KOREA conventions and exhibitions

The last two years have not proved to be kind ones for the Government of South Korean president Roh Moo-hyun. His liberal-leaning administration has been a dismayed witness to the ineffectiveness — and more recently, the de facto dissolution — of the six-party talks surrounding North Korea's nuclear ambitions. A slowdown, stemming from the bursting of the credit card bubble in 2002 has put a drag on the domestic economy, bringing growth in at below the Government's target of 5 percent, despite record exports last year. And in 2004, the government suffered the embarrassment of watching the Constitutional Court shoot down its flagship decentralisation policy. But one sector of the nation's economy has proved resistant to these negatives: the CEI industry. "Last year, foreign participants at international conferences in Korea numbered around 35,000," said Jo Deok-hyun, director of the Korea Convention Bureau, a component of the Korean National Tourism Organisation (KNTO). "Each participant's spending was about US$3,200, but indirect impact per person was around US$5,000; we calculate around US$200 million in total." The number of international meetings in South Korea has been rising steadily since 1993. The country has proven to be especially adept at lobbying internationally to win hosting rights to events. "It is still very much a command economy here, with lots of government-driven events," said James Rooney, president of Seoul-based consultancy Market Force Company, who has handled conference organising duties for a range of governmental groups, and who has trained government officials in presentation techniques. Landmark events include the 1988 Olympic Games, the 2000 ASEM summit, the 2002 World Cup and the 2003 Asian Games. Collated data is not yet available for 2004, but the Union of International Associations found that while the overall global situation for the meeting industry in 2003 was largely flat, South Korea saw a 31 percent increase in that year. It also found that among cities, Seoul, as host to 87 meetings, or 0.92 percent of the global whole, was in joint 15th place ranking as a venue, alongside Washington DC. This put it behind Singapore (in sixth place, with 122 meetings), but ahead of all other Asian venues such as Tokyo (joint 29th place, with 44 meetings) and Beijing (in 30th place with 41 meetings). The same UIA study found that South Korea, as a nation, hosted 160, or 1.69 percent of all meetings in the world, putting the country in 18th place worldwide. In Asia, only Japan beat South Korea, claiming the 13th spot, with 219 meetings, or 2.32 percent of the global market. The strong showing looks set to continue. The KNTO offers a 69-page schedule of upcoming events, from 2005 through 2014 —and these do not include corporate events. The big event this year takes place in coming November, when Korea will be hosting the APEC summit and APEC CEO conference in the southeastern port of Busan. The city's BEXCO exhibition centre is undergoing a US$14 million renovation in preparation, and 58 hotels are gearing up to accept guests. As well as 21 heads of state, as many as 800 CEOs are expected to visit. City officials are reportedly considering scheduling the Busan Film Festival to run concurrently with the APEC event. KNTO sources see Korea's main strengths as its high capacity for IT and biotechnology, and point proudly to a number of prestigious international medical conferences taking place in 2005/6. Jo also noted that international pharmaceutical companies such as Merck and Astrozeneca favor Korea as a destination for regional conferences. Beyond the metropolis While the government's flagship policy for decentralisation — the planned relocation of the nation's administrative capital from Seoul to the rural market town of Yeongi-Gongju was torpedoed by a Constitutional Court ruling last year — a need for decentralisation is abundantly clear. Seoul itself is home to 10 million people, and the wider Seoul metropolitan area is home to half of South Korea's 48 million population. But while the nation's capital is clearly going to remain Seoul, decentralisation has been underway in the CEI sector. According to KNTO data, up to the year 2000, some 90 percent of the nation's international conventions and exhibitions took place at the giant COEX centre in southern Seoul. With new, modern regional centres coming on line in recent years, by 2004, COEX's market share decreased to around 50 percent but volume was still up. The country now has four standout conference and exhibition centres. These are COEX; BEXCO in Busan, the nation's second city and a major port on the southwest coast facing Japan; ICC (International Convention Centre) Jeju, on the subtropical getaway island of Jeju off the south coast; and EXCO in the city of Daegu, the country's most centrally-located city and a national distribution hub. Meanwhile, the rest of the country are getting their own centres up and running. Central government has successfully supported local governments in building both the hardware — centres — and in emplacing the necessary software — such as convention bureaus. "Part of the decentralisation policy is to give local governments autonomy to build their own facilities — but with central government support," Jo said. And the industry continues to expand its facilities. There are three new centres opening this year: Gwangju's GEXCO; Changwon's CECO; and the much-anticipated KINTEX, in Goyang, a satellite city of Seoul. A further five or six convention centres are expected to come into being by 2010 — including one in the major city of Daejeon, and an internationally-designed centre, currently being built by the New Jersey-based Gale Company, on the reclaimed island of Songdo, off the port of Incheon. Land was broken for the latter project last year and it is significant that the US$20 billion, privately developed new city, Songdo is being built around a convention centre. "These plans mean every major city in Korea will have its own centre by 2010," said Jo. The structure of the industry is such that all centres except for the privately run COEX and the Songdo centre are joint ventures between the government and the private sector. The KNTO see the volume growth in the industry continuing. "As this is a supply-side industry, the centres are attracting their own events," said Jo. But could this all be too much, too soon? With the number of new centres going up, problems of over-supply are beginning to appear. "We are adding three more centres this year, and some centres are suffering from deficits," admitted Jo. "Internal competition is very heated; this makes us competitive, but from a country-wide perspective, we attract less money." But while foreign players in Korea praise the quality of the constantly-expanding Korean facilities, there are critical of shortfalls in the sector's software. Software shortfall "The hardware here is relatively good, and conferences in Korea can be well-arranged," said Rooney. "However, there needs to be proper leadership and you don't find that universally. There are some conferences that are a bit goofy; they might lack English language materials. While there is a can-do attitude here, there is also the 'palli-palli' (hurry up) syndrome: some conferences tend to come together at the last minute." Tami Overby, president of the American Chamber of Commerce in Korea, agrees. "We have tried to outsource events here, and there is a huge gap between the expectations of multinationals and local outsourcing firms," she said. "And then there is coordination. I was at a forum where I was one of five panel discussants. The moderator changed the format at the last minute — even though I had spent a lot of time preparing materials." Overby also noted that Korean conference organisers allow the press remarkably free reign: photographers will get right up in the faces of international chairmen in the midst of presentations and click away: "It's hugely disruptive, and it doesn't happen anywhere else in Asia." she said. Noting that there is no 'single standout' company to go to for across-the-board conference organisation, Rooney says, "Things tend to be organisation-specific. For example, the Grand Hyatt is a world class destination, and I want my conferences there because I know I'll get high-quality execution. So there is usually the capability — if you have a small amount of international talent involved." Overby adds that with the exception of the major hotels, she no longer outsources event or conference-organising functions to any company. Her events are coordinated in-house, by the chamber's own staff. However, those viewing the market from afar often take a kinder view. "From my brief experience, Korea is a world-class conference venue, offering exemplary facilities and service," said Antonius Papaspiropoulos, external affairs advisor for Shell in Asia Pacific. "Hotel facilities are world-class, Korean hospitality is second-to-none, and Korea's geographical location also makes it a good 'hub' for regional meetings. I honestly cannot think of any weaknesses." Shell will be hosting a sustainable development conference, 'Sustainable Seoul' in the city on May 9, designed to debate how Korea — the world's 10th largest economy — is balancing economic imperatives alongside environmental and social responsibility. Incentive averse While the conference and exhibition industry is well-established, incentive travel programmes appear not to take place — even at major corporates. "We have team awards for those teams which improve productivity, and also profit sharing awards, but the rewards are financial," said Kim Se-jin, a human resources manager at Samsung Electronics domestic sales division. Company training programmes are done at an in-house company facility in Suwon, largely by Samsung trainers, although Kim says some outside trainers from universities are hired. Courses tend to be on product knowledge and sales skills. "HR people from across the world get together in Korea once a year," she added; again, the courses take place in the Samsung facility. A PR source at LG Electronics said that LG has no incentive travel schemes. Korean firms have had a historical reluctance to incentivise their staffs. Partly this may be due to the strong union movements in Korea, and partly due to a powerful group mentality which emphasises equality and group goals, rather than individual achievement. However, recent press reports have noted that domestic auto companies Hyundai, Kia and Ssangyong have faced difficulties in the recent slow domestic economy: many salesmen do not sell enough cars to justify their monthly salaries. On the other hand, the one auto company to incentivise its sales staff, GM Daewoo, had some star sellers earning over US$100,000 per year, the reports stated. Looking more broadly at the local business environment, both foreign businessmen and the local press are scathing over how the Government has failed to effectively promote a positive image for South Korea internationally. "There is a huge gap — a really huge gap internationally — on what Korea is and what people are aware of," said Rooney. "This is the world's 10th largest economy, but when people abroad think of Korea, they probably think of the Korean War, the corruption problems of a few years ago, and the nuclear issue — if they think of Korea at all. Singapore and Hong Kong have developed their images; Korea really has to address this and get a consistent message across." What the public sector has failed to do, the private sector is doing. The 'hallyu' (Korean wave) of pop culture that has surged over the shores of Japan, China and Southeast Asia, depositing a cargo of pop music, animation, films and TV melodramas on foreign shores. It has done a huge amount to boost Koreas'profile in Asia-Pacific. Meanwhile, the ever-increasing success of South Korea's export-focused conglomerates like Samsung (named in the annual Fortune/Interbrand annual survey over the last two years as one of the world's fastest growing brands), LG (recently profiled in a Businessweek cover story) and Hyundai Motor (the firm's chairman was chosen by Businessweek as one of the top 20 managers in the world last year) is another factor in raising Korea's visibility as a business destination. While all this trickles down to CEI, a further push for the industry is the increasing number of marketing organisations backing it up. This year, Seoul joined Busan and Daegu in launching their own convention bureaus; Jeju is also preparing one. "We are quadrupling our marketing power," said the KNTO's Jo. North Korea looms South Korean destination marketers are not helped by the fact that one of the world's consistently scary headlines news stories lies half an hour's drive out of Seoul: North Korea. However, while international news outlets breathlessly report the deadly danger of North Korea's nuclear weapons programmes, South Koreans and resident foreigners largely shrug off the periodic crises; after all, they have been living with the threat for 50 years. Following the shock Feb 10 announcement by North Korea that it possessed nuclear weapons and was boycotting talks on its atomic programmes indefinitely, the resounding reaction from the South Korean public was 'So what?' In the weeks following the announcement, the stock market surged to five-year highs. "It's fair to say that people who are far distant from Korea worry more about the North Korea dimension than those living here," said Rooney. "North Korea is such an old, relatively unchanging story." Even so, there is widespread recognition that North Korea situation is damaging to South Korea's image. "Currently, the situation with North Korea may be why more people are not coming to Seoul for conventions," said Anna Han, PR manager of Seoul's Shilla Hotel. Han's comment is a mantra repeated by businesspersons in all sectors. Which means that despite the blasé South Korean attitude, international tourists and convention goers are likely to continue to consider the North Korea bogieman when setting their travel and meeting agendas — and there is no end to the long-running crisis in sight. One of the Government's major goals is to turn Korea into the 'Hub of Northeast Asia' — the nation sits slap bang in the middle of China, Russia and Japan, and hugely ambitious plans are ongoing to construct Free Trade Zones at the ports of Incheon, Busan and Gwangyang. "With Korea's growing stature as a hub of Asian business, we are focusing on developing our conference and large-scale meeting capabilities to capitalise on the emerging opportunities in this sector," said Roddy Gordon, director of marketing at Seoul's Grand Hyatt. But approximately 80 percent of conferences and exhibitions in Korea are domestic events, says the KNTO's Jo, and some observers remain skeptical as to whether Korea really has the determination to fully open its doors and minds. The parochialism of the business environment has changed greatly from the early 1990s, when the market was just beginning to open, but Korea watchers in Seoul caution that a nationalistic backlash against the market opening and globalisation of recent years appears to be underway. Noting that foreign ownership of the local stock exchange is nearly twice as high as that seen in Taiwan and Tokyo, raising the spectre of hostile M&As by overseas players — a concern greatly played up by the media — policymakers and financial regulators are currently moving to limit foreign management control and shareholder influence in the financial sector. Given the small number of multinationals with their regional headquarters in Korea — currently, only Volvo Construction Equipment and US-based equity fund Lone Star have their Asian head offices here — the country finds it harder to attract multinationals' in-house conferences than Hong Kong or Singapore. More germanely for the CEI and hospitality industries, this hesitant approach to globalisation results in a lack of support staff capable of speaking decent English. This is reflected in the poor — sometimes incomprehensible, sometimes amusing — English copy in ads and promotional literature. One exasperating feature of many Korean exhibitions, conventions and marketing events is the plethora of 'doumi' (literally, helpers). Usually attractive young females, costumed as per client requirements — they can appear in anything from skimpy branded attire to lavish traditional dresses — these girls provide attractive eye candy at booths and venue exits and entrances, but few speak any English, and as they are hired from outsourcing companies, rarely have any knowledge of the products or services they are supposedly promoting. More broadly, many Korean staff lack the kind of international outlook that informs their counterparts in places such as Hong Kong and Singapore — which have much longer experience of being trade and travel hubs and have the advantage of having multi-ethnic populations. Accommodation issue Another issue facing the industry is that while there is a wide supply of 5-star hotel accommodation, there is very little catering to foreign guests in lower price brackets, particularly outside Seoul. One venue which has taken a creative approach to this problem is the Seoul-area KINTEX, due to open in coming April. "We are on the verge of signing a contract with a motel, and will turn it into a KINTEX-branded business hotel," said Phil Chung, of KINTEX's Exhibition Planning Team. The dragon next door With China holding the 2008 Olympics in Beijing, and the 2010 World Expo in Shanghai, there are also concerns in Korea over its ability to compete with the dragon next door. "They are not just holding events, they are also building major convention facilities," said Jo. "And international businesses all want to be in China due to its market size." However, organisations like the Korea International Trade Association are actively studying how Korea can leverage the China relationship — China has not only supplanted the United States as Korea's largest trade partner, but also its largest investment destination — to take advantage of the possibilities offered by the giant economy. Koreans are also confident that the standard of their human resources will remain superior to those of China. "For the next couple of years, they won't have the software to support their hardware," said Jo. As the industry reaches maturity here with its optimum range of infrastructure coming into play, the outlook appears positive. As more and more experience is accrued by Korean exhibitors and conference goers abroad, it is likely that some of this will rub off, thus upgrading the professionalism of conference and exhibition planners and organisers. Meanwhile, the country's broader national goals for competing within 21st century Northeast Asia — notably its 'Hub of Asia' ambitions — will bear watching. If they bear fruit, they have the potential to take the tourism, hospitality and CEI industries here to the next level. ceco The Changwon Exhibition and Convention Centre (CECO) will open this March in Changwon, located one hour's drive from Busan. Within a one- hour radius of the facility are an F3 racing track and an 18-hole golf course. Also within easy striking distance of the facility are the famed Haein Temple, the Mount Magum hot springs complex, and the nature reserve of Junam Reservoir. Floor space is 7,823sqm, with a capacity of 430 booths or 5,000 persons. Contact: Jung In-hoan, director of marketing, CECO Management Office Telephone: +82 55 274 0780 Website: http://www.ceco.co.kr gexco Due to open in September 2005, the Gwangju Exhibition and Convention Centre boasts a convention and conference hall offering 1,518sqm of floor area, with space for up to 500 booths, and theater-style seating for up to 2,000 persons, and parking for 2,000 vehicles. Facilities include translation facilities in eight different languages, and solar power sources on the roof. The centre already has 22 events booked. The city of Gwangju in Korea's southeast is famed for its excellent food — appropriately, one of its first events will be the 2005 Food Fair in October — and also known as the base of Nobel Peace Prize Winner and former president Kim Dae-jung. Contact: Gwangu Exhibtion and Convention Centre 1200, Chipyeong-dong, Seo-gu, Gwangju 502-827 Telephone: +062 611 2000 Website: http://www.gexco.or.kr kintex The Korea International Exhibition Centre in Goyang (also known as Ilsan) — the largest such centre in Korea — will open in April. KINTEX is a 20 minute drive from central Seoul. Industry watchers expect KINTEX, with its total exhibition area of 53, 541sqm and parking for 7,000 vehicles, to grab a large share of the exhibition pie from current top-dog COEX. KINTEX has already booked 30 events, including the top five exhibitions in Korea: the Seoul Motor Show (April 2005), the Korea Electronics Show (October 2005), the Korean Machinery Fair (October 2005), the Kyunghyang Housing Fair (March 2006) and the International Machine Tool Show (April 2006). The centre has partnered with a number of 5-star hotels in Seoul. Goyang/Ilsan itself is a modern town built in the 1990s, well-known as a weekend getaway destination which offers a huge lakeside park. KINTEX's flashy website is worth a look. Contact: Phil Chung, Exhibition Planning Team,KINTEX Telephone: +031 810 8074 Website: www.kintex.com