Bernd Aufderheide, Hamburg Messe
Release Date: 2010-11-19
Generally speaking a trade fair represents the key sectors of the economy of a city in a region. Hamburg is one of the most important economic centres in Germany however, Hamburg Messe has a relatively modest size given the economic weight of the city. Are you running a different business model here?There are two reasons for that, one of which is historical. Running trade fairs in Hamburg has not been made as strong a priority as in other cities. For several centuries Hamburg has been dominated by its maritime activities, giving the city its international reputation as a maritime hub and the centre for ship finance. This of course includes trade, but in Hamburg trade related to the goods which enter Hamburg and are spread throughout Germany and the rest of Europe. For example, it is interesting that the Czech Republic has owned a part of Hamburg’s port since the 1920s, since it is the most important port servicing the country. This is a typical example of how business is drawn to Hamburg and then spread throughout Germany and the rest of Europe. That is one reason why the trade fair priority has been different from other cities, but of course it has developed over the years. We just invested €420 million in renovations to build a new exhibition centre and extend the convention centre, and were able to shift the priorities of our board and shareholders – the citizens of Hamburg. With regards to the size of Hamburg Messe, it is a modest sized exhibition centre, which indeed does not allow us to put on very big consumer shows such as the automobile fairs. On the other hand, of all the trade fair companies in Germany we make the best and most efficient use of space with our fair grounds. We have a 14.9 fair space turnover; that means that 14.9 times a year we sell our entire floor space, which is higher than any other trade fair organizer in Germany.
Can we also say that the fairs with the much larger exhibition grounds are primarily focused on hosting events dedicated to larger and more mature industries while you have the flexibility with your new grounds and smaller size to focus on the new and emerging industries, and develop new trade shows for emerging sectors?
From a strategic point of view, yes. But taking a look into our exhibition program you will see that the major source of our income derives from traditional industries such as the maritime sector. We have a big ship building show that has been going on since the 1950s. The hotel and restaurant fair has its origins in a show which dates back to 1923. For decades Hamburg has been the centre of hotel and restaurant development. Also, the leisure boat show, which is running at the moment, is celebrating its fiftieth anniversary this year. These are our bread and butter businesses. A second aspect is that Hamburg is a very lively and modern city which is eager to attract and develop new technologies and industries. We try to adapt these topics into our calendar. For example, anything that has to do with clean energy is something that we will be developing here. Of course, that has disadvantages at first because it is difficult to have big enough fairs that take capacity right from the start, but we are sure that this will be a good investment in the long run.
Hamburg Messe opened its new fairgrounds last year, right at the beginning of the worst economic and financial crisis in decades. Did this force you to think creatively and adjust your development strategy?
Yes, but my predecessors had been planning the direction for Hamburg Messe over the six to eight years before I joined, so they had made their minds up beforehand about what to do with the new centre. Of course no one really took into consideration that such an economic slump would occur. However, there’s a very busy and innovative spirit in this city. For example, unlike other German or European cities, Hamburg created a cluster for IT technologies fairly early on which has now become a huge business. This is typical of our city over the last ten to twelve years, always looking to capitalise on emerging trends. The same goes for the aviation sector; Hamburg has received several awards for the many initiatives to further the scientific advancement of the aviation sector. The public-private partnerships that are set-up for this purpose are very typical of Hamburg. We have technical universities, the Airbus’ design centre, and Lufthansa Technik, which is one of the most creative and innovative companies in the field. All of this together creates an optimal atmosphere from which to effectively create new business. That is where we as an exhibition company come in. We’re not just a fifth wheel but we try to join the development of innovative industries at an early stage. It takes time to develop, but it does work; we get strong support not only from the city government but also the industries themselves.
One of the world’s leading events for the photovoltaic industry took place in Hamburg this year, while the city is not home to the country’s main solar industry clusters. How does such an event end up here in Hamburg?
Why do exhibition topics move to a certain city? Of course Hamburg has a background in the environmental industry. For the past two years Hamburg has been governed by a coalition including the Green Party; it is the first place in Germany where the Green Party governs on the state level. Hamburg will also be the European Green Capital in 2011 – giving us another accolade in the green field. We also have a strong relationship with Shanghai, since we are twin cities. At the world expo next year in Shanghai, Hamburg will have it own presentation outside of the German pavilion – the “Hamburg House” – which will be a zero emissions building. This is another jewel in our crown, further clarifying the identity we are establishing. There is always not only a regional and national focus, but also an international one. The question of what we can do internationally is something that permeates the business and government mindset of Hamburg.
What is the main expertise that you have built up over the past twenty years organising international exhibitions?
At the end of the day it is a question of how to deliver the best service to your customers. Until four or five years ago we had an insufficient exhibition centre – tearing it down was the only good thing you could do with it. But despite our infrastructure the industries with a rich tradition in Hamburg kept their faith in the city. Of course, we also needed to work on our infrastructure because there were new centres springing up in Munich, Leipzig, Stuttgart, and Cologne. One of the reasons why companies feel so at home here is because we deliver quality service; we have a long tradition of being very close to the customers. There is a ranking in a German economic magazine, which for years rates the service quality and level of exhibition companies; we are consistently on the top of that list, along with our friends in Leipzig. Today, our infrastructure is very impressive but so are our competition’s centres. We are ahead perhaps by one year in terms of infrastructure, but next year, another more modern centre could easily be built. Therefore the only factor which truly differentiates you is how close you are to your customer. This is why we insist on delivering perfect service and customer care in Germany and abroad. When we organize exhibitions outside of Germany we do so in industries that we are familiar with – such as maritime – and then take our customers abroad. Such relationships, which take decades to develop, keep us in business in the traditional industries, and we apply the same concept to all our other industries.
When you go abroad you can bring your expertise long time customers to international events. However, the key to the success of any show are the visitors and you cannot manage the visitors in China or Korea. What do you look for in a partner to make your event a success?
There are two different types of fairs that we offer. In Korea we are organising the official German pavilion; the core marine fair is organized by a Korean company which is supported by a Korean ship association. They have a long tradition so we know that a first-class show is being organised for the Korean market and we can rely on things being handled properly. In 2009 we had our first international ship-building fair, SMM, in India. This fair is organised by us, but it took some time to find a proper partner in India to be responsible for visitor recruitment and the organisation within the exhibition centre, since Mumbai is already a tough market for exhibition centres. Our partner in India is a local Indian company that has been doing shows with its customers for twelve years. The most important thing in order to succeed is to have the right partner. We would never just go there and randomly select someone because the brand name of SMM stands for a certain quality and we would never dare to damage it in any way. Also our shipbuilding show in Istanbul earlier that year was organized in cooperation with of a long-standing managing partner in Turkey.
Chinese trade fair organizers cannot yet match the expertise or and track record of their German counterparts, which therefore serve as interesting partners? In which sectors do you want to be recognized as the preferred partner for China? In which sector can you add the most value?
The main focuses would be the maritime sector and now the environmental area. Simply because of the size of our companies we cannot be taking on German competitors from Dusseldorf, Hannover, or Munich, it just wouldn’t make sense. Our idea is to export the strengths that we have and find a proper partner, which doesn’t necessarily mean however that we wouldn’t cooperate with a German partner. There is quite a competitive environment in Germany, but we do all know each other. If you track modern German history after WWII, industrial fairs were originally centred in Hannover and then spread out to cities like Frankfurt and Munich. Somehow trade fairs went their own ways but we ultimately found out after competing in between the 1960s and 1980s that you have to come go together again to be stronger.
Hamburg Messe is owned by the City of Hamburg and has a responsibility to support the economic development of the city and region, but at the same time you operate internationally in cooperation with other German trade fair organizers and pursue a collective interest. Where do you find the balance and is there ever a conflict of interest?
No. If you had asked me this question as the CEO of another trade fair perhaps the answer would be different, but the Hamburg government has always been a hands-on business-oriented government, and has followed the same very straight business model for years. The best example of this is our city hall. At least 100 years ago, the merchants, ship owners, and traders gathered in the Chamber of Commerce to discuss what needed to be done to get their ideas onto the political radar; then they would take the underground passage to the city hall and put on their government hats to vote laws on what had just been discussed on the other side of the courtyard. Essentially it was the people of the city who governed the city, and the same spirit exists today. The government, our shareholders, and the members of our supervisory board in Hamburg know that international thinking is needed from the outset. They understand that this is an add-on which brings money to Hamburg Messe and also has a payback for the city of Hamburg. The experience over the years of doing shows outside of Germany is that if you have a good show then you can export it to another country. We do it to accompany our customers into new markets, but at the same time we have the intention of winning new customers wherever we go.
Whenever an exhibition company anywhere goes outside its own region, it always has some kind of ambassadorship to the city. That was something that I really had to learn over the past five to six years. People from Hamburg are interested in a good image and spend a lot of money to market and brand the city, in other cities it’s often business first. However, we cannot do something which is only image related, we are realistic in that we recognise that we need there to be a financial incentive too.
The City of Hamburg will be the Environmental Capital of Europe in 2011 and is determined to support the development of environmental industries, does this mean your portfolio of trade fairs will be developing in that same direction over the coming years?
Yes, Hamburg Messe and its shareholders explore the position of our city, the position of other cities and regions, and industry trends over the next five to ten years. Based on this assessment we will invest our money strategically. We will always need our bread and butter business. Right now we are all thinking in terms of square feet and meters, but the atmosphere is changing. You have to think about new formats of exhibitions and conventions; the selling of square meters alone will now become more difficult as platforms are merging. In this environment you can only achieve profitably development if you are operating in good partnership with your shareholders, industries, and scientific communities.
The bread and butter business of your main customers has become a global business. How international do you have to operate in order to reflect the needs of your city and its exhibitors?
I think that with our core exhibitions and core industries we have arrived in all of the internationally strategic parts of the world such as China and India. As you said, Hamburg has been international from the beginning. We have our own representative network which is far smaller than that of the larger trade fair companies, but we do not require huge overhead costs needed for good representation. We are looking carefully towards markets that we would like to enter, such as India at the moment, discussing how we should go about doing expanding our reach there. We will be looking into a handful of markets over the next several years, such as Latin America as it recovers stronger from the crisis and the Middle East, since we are quite well established in Eastern and Western Europe and China.
Hamburg is a sister city of Shanghai and is an important gateway to Europe for Chinese companies. What are your longer term ambitions in the Chinese market?
It’s very simple: to offer the best exhibitions either with Chinese partners or international partners to the global community. We don’t intend to have a big office or extravagant venue, just the best shows. I believe in taking the Hamburg approach – no concrete, no steel, no buildings, but entering new markets by finding good partners. Simple business, nothing more. All the rest is up to politics, not us.
If today you were not the CEO of Hamburg Messe but were free to work with anyone and a Chinese organiser looking to expand into international markets wanted your counsel, what would you advise them to do in order to be successful in the international trade fair market?
A tricky question: probably stay at home, don’t lose your money! I would really advise them to do their homework first to establish why they really want to organise shows internationally. Exhibitions follow markets, not vice versa; if you have a strong market and the support of the key market players, then you can go anywhere. If you don’t do your homework then it does not make sense for any organiser to go anywhere. Having over twenty-five years of experience in this field I see now that too many decisions are being made from the gut, even if many with good reason. Then there is the question of the business and the political environment; I would always say that if you think there is a market and you have the proper partners, then do it. But if you don’t have those and unless you have a lot of money to burn, then hold off on internationalising.
Of course the Chinese government is very committed to developing its green industries. The country is already the world’s largest manufacturer of solar panels and wind turbines, and is determined to become the world leader in clean cars and many other green sectors. Obviously, once these sectors have matured in their own country and fulfilled the local market demand they will go international. At that point in time, Chinese trade fair organizers might want to organize their own shows to introduce Chinese technology here in Germany. If they were to come to you and ask to organize an event together in wind or solar, how would that work? Would you be interested in making that a success together?
First of all it would be a good thing. Guest events already account for about 30% of our total turnover, so it would be very interesting actually. There have been similar plans in the past such as Chinese goods import shows, but none of these attempts has been successful. It all would need to be discussed intensively in China with the proper Chinese partners, and then overall it would be a very interesting model.
We discussed intensively with our partners – not competitors – what the future developments are in places like China and India. We believe that for at least the foreseeable future most industries will target global markets and require global platforms. It’s okay if there is one big show in China, another one in Europe, and a third in the US; the market is global and there will always be enough room for more than one good fair. In this environment, there is a good opportunity for China to get even stronger on the world map for internationally important fairs, not simply by quantity but also quality.
| Company: | Hamburg Messe |
| Position: | President and Chief Executive Officer |
| Country: | Germany |