An increasing number of Hong Kong exhibition companies are setting up their wholly owned subsidiaries here, reviving the local exhibition industry while bringing in fierce competition.

Pico Hong Kong and CIEC Exhibition Co (HK) upgraded their existing representative offices in Shenzhen in January and February, said the Shenzhen Convention and Exhibition Association Secretary-General Sun Yilun.

The Closer Economic Partnership Arrangement (CEPA), signed between the Hong Kong Special Administrative Region and the mainland last June, allowed Hong Kong exhibition companies to set up wholly owned subsidiaries and give independent expos on the mainland starting January 1.

CIEC has invested nearly 5 million yuan (US$600,000) in the Shenzhen company, expecting to take a bigger share in booming local and South China's markets, said Zhang Shuangwen, a project manager for CIEC Exhibition Co Ltd Shenzhen.

Another three Hong Kong exhibition companies Reed Exhibitions Ltd, Adsale Exhibition Services and China Promotion Ltd CP Exhibition which have applied to set up wholly owned subsidiaries in Shenzhen, are expected to get the final approval soon, Sun told China Daily.

"The entry of strong Hong Kong expo companies in Shenzhen will have an impact on local business, which consists of medium or small exhibition companies," Sun said.

However, Shenzhen is blessed with its own advantages in terms of geographic position, facilities and exhibition prices.

Shenzhen has far more exhibition space than Hong Kong, with a High-Tech Fair Exhibition Center having an exhibition area of about 700,000 square meters.

And a new center is expected to open next year, costing more than 2.5 billion yuan (US$301.2 million) and covering an area of 250,000 square meters with floor space of more than 150,000 square meters.

"Being more creative is the key to survival. The local industry should constantly improve its management and services when dealing with Hong Kong exhibition companies," Sun added.

Also, acquisitions and mergers of local companies are encouraged to further integrate resources and avoid unnecessarily wasting expenses caused by repetition of shows, Sun told China Daily.

"Both Hong Kong and Shenzhen benefit from the CEPA, and are complementary to each other," Hong Kong Exhibition and Convention Industry Association Chairman Stanley Chu said.

"As a newcomer, we still prefer to host shows with mainland cooperative partners, because mainland partners are more familiar with the domestic industry and market."

Chu suggested that Shenzhen could become a convenient place for a Hong Kong-based company to process data and research when operating businesses on the mainland.

"More than 20 Hong Kong-based exhibition companies are set to join the mainland market as wholly owned businesses this year, in big cities such as Beijing, Shanghai, Guangzhou and Shenzhen," he said.

(China Daily March 3, 2004)