I couldn’t help but reflect on this question returning from the annual EDPA (Exhibit Designers & Producers Association) conference, a confab of owners/executives of global exhibit firms held in Las Vegas a week ago.
But my curiosity was further peaked when I came across a fascinating article, “Revealed – the capitalist network that runs the world” about the interlocking interdependence o f 1318 transnational corporations (TLCs) who today serve as the world’s capitalistic network of power. Read on.
A trio of system theorists at the Swiss Federal Institute of Technology in Zürich studied a database of 43,000 million TCN investors worldwide and discovered share ownerships linking them. Constructing a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, the structure of global economic power was mapped. The result…
1318 companies with interlocking relationships; each having ties to two more other companies, and connected on average to 20. Further, although they represented 20 percent of global operating revenues, the 1318 collectively owned the majority of the world’s blue chip and manufacturing firms. A super-group” was found within the 1318; 147 even more tightly knit companies—all of their ownership held by other members—control 40 percent of the total wealth of the network. In effect, less than 1% of the companies control 40 percent of the network.
Who are these super-entities? Financial institutions.
So does the global exhibition industry have a spiderweb network of influence and ownership? Not yet.
The reasons?
It’s a fractured industry composed of cottage industries and globalization will occur only at the pace of economy development in emerging countries. Consider:
- 50% of trade shows are held in the US; the BRIC (Brazil, Russia, India, China) are prospering and exhibitions are following but further infrastructure growth is needed. This could take a decade or more.
- Revenue from global exhibition activities for the top 46 US exhibit firms was 3%; it’s on the rise but far from justifying global acquisition and consolidation.
- Based upon industry gross margins, the risk may be greater than the potential profit opportunity.
Looking at this from a US-centric perspective, here’s the situation:
Show Producers? One could argue that show producers control industry power (after all, they market/sell the show) but Doug Ducate, President-CEO of CEIR (Center for Exhibition Industry Research) shares that of the 14,000 exhibitions (US/Canada only), Reed Exhibitions (the largest show producer in North America) controls less than 5% of this market. And if US/Canada produce 50% of the world’s exhibitions per annum, no dominate show producer controls the market nor do they control intellectual exclusivity/knowledge of why their customers’exhibit; Ducate argues that the “exhibit design/build community” know more about the exhibiting companies goals/objectives than the show producer who is focused on selling real estate.
General Contractors? Without question, Freeman and GES control the US/Canadian exhibition market (60:40) and yield tremendous buying power and operational control over associations, exhibitors and contractors serving the industry. Being competitors in a business that is an oligopoly affords both industry power in how they price and bundle their services to the industry; look no further than other industries that are in an oligopoly position to see the potential impact to the industry.
Exhibit Designers/Producers? The recent EDPA Economic Survey (North American focused) shows that 44 firms represent approximately $900M in sales and is a fractured industry unified only by EDPA. The power of this group is still largely internally focused but it has the collective opportunity to drive industry pricing and policy.
In summary, the case could be made that the power elite of our industry in the US include:
- Freeman
- GES
- Reed
- Exhibit Designers/Producers (EDPA) members
Thinking about this question on a global basis, the answer is more difficult to answer:
- European convention facilities often act as the show producer in a limited geography reducing their power and impact
- General contractors are not prevalent; exhibition services are provided by the design/builder partner reducing the ability to consolidate service
- Europe/US are mature exhibition industries with defined roles/responsibilities for its community.
- Emerging markets (Brazil, Russia, India, China) are building exhibition infrastructure but it’s too early to determine their impact on a global basis.
I’d conclude that a “global power elite” in our industry is far away. But, as “designers/builders of experiences”, we have the opportunity to unite and drive service efficiencies, create economies of scale, put pricing pressure on general contractors, and open up our respective businesses to the global exhibition business and growth.
Let’s build our own network of influence before other competitive factors impose their own.
exhibitionpro 