Economic benefits of Hong Kong’s exhibition industry reach HK$35.8bn

Report showed the figure surged 18.6% from 2008.

The latest in a series of biennial Economic Impact Study reports on Hong Kong’s exhibition industry released today shows that activities associated with Hong Kong’s exhibition industry contributed HK$35.8 billion (US$4.6 billion) to the local economy in 2010, equivalent to 2.1% of Hong Kong’s total GDP, while generating the equivalent of 69,150 full-time jobs. Compared with findings in the previous report, which covered 2008, all the indicators moved upwards showing positive compound annual growth rates (CAGR).

The report, commissioned by the Hong Kong Exhibition and Convention Industry Association (HKECIA), revealed that the exhibition industry continues to bring significant benefits to Hong Kong’s economy not only by contributing substantial expenditure effects, but also by providing thousands of jobs for the exhibition industry and other service industries and supporting sectors, including hotel, food and beverage, retail, stand design and construction, and logistics and freight forwarding.

The report attributes the strong growth of the past two years to the continued high level of global sourcing activities for products from Mainland China and other Asian countries. At the same time, businesses from around the world are increasingly looking to use Hong Kong’s exhibition platform to introduce their products to the growing markets in Mainland China and other Asian markets. This is a situation that, according to the report, is likely to continue and will provide the city with ongoing exhibition growth opportunities.

Mr Daniel Cheung, Chairman of the HKECIA, backed the report’s assessment, noting clear signs that the world’s centre of economic gravity is continuing to shift eastwards. Identifying local drivers for the growth shown by the study, he noted, “This increasing business activity has come about due to the addition of new exhibitions, growth of recurrent shows at the two venues AsiaWorld-Expo and the Hong Kong Convention and Exhibition Centre (HKCEC), as well as increased exhibition space arising from the expansion of the HKCEC in 2009.”

The report gives precise estimates of various economic benefits arising from the exhibition industry, but also mentions the many important intangible benefits generated by the exhibition industry. These benefits are less easy to measure but are nevertheless very real. By way of comment, Mr Cheung said, “Exhibitions are important factors in raising Hong Kong’s international status. Currently, Hong Kong hosts five of the world’s largest trade exhibitions and seven of Asia’s largest trade exhibitions. Record-breaking events like this reinforce and publicise Hong Kong’s profile as a reliable, successful and dynamic place to do business of any kind, creating a momentum which keeps Hong Kong high in global public awareness as an ideal business location.”

Mr Cheung continued, “The report confirms that the exhibition industry is  driving force behind Hong Kong’s economic strength. Exhibition activities are key to the development of import and export opportunities, and are also essential marketing platforms by which our SMEs can make international business contacts without the expense of travelling overseas.”

Reflecting on the overall implications of the report, Mr Cheung commented, “While we are pleased with the findings of this carefully researched and objective report, we need to be mindful of ongoing competition from the region. To take full advantage of market trends, Hong Kong’s exhibition industry must remain proactive and continue to invest so that our facilities remain second to none, and our service standards unmatchable.”

Expenditure effects continue to grow because of increasing exhibition activity

Hong Kong’s exhibition industry contributed expenditure effects of around HK$35.8 billion (US$4.6 billion) to the Hong Kong economy in 2010, up by 18.6% from 2008, representing a CAGR of 8.9%. This was equivalent to 2.1% of GDP, up from 1.8% in 2008.

Direct, indirect and induced expenditure represent 50%, 30% and 20% of total expenditure respectively.

Direct expenditure, which covers expenditure specifically on exhibitions and exhibitionrelated activities, amounted to HK$17.9 billion (US$2.3 billion). 55% was visitor expenditure contributed by international and local exhibition visitors, and the remaining 45% was business expenditure generated by exhibition organisers and exhibitors.

Expenditure by exhibition visitors amounted to HK$9.8 billion (US$1.3 billion) in 2010. It was spilt 90:10 between international and domestic visitors respectively. The food and beverage (F&B), retail and hotel sectors were the largest recipients of direct visitor expenditure, accounting for more than 74%, or HK$7.3 billion (US$936 million), in 2010.

Business-related expenditure amounted to HK$8.1 billion (US$1.04 billion) in 2010, representing a CAGR of 22% from 2008.

Fiscal impact grows with increased visitor and business spending

The tax take enjoyed by the Hong Kong Government in 2010 as a result of exhibition activities is estimated at around HK$1.1 billion (US$141 million), based on the total expenditure effects of HK$35.8 billion (US$4.6 billion). This represents an impressive CAGR of 10.7%.

Fiscal benefit is derived from three taxes:
Profits tax: HK$650 million (US$83.3 million)
Salaries tax: HK$418 million (US$53.6 million)
Airport tax: HK$59 million (US$7.6 million)

Equivalent of 69,150 full time jobs provided by the exhibition industry
Full-Time Equivalent (FTE) employment amounted to around 69,150 in 2010, representing a CAGR of 6.5%, up from 61,000 in 2008.

Around 2,650 FTE employees, or 4%, were directly employed by venues and exhibition organisers.

The remaining 96%, or 66,500 FTE jobs, was provided across various supporting sectors. Of this group, around 61%, or 41,000 FTE jobs, was directly involved in hotel, retail, and F&B, while the remaining 39%, or 25,500 FTE jobs, was spread across other sectors such as stand construction, advertising, freight and logistics.

International exhibition visitors and exhibitors contributed more than overnight tourists

The report showed that international exhibition visitors spent on average 67% more than overnight tourists while international exhibitors’ spending was on average 30% higher than that of overnight tourists.

International exhibition visitors and international exhibitors spent on average HK$11,219 (US$1,438) and HK$8,819 (US$1,131) per visit respectively, compared to HK$6,728 (US$863) per visit by overnight tourists.