Our modern image of the middle class comes from the post–World War II era. The 1944 GI Bill provided returning veterans with money for college, businesses and home mortgages. Suddenly, millions of servicemen were able to afford homes of their own for the first time. Discretionary spending increased, the US GDP grew exponentially and with it came the growth of expositions. Today the US hosts 11,000 exhibitions, but emerging economies will be the engine of exhibition growth for the foreseeable future.
Are you ready?
A dozen emerging nations, not just the fast-growing BRIC countries, include almost two billion people, spending a total of $6.9 trillion annually; research suggests that this figure will rise to $20 trillion during the next decade—about twice the current consumption in the United States. In short, the US economy is in a mature cycle, emerging nations are in the growth cycle. What does this mean to the exhibition community? One word, OPPORTUNITY.
It would be naive for the US exhibition community to put all its eggs in one basket (although we still are the largest economy) and reason why multi-national businesses are multi-national. Building “commerce bridges” with emerging nations is good business and this week we hosted at 3D Mr. Wu Chen Lin, President/CEO of the Shanghai Exhibition & Convention Industry Association. Among his many duties, Mr. Wu is responsible for bringing together all Chinese governmental departments to build the new Shanghai Convention Center which will the largest in the world at 5M square feet; twice the size of McCormick Place, the largest center in the US. It’s staggering to consider the magnitude of this undertaking, but it’s driven by one thing: growth of middle class consumption and demand for products/services.
Mr. Wu (3rd from right) pictured with David Causton, GM McCormick Place, Tiana Weiler, Event Management Director, and 3D execs (left to left): Danielle Xu, Chris Kappes and Larry Kulchawik
To put things in perspective, the U.S. Census Bureau says the median income in the U.S. is about $51,000 a year. While there’s no official “middle-class” in China, (Chinese people don’t use the concept), a household considered to be middle-class in China would earn somewhere between $10,000 and $60,000 a year, according to Helen Wang, author of The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means to You. A rule of thumb is a household with a third of its income for discretionary spending is considered middle class,” Wang said.
Being middle-class in China often means earning at or below what’s considered the poverty line in America.
For the exhibition community to grow, we must look for nation’s with emerging middle classes to find growth. Easier said than done. The challenge is building a smart business model to grow in these markets when we’re being challenged in the US with price and margin pressures. There are only a few true global exhibition organizations and they’ve emerged by piggy-backing multi-national clients around the globe and diversifying their business model to serve local markets.
I’d welcome your thoughts about what you think is the most efficient and cost effective way to expand?
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