Going GlobalProducing

U.S. pavilions at overseas trade fairs

By Jenny Tesar

"It's a no-brainer -- an easy opportunity to expand globally."

"It's a great start for anyone who's thinking of entering a foreign market."

"It's a win-win situation. You provide a service and you make some money."

People who spend much of their working day organizing and operating pavilions in overseas trade fairs are enthusiastic about their endeavors. And they're quick to say, "You too can be a hero!"

"In part because domestic markets are drying up, many North American companies are looking at the international market as a way to sell products and build profits," says Steve Swanbeck, President of Forum Communications. "If a number of your exhibitors -- or your association members -- are eager to expand internationally, consider organizing a pavilion for them at an overseas trade fair. It's a service that you can offer. And at the same time, it's an excellent opportunity for you to promote yourself and your shows in North America."

Basically, a pavilion is a group exhibit. Each exhibiting company has its own booth, roughly 9 square meters (about 97 square feet) in size, though companies often rent double or triple booths. The pavilion organizer provides the exhibitor with a turnkey package that includes the hardwall booth, carpeting, furniture, electricity and signage, plus set-up, dismantling and cleaning services. The exhibitor may order additional services such as special graphics, flowers, telephone, etc.

In addition, the pavilion organizer uses some of the space for a lounge, where exhibitors can meet with prospects; and a business office, where telephone, fax, copying and other services are made available to exhibitors. Space also may be provided to government trade officers, who brief and counsel exhibitors.

Pros and cons
As described in previous EXPO articles, a show organizer who wishes to produce an event on foreign soil has three basic choices: go it alone, form a joint venture or create a pavilion in an already-existing foreign event.

The pavilion approach has two important advantages:

First, it requires less international expertise. You may be a wizard at marketing and operating a North American show, but marketing and operations overseas is a different ball game -- indeed, a game that often differs drastically from country to country.

Second, a pavilion is comparatively inexpensive, involving minimum financial risk. "Starting a new show overseas is easily a multimillion-dollar proposition," says Swanbeck. "Instead, why not plug into an existing show in your chosen market, which already has a targeted visitor base? That way, you don't have to spend a nickel on attendee promotion. And right off the bat, you can assure your prospective exhibitors that there will be an audience for them."

The main limitation of the pavilion approach is that you do not control or own the show. You're renting space inside someone else's event -- just like your exhibitors here rent space from you. Indeed, as a pavilion organizer you wear two hats: you're an exhibitor in the eyes of the show organizer, but a show organizer in the eyes of your exhibitors.

Choosing a venue
Begin by determining your objectives and evaluating your resources in order to decide if having a pavilion is indeed the best approach. Then, based on your objectives and the objectives of your potential exhibitors, choose a venue. Talk with exhibitors in your current shows, particularly those who have already exhibited overseas. Check directories that list international events. Find out if the shows have representatives in the U.S. and Canada. And talk with industry specialists in government agencies. For example, the U.S. and Foreign Commercial Service can provide market data, customs information and background on foreign trade fair organizers.

The biggest show, or the show that is the acknowledged leader in the industry, may not necessarily be the best choice. "People sometimes have tunnel vision, and look in just one direction -- at the biggest show. However, perhaps their marketing strategies should make them look in other directions," says Swanbeck. "For example, if your exhibitors have a product that is very marketable in Spain but not in the U.K., then it would behoove you to look at a Spanish trade fair rather than picking the largest fair in Europe. The latter may have the biggest numbers, but like virtually any fair, it draws its greatest portion of attendees from the native country. By going into a more tightly focused venue, your exhibitors have a better opportunity to meet the prospects they've identified. Also, they may not face as much competition, and their products may be more easily marketed."

But make certain that there's a market for American products in the show. "It could be that we're too sophisticated," says Jerry Kallman, President of Kallman Associates. "A case in point is a forestry and timber show in China, where the market is not yet up to numerically controlled sawmills."

Swanbeck also suggests going into a variety of venues. "Just as many shows in North America switch venues from year to year, to capitalize on different markets, you could take a pavilion in an Italian show one year, a Taiwanese show the next, and so on. This enables you to help a broader range of your current exhibitors, and to offer the exhibitors more opportunities."

Watch out for scheduling conflicts. If an overseas show runs head to head with a show here, it's a lot harder for you to recruit exhibitors. "Your exhibitors also want to see how the overseas show fits in with buying cycles, especially if it's a consumer goods industry," warns Kallman.

Another useful step at this point is to float some trial balloons, to determine the feasibility of the project. Tell potential exhibitors -- perhaps through a newsletter -- that you're thinking about taking space in an overseas show. Are they interested? In which country or part of the world? Would they be willing to pay $5,000 for a booth? $8,000? You can't take all the responses at face value, but they can serve as a guide, to give you a sense of what kind of demand might exist.

It's also smart to do a site survey. There may be some unpleasant surprises. What you thought was an entrance could be an exit next to the toilets. What you were told was a finished floor may be broken concrete. And then there's that low overhang... "Check the site at least nine months to a year in advance," advises Bill Warnes, President of Marketing International Corporation. "You want to sell something you're proud of, and something about which you can speak with authority. You don't want to be caught in lies that somebody else has passed along to you."

Built-in escape routes
Your contract with the show organizer is comparable to the contract your exhibitors have with you. It's an agreement to rent a certain amount of space at a certain price. The price depends on how much space you want, and how eager the organizer is to have your pavilion. "If you're only buying 100 square meters, you're no bigger than any other major exhibitor," points out Warnes. "But if you're buying 500 or 1,000 square meters, then you can get a better deal."

At this point you should have a pretty good idea of how many companies are likely to rent space from you. "We guesstimate, based on our track record," says Kallman. "Someone doing this for the first time should err on the side of conservatism. You may be able to deal with the organizer -- say, 'We want to reserve this much space, but we'll give you our final requirements six months before the show.' But some shows are completely booked from one year to the next and it's very hard to get your foot in the door, especially if you want a relatively large space. Then you have to commit early."

You don't want to commit to more space than you can fill. On the other hand, it's probably not worth creating a pavilion if you can only sign up a few exhibitors. "The kind of presentation you make is very important," stresses Swanbeck. "To create a nice showcase, I think you need a minimum of about a dozen companies. A pavilion should be large enough to indicate that you're a real player and that you -- and your exhibitors -- really are interested in the market. If you show up with three or four companies and a shoddy-looking pavilion, that reflects on your organization."

Warnes recommends long-term agreements in cases where a specific show promises to meet all your needs. For example, in one Latin American show he has a 10-year agreement with exclusivity for the U.S. and Canada. "I pointed out that I'd work hard to make sure it would be a successful event for the companies I bring, that they'd want to return, and that I'd be building the reputation of the show. Besides, if my pavilion is successful, I want to be able to go back and do the same thing the following year. The organizer can't take my clients from me and say 'I don't need you any more.' But I also have a clause that allows me to cancel the contract at any time with a 90-day notice."

Before signing the contract, it usually makes sense to have a lawyer review the agreement, to ensure that you know exactly what your obligations are. Lists of lawyers in the host country who handle international business are readily available at the commercial attache's office in the U.S. or Canadian embassy.

You may even be able to get a no-cost space option. In some cases, Warnes has a "kickout" 30 days before the show, when he can release the space and not pay a penny. "You can do that when show organizers really want a North American pavilion," he says. "Perhaps the show has been around for five to 10 years, and the organizers and their sales reps have failed to get exhibitors from the U.S. or Canada. Then we come along and ask for an option on 5,000 square feet of space. That's very attractive to them because they're dealing with one company that's going to create booths and aisles, wrap it up with a U.S. or Canadian identity, and take the responsibility of finding exhibitors.

"It's also an easy way for them to make money. Say an organizer is renting an exhibit hall at $10 a square meter. They sell it to you on a no-cost space option for $30 or $40 a square meter, which gives them a nice profit for doing almost nothing."

Building the pavilion
The design and layout of the pavilion is up to you, subject only to any limitations set forth by the show's rules and regulations. You can contract with the show organizer to design, erect and furnish the exhibit; you can contract the work to an exhibit house -- called a standbuilder or designer; or you can bring in a pavilion you're using elsewhere. Most pavilion organizers work directly with contractors, since it's cheaper than paying the show organizer to handle these chores. "I strongly recommend using a stand-builder who has experience in constructing pavilions. Many stand-builders are not familiar with the needs of the group exhibitor," says Swanbeck.

You'll also need to arrange for fax and other equipment rentals, interpreters, beverage service within the lounge, and so on. Read your exhibitor's manual. If it doesn't contain order forms or lists of contractors, speak with the organizer.

Also ask the organizer for lists of recommended freight forwarders, travel agents and hotels. As with floor space, you may have to commit early. "These things often get signed up from one show to the next," notes Kallman. "First-time international exhibitors often feel intimidated," says Swanbeck. "The more service you provide, the more hand-holding you offer, the better the chances that your exhibitors will be successful and pleased with the experience.

"It is absolutely critical that your exhibitors deal with a freight forwarder who is familiar with doing overseas trade fairs and, even better, with that particular fair. Time and again when exhibitors do not follow that advice, their stuff ends up sitting on a dock somewhere in the wrong country."

Use the exhibitor manual you received when you rented space as the basis of the exhibitor manual you give to pavilion exhibitors. This saves you a tremendous amount of time and effort. Sometimes all you have to do is translate it into English, and then copy it. In other cases, you may want to edit the manual before you pass it on. "We anticipate and provide many of the services listed in the organizer's manual, to make things easier for our exhibitors," says Kallman. "Also, you want to have your exhibitors order things like outlets through you rather than directly from the show organizer, so you can coordinate people's needs and avoid a lot of confusion.

Just be certain to pass along all the organizer's rules and regulations, plus all the information on import restrictions and temporary import arrangements to your own exhibitors.

Making money
It's conceivable that you might want to break-even organizing a pavilion. Perhaps you're simply doing this as a service for your association members. But most organizers want to make a profit -- and that's certainly possible.

Just as you do here, you build your costs plus a profit into the price paid by the exhibitor. Because you've rented a large space, you should enjoy some economies of scale. "We can get 50 tables and 200 chairs one and four in each of 50 booths for a lot less per booth than an exhibitor who rents a table and four chairs," says Kallman. "In places such as Germany, where you have to have an electrical hookup, one hookup will serve ten booths. The hookup costs $1,000, which you can amortize among the ten booths. But a single exhibitor may have to pay $500 for a slightly less powerful hookup. In many places, there's a rebate on cleaning areas of more than 100 square meters. If the base cost is 50 cents per square meter per day to clean one booth, it may be only 28 cents per square meter to clean 100 booths."

How much profit you build in depends in part on how much the exhibitors you wish to attract can afford to pay. "I would imagine you could mark up something 25 percent and still keep it within reason," says Kallman.

"Depending on the show, we're probably talking a minimum cost to the exhibitor of $5,000 to $10,000, for a turnkey package, airfare and lodging," says Swanbeck. "Sure that's more than here, but it's much cheaper than alternative international marketing approaches. If instead of exhibiting in a trade fair, you choose to hop on a train and travel around Europe from one potential customer to the next, it'll cost a heck of a lot more and you won't see nearly the number of people you would at a fair!"

A show within a showTurning 1,200 square meters (13,000 square feet) of space in an overseas trade fair into a highly successful version of a U.S. show can be "a very nice experience" -- if you're working with good people. So concludes Diane O'Connor, Trade Show Director at Cannon Communications. This past June, Cannon held Medical Design & Manufacturing Europe as "a show within a show" at Interhospital 93, a leading international fair for the hospital industry that was held in Hannover, Germany.

O'Connor gives special credit to Hannover Fairs USA, the U.S. office of the Hannover Trade Fair Authority. "They provided a great amount of support. They helped us find decorators who bid on construction of the pavilion, acted as a conduit for people based in Germany, staffed our show office, and so on." Also receiving kudos from O'Connor is Navtrans, the freight forwarder that handled shipments for most of the North American exhibitors.

The basic booths in MD&M Europe were 3 x 4 (corner booths) and 3 x 3 (129 and 97 square feet respectively). Some of the 78 exhibitors -- who came from the U.S., Canada and Europe -- took double booths, but most had single booths. In the center of the pavilion was a spacious lounge, where exhibitors and their guests were served complimentary snacks, sodas and coffee; alcoholic beverages were available at cost. There also were four conference rooms that exhibitors could reserve to talk with clients. Complimentary translation services (German, French, Russian and Spanish) also were available to the exhibitors.

North American space sales were handled by Cannon's local sales personnel. In Europe, reps from Cannon's magazine International Medical Device & Diagnostic Industry handled space sales.

Interviews and written surveys indicated that exhibitors generated a lot of business, and started numerous new distributorships. "They can't wait 'til the next show!" says O'Connor.

Cannon has a long-term working agreement with Interhospital, so MD&M Europe will definitely be part of the next fair, which takes place in 1995.