The coronavirus pandemic, which has put business communication on pause, has created serious challenges for the convention and exhibition industry. They were further aggravated by bigger economic problems, as well as the anti-Russia sanctions. Today, about 70% of the players in this market segment have suffered serious losses. More than 60% of companies have laid off staff, while 10% had to close down. Alexei Vyalkin, CEO of Expocentre, the biggest exhibition platform in Russia, the CIS and Eastern Europe, explains how the industry is coping with challenges in an interview with Invest Foresight.
— What are the causes of the challenging situation in the exhibition industry? Was it the pandemic, for the most part?
– I would say it is a combination of many factors, including the influence of the pandemic and the sanctions. The last couple of years have been a perfect storm for the industry. However, the situation is not as critical as could have been expected. For example, at Expocentre, every planned exhibition has taken place, without any cancellations due to force majeure.
— No cancellations at all?
– Absolutely. We are currently putting together our 2023 exhibition schedule, and the space is almost booked out. Last year, we held 80 exhibitions, and this year’s figures are similar. Moreover, the last RENWEX renewable energy exhibition was immensely popular, with attendance exceeding the last year’s level by 36%. So Expocentre remains the top venue in Eastern Europe and the CIS – this is a universally recognized fact.
– Does this mean the public has been missing “live” exhibitions?
– Looks like it. Virtual technologies have not yet taken root en masse, and digital communications have not been able to fully replace live communication. From our experience, exhibits literally need to be tangible; it remains important for visitors to see the product with their own eyes, to look closely at their potential partners. This can hardly be done virtually. Apart from this, an exhibition is also a platform for meetings, and we offer amenities for this. By the way, we have also noted that the share of professionals attending exhibitions has increased. Moreover, we have the same policy as before – our events are free for visitors.
— Have your exhibitors changed much?
– Companies from unfriendly countries have left, but they asked to keep their financial obligations already fulfilled for the next year. So they expect the situation to change, and openly admit to having no economic reason to leave the market… Some find loopholes, obtain Russian residency.
It is not easy for Russian exhibitors either – some of the domestic companies exhibited imported products as distributors. Finding a replacement in a short time is difficult. But we are trying to meet each other halfway, looking for mutually acceptable solutions.
Startup areas and subcontracting
— How affordable is it for exhibitors today? Do the costs pay off?
—Today, when companies face the challenge of building new logistics chains and finding partners, exhibitions become especially effective and they certainly pay off. Moreover, we take a very flexible position, trying to be understanding and to accommodate Russian companies as best we can. We are well aware of how difficult it is for them to find new partners, to enter new markets and get new customers.
By the way, we have derived an exhibition payoff formula – a correlation between the cost of participation and how much income an exhibition can generate for a company. It shows how justified the exhibition costs are.
For example, it is realistic to justify participating in a five-day exhibition on metal processing with deals closed for the amount of RUB 3 mio ($49K). For participants in an exhibition on advertising, it is sufficient to sell one printing machine to break even.
— Do you offer new formats of work to participants?
— Yes, we try to propose wider opportunities to our exhibitors. Our latest formats include a subcontract market as an effective way of cooperation that allows building production and logistics chains). It was first tested during the Metal Processing 2022 exhibition held in cooperation with the Chamber of Commerce and Industry of the Rostov and Yaroslavl regions. The outcome exceeded our expectations. Around 50 companies and membership organizations of commerce and industry chambers participated in the market. Interestingly, sometimes regional participants did not know that a product they were seeking was produced in the region next door. The subcontract market helped them establish partnerships.
— Can exhibitions help with searching for innovation?
— We particularly focus on promoting science and innovation, supporting Russian inventors, young scientists, and for this purpose we test such formats as startup zones. For the past year, we have been maintaining strong ties with Russian universities and especially those that are involved in the trade fairs at Expocenter. For education institutions, partnerships are useful, among other things, as an opportunity to present latest innovative developments of their students on very beneficial terms. We consider these participants our potential partners and clients.
In cooperation with the State Duma Committee on Science and Higher Education, we launched a project called STI-Expo (Science-Technology-Innovation-Expo). This project offers such significant events as Russian High-Tech Week, Russian Industrial Week and Russian Healthcare Week. In the upcoming years, we will continue to build upon this area of work. The President announced years 2022–2031 the Decade of Science and Technology.
Focus on new markets and B2I
— Attracting investment remains one of the challenges for Russian companies. Can exhibitions help with that?
— Today, exhibition services in the B2I format, or business-to-investor, remain our biggest know-how. This approach focuses on attracting investment to companies participating in our exhibitions. I truly believe that an exhibition must be a financial payoff for a company and seeking investment is one of the objectives. At every trade fair, we organize a presentation of projects seeking investment. We pick investors who want to specifically put their money into companies in a certain industry. We plan to keep this format in the future.
— What about building links with new markets?
— For the past six months, we have been closely eyeing cooperation opportunities within the Shanghai Cooperation Organization and BRICS, exploring the potential of cooperation through the exhibition segment. We have noted mutual interest in developing trade and economic relations. When it comes to the SCO countries, we are intensifying cooperation there, including through assistance of commerce and industry chambers. In particular, this cooperation involves promotion of these countries’ exports on the Russian market through participation in Expocenter trade fairs. We pay great attention to organizing exhibitions of goods and services offered by the SCO in the strategically important areas – first of all, machine engineering, food industry, energy, chemical industry and medicine.
— Can Russian companies count on support with reaching new markets?
— We also work on organizing Russian exhibitions and fairs abroad. Since 2019, Expocenter has organized exhibitions at 22 trade fairs, with 271 corporate participants.
— Russian companies are facing a challenge of import substitution. How can they benefit from exhibition resources?
— The exhibition industry may actually become one of the key import substitution drivers because exhibitions serve as actual platforms for new contacts, business meetings and project launches. More intensive exhibition and convention activity may offer serious support to Russian companies that are switching to the import substitution tracks. Without this exhibition resource, the process may take as long as ten years.
Interview by Olga Blinova