Asia Comment
Now is
the Winter
of our
discontent?
Bjoern Kempe says eight golden
years are over – prepare for Winter!
t’s official – eight golden
years are over. Several
global economies such as
Japan, Germany, UK and
Italy have announced slowdown and
even negative GDP growth for the last
quarter.
Do we remember 2008, the global
financial crisis? I rather think we do.
What is so different between 2008
and 2019, and could a new economic
global crisis last even longer? There
are, in my view, several factors that we
need to consider:
1. UK Brexit – with Boris Johnson
I expect a hard landing … it will hit
all our fellow UK-listed exhibition
companies.
2. Italy recession and political
crisis. This could, after Greece, be the
next thing that will shake up Europe.
And we do have plenty of Italian-listed
and government organisers, so a hard
time could be in store for them.
3. Germany – Angela on the way out
and ZEW (an economic barometer)
at a record 11-year low of confidence
with several companies like Henkel,
Siemens, Daimler, BMW, Deutsche
Bank, Commerzbank, machinery
manufacturers, steelmakers, METRO,
and Kaufhof/Karstadt department
store all recently posting plummeting
quarterly results. German Messes
will have a cold winter coming, too,
with elections likely in the mix and
consumer confidence diving lower.
We are hearing the first calls also
for the privatisation of some Messe
w w w.exhibitionworld.co.uk
companies.
4. USA – President Trump and
an uncertain picture around his
re-election campaign; a Federal
Reserve Bank that is between rate
hikes and following the President’s
calls; a looming trade conflict with
China and Europe, as well as several
global flashpoints in Iran, North
Korea, Venezuela, Syria, Afghanistan,
Kashmir, etc that might develop into
serious war games…
5. More countries with nationalistic
leaders that promote “their nations
first”… are unlikely to add any positive
impulse for the global economy.
6. China, with plenty of problems
within the country affecting stabilising
GDP, its ongoing trade conflict with
USA and with Hong Kong/Taiwan as
areas of potential political conflict.
Growing manpower cost, climate
changes, security issues, transitioning
the economy into a service economy
and high-tech challenges make for a
lot for the central government to get to
grips with.
Despite being a very optimistic
person, I have to say the global outlook
has never looked worse. I can also see
that our exhibition industry, which is
mainly involved in these geographies,
will feel a global impact and it’s going
to be hard if not painful.
All major exhibition companies
are already experiencing challenges
in 2019 and this is just the beginning.
A few ‘safe havens’ such as ASEAN,
Middle East, Africa and Australia
Björn Kempe,
CEO ExposAsia
will be the exceptions. Most of the
exhibition companies will feel the
pressures from their local market
economies and the missing coins in the
Chinese exhibitors’ pockets. Chinese
companies might not want to join
shows anymore and follow instead
their nationally led programmes
globally.
I reported six months ago that the
buyer’s market had turned into a
seller’s market – with a record number
of private exhibition companies
in Asia selling out. This trend has
increased and, as a broker, I have
never seen such strong increase in old
established family companies wanting
to sell. Another alarming sign of a cold
winter coming.
Globally, we saw consolidation
continuing with Tarsus, Mack Brooks,
Comexposium etc in Q1/Q2, so I
believe more to come in Q3/4. It’s not
over yet. I am also very surprised
at the speed that consolidation is
continuing. I would be not surprised
see our industry down to just a dozen
major global players within 3-5 years.
Finally, multiples are coming down,
so that can provide some relief for all
major top 10 players.
We all know that our industry is
always a mirror of the global economy
and very often we see things coming
earlier than the rest. I hope that all
of us are prepared for the coming
years that are not going to be easy
and that we are prepared enough to
withstand global economical, political,
financial, technical and climate
related challenges. Please ask yourself
when you plan your budgets for 2020
whether you have considered these
factors?
I hope to discuss this and more
during the upcoming UFI Congress
in Bangkok. Crisis always means a
chance to adjust, re-think, innovate
and change.
As long as we
understand the
challenges that are
coming, we are able to
work with them and
master them.
Issue 5 2019
35