “the mother of fairs”, as we call it – was the origin of many of the show we run today in Hannover, such as CeBIT, LIGNA, and BIOTECHNICA. Our venue has always been larger than most other, but considerable changes were obviously made in terms of size and infrastructure for the EXPO 2000 World’s Fair. Yes, you are right: The challenge is now how to fill this huge venue.
There are also great advantages which come with such large capacities: We are not limited to hosting only large-scale events in Hannover. The venue also lends itself to the staging of many other types of events large and small, since each of the various halls has its own particular virtues. For example, we have a range of conference facilities which make it possible to run two or more separate trade fairs, conferences or special events in parallel. As for any venue around the world, spring and autumn are the busiest seasons. In spring we have CeBIT and HANNOVER MESSE, leaving little space for other shows. In autumn – the peak exhibition season across Germany – the capacity of the venue means that we can usually host up to five shows in parallel, when all available facilities are in use. If our venue were smaller we would not have the opportunity to do this. For example, we can have a very large show like AGRITECHNICA which covers more than 320,000 square meters, whilst simultaneously using the other halls for the construction or dismantling phases of other shows. It is important to bear in mind that the overall duration of fairs is not limited to the few days when the shows are open to visitors; there are also lengthy pre- and post-show periods for the construction and dismantling of the booths. At Deutsche Messe we are very focused on capital goods shows, meaning that the products are considerably larger and more complex, often requiring two-storey designs to accommodate and display big machines. For EMO, the world’s leading machine tool show, some of the machines on exhibit are actually shown in full running order, which require foundations to be dug out, and this means as much as three or four weeks are needed for set-up, alone.
Having such a large venue therefore means we can be more flexible than other trade fair companies. Besides this, markets are moving, and customers are having to direct more and more of their marketing budgets towards emerging markets in China, India, Russia, Brazil and other regions. We not only keep a close eye on such market shifts, but are also committed to being key players in emerging markets. This sums up the international business for which I am responsible.
Does the fact that the events in certain sectors and in certain industries are taking place all around the world mean that these events become more global or more local?
There are certain phases or tiers in the growth of an exhibition which are best represented by a pyramid. At the top of the pyramid are globally leading events such as our CeBIT or HANNOVER MESSE, as well as EMO, AGRITECHNICA, LIGNA and DOMOTEX. The second tier consists of leading shows in a continental context. We started our international business in 1981, under the subsidiary HMI (Hannover Messe International). By the end of the 1990s China became our prime target region. We wanted to begin in Shanghai, China’s business hotspot, but it was very difficult to find a suitable venue for staging the type of shows Deutsche Messe was experienced at, i.e. capital goods exhibitions with a need to display large machines. Our requirements included that a hall should have no columns, ensuring flexibility and enabling trucks and cranes to be driven right in for construction and dismantling work. We also stipulated that the halls be designed with suitable electricity, water and compressed air supplies. Ultimately it is fundamental to create a good atmosphere in the exhibition halls since you will be spending many hours a day in there. It is no good having multi-storey, claustrophobic halls with artificial light and little room. Instead we demand modern halls with a very different, fresh appeal, easy orientation, plenty of natural light and optimal air circulation for a far more pleasant environment. The problem with exhibition centres in China was that they did not fit these very stringent criteria at the time, so we decided to invest in building a new venue: the Shanghai New International Exhibition Centre. We co-founded a new company with Messe München and Messe Düsseldorf called GEC, the German Exhibition Corporation International. Together we became 50% shareholders of the SNIEC, while the other 50% is owned by a Chinese partner, Lujiazui Exhibition Development Co. Ltd. By means of collaboration on the part of Germany’s three major trade fair companies, we succeeded in reaching our goal of staging shows in China.
As soon as it became clear that the SNIEC would begin its operations in 2001, the Board of Management called for a further strategic move: All relevant shows in Hannover were to be exported to other regions of the world. This meant that HANNOVER MESSE, CeBIT, DOMOTEX, LIGNA and BIOTECHNICA would all be exported to China, too. This was a huge step in the internationalisation process for Deutsche Messe, and it went very well. In 2007, our Supervisory Board made the decision to appoint a fourth member to the Board of Management and to make that person – myself – responsible for Deutsche Messe’s entire international business operations, which is to sayall international shows, all overseas organisations and subsidiaries and all foreign cooperations and investments. This obviously includes our part-ownership of the SNIEC, as well as our collaboration with Fiera Milano, among others. So for the past two years, the company’s international business has been handled in a concerted way, by one central unit. This makes it possible for, Deutsche Messe to pursue its internationalisation strategies with greater power and focus.
Deutsche Messe’s operational force abroad mainly consists of the subsidiaries in the US, Brazil, Turkey, the UAE, India, Australia and of course China. Deutsche Messe is represented in over 110 countries, either by subsidiaries, branch offices or local representatives. Those working in subsidiaries or branches are direct employees of Deutsche Messe, whereas representatives are generally third parties. China is the largest subsidiary, with about 60 permanent employees in our head office in Shanghai, which is located just next to the SNIEC entrance. We are also represented in other cities such as Beijing and Guangzhou. The calendar of the shows we are staging in China features offshoots of HANNOVER MESSE, such as CeMAT, PTC and the ENERGY Show / Industrial Automation Show / Metalworking and CNC Machine Tool Show, whereas the later are part of CIIF, the China Sign Show which is in Guangzhou. Then there are DOMOTEX Asia/Chinafloor in Shanghai and the Guangzhou International Travel Fair. We are also the ones behind the FA/PA Modern factory/Process Automation Show to premiere in Beijing next year, and we have adapted a new show called DMCB (Drive, Motion and Control Show) in Beijing. Lots of new topics are arising since we are no longer exclusively focused on Shanghai. We are establishing successful leading continental fairs, for example DOMOTEX Asia, PTC, CeMAT or WoodMac CHINA, each of which is of continental importance in its particular field. Now opportunities for regional shows are becoming apparent. Catering to regional needs represents the third tier of the pyramid, after the global and continental tiers. This is particularly important considering the size of China and its potential for a large volume of shows. For example, if a show has been successful in Shanghai, why should we not run the same sort of show on a regional scale in Beijing? So although we are still exploring the possibilities for new events in Shanghai, we are also are spreading our business into the different regions.
While several other trade fair organizers are reluctant to take the brand names of their flagship events to different countries, Deutsche Messe is consciously trying to build global brands by taking its events abroad…
Our philosophy is based on the fact that we know our brands are very strong in the industries they target. Our shows become household names for their core industries, and the exhibitors, visitors and journalists are all familiar with them. Taking the example of CeMAT, although most people won’t know what the name means in German, they will know that it stands for the leading international show on material handling and logistics. Our strategy is aimed at globally spreading such brands associated with specific industries. Thus when we have smaller CeMATs around the world, in China, Russia or Brazil, the CeMAT brand name carries the same seal of quality and international participation which is associated with the show in Hannover, and will therefore attract the same calibre of exhibitors and visitors since everyone will know it is organised by Deutsche Messe. So our target is to offer the highest possible exhibition quality in the continental domain, as well. We would not, however, use our international brand names at a regional level, since we would not be able to guarantee the same level of international participation.
Historically all your successful shows have come from Hannover, when will it be possible for a successful show to originate in China or in another country?
This has already happened. We have a number of corporations in place around the world. DOMOTEX Asia, for instance, is organised in association with another tradeshow organiser in China, and this is not our Chinese subsidiary. The same is the case for many of our events in Turkey. Having such fruitful cooperations lays the groundwork for creating new shows and enlarging our business in certain countries, helping us to generate new concepts which we may not have come up with on our own. Several shows are the offspring of existing partnerships; for example in Turkey we have a successful corporation on the ANKIROS/ANNOFER show, which is targeted at the forging and metallurgy industry As a result of this cooperation we realised that Turkey is a specialist producer of many aluminium parts. So it seemed it would be a wasted opportunity not to have an aluminium fair, so this autumn we launched Aluexpo, which has surpassed all our expectations. Another partner or ours introduced the idea of putting on a renewable energy show, so we set up an event called RENEX, which once again exceeded its targets. It is in fact though such cooperations that many of the ideas for Deutsche Messe’s new shows have come about.
In China, we have discovered that the more you raise your profile in the market the more organisers and authorities will approach you to organise their events or to become partners.
Other ideas arise by pure chance: The Guangzhou International Travel Fair or The China Sign Fair, for instance, were not originally covered by the Deutsche Messe portfolio, but were ideas driven directly by the specific needs and circumstances of the Chinese market. So as you see, many different roads can lead to new events.
After having developed global success stories in Hannover and taking them abroad, would the ultimate ambition be to create a fair that becomes successful in China and ultimately bring it back to Hannover?
It is important to define what is meant by ‘successful’. For me, a successful show is one which meets the needs of visitors and exhibitors. Obviously, an event must also be financially successful in the long run. However during a show’s initial period of establishment, there needs to be investment without expecting immediate financial returns. The success of an event can only truly be gauged after a longer period, say four or five years, once it has achieved a firm footing on its target market. I am dedicated to ensuring that Deutsche Messe properly addresses the needs of the markets it targets. As a tradeshow organiser, when you step into the market with any given topic, it is unlikely that you are treading new ground which hasn’t already been tried by others, particularly in the better-known markets in the most common emerging regions. This means that from the outset, you need to be competitive, providing a high-quality, superior product. The green topics, such as renewable energies ecological topics, logistics and climate, add another aspect to Deutsche Messe’s philosophy, since we want to cover all of the most important topics for the future of mankind. The origins of Deutsche Messe’s coverage of energy come from the establishment of the ENERGY show within HANNOVER MESSE. This is currently the most successful segment of HANNOVER MESSE; it continues to grow without showing any signs of bottoming out. There will always be growth in related fields because they address issues of fundamental importance for the future. Satisfy tomorrow’s energy needs calls for intelligent networks, methods and technologies to help us make the most efficient use of renewable energies. Green is therefore today’s hottest topic, which is why we have also launched energy shows in India, China and Turkey.
Energy efficiency has also been the focus of other shows such as LIGNA, for saving energy is essential to manufacturing and processing in the wood and timber industries, too. In fact, this has become a pivotal issue in beating out the international competition, whether in forestry, furniture making or the manufacture of wooden components for construction work. Another show which places a major emphasis on ideas and technologies for reducing energy consumption is – perhaps somewhat surprisingly – CeBIT. A “Green IT” showcase was launched at this premium IT, computer, telecommunications and software show two years ago, when we realised that energy savings was the a major issue for the future, and that computer software could contribute a lot of added value to the cause. Now everyone is talking about Green IT. So, for Deutsche Messe, ecological topics are featured in a big way at many of our shows, not just those in which energy consumption is a self-evident topic.
What are the main lessons you have learnt personally from entering China and conducting very successful business there, especially if we compare it with other organisers? What has been the secret of this success?
There are many reasons for our success, one of which is Deutsche Messe’s international strategy. We systematically expand the branded fairs for which we are renowned around the world, and addressing new themes through various cooperations. No matter where in the world we do so, we have learned that it is mission-critical to precisely know the needs of the markets being targeted, and to have a thorough awareness of would-be competitors.
I have learned how fundamental it is to gain the support of local partners, whether associations, ministries or even local media, since they provide a network for the promotion of the shows. Business is powered by people and partnerships, not merely by companies. Trust is essential between partners, particularly in China, where partnerships must be honourable, transparent and personal in order to be successful for all concerned When doing business, close relationships are essential; you must share attitudes and philosophies, strategies and targets. When I took up this position two years ago, I decided that I had to be involved in every show we did abroad; I had to get to know each and every partner at a personal level, to become acquainted with their characters and attitudes, not simply to know about the companies we were working with. In view of the high demands this placed on my appointment schedule, my colleagues thought of this as perhaps a little bit crazy, but this meant that I could be much more in touch with the projects Deutsche Messe runs, and build upon personal relationships so that trust is established for future corporations.
Will Deutsche Messe ever become a global trade fair organiser which just happens to be based in Hannover?
The city of Hannover and its home state of Lower Saxony are nearly equal shareholders in Deutsche Messe, with shares of about 50% each, so of course our main efforts will always be concentrated in Hannover, not to mention the fact that we have this huge venue here. So Hannover will always account for a major part of our business. However there is no doubt that a significant share of our business will be shifting into the international arena, perhaps even to the extent that our international business might one day become bigger than our domestic business – and this is clearly what I’m working towards! This is the direction in which we are growing, since marketing budgets, over which we have no control, are shifting towards new markets, making it harder to fill up the venue here in Germany. Deutsche Messe is well positioned to take advantage of the ongoing redistribution of marketing budgets such that we will be able to capitalize on these developments as our worldwide portfolio grows.
Due to its strong economic growth over the past few months, China has successfully positioned itself as a primary candidate to receive much of these budgets. What will be the role of China in your global strategy over the next five years?
I am sure China will remain the most important subsidiary and the most important part of our business. Other regions are also growing, such as Turkey, Russia and Brazil, but there is no doubt that China will continue to be our primary focus, since the markets there are showing remarkable potential for business.
What is your final message to the Chinese readers, both on the business and political side?
We would like to play a very important role in China. We would like to be the best at covering the themes we address there. Deutsche Messe would like to uphold its hard-earned reputation as a provider of the highest-quality shows, and would like visitors and exhibitors alike to be happy with its products. Deutsche Messe is a very trustworthy cooperation partner, not just a company looking for short-term gains.
| Company: | Deutsche Messe |
| Position: | Member of the Managing Board |
| Country: | Germany |