COLOGNE — Each year, jwe GmbH publishes a comprehensive research report that analyzes the financial results of leading exhibition companies as well as global and regional market trends. Trade Show Executive recently sat down with Jochen Witt, President and CEO of jwc GmbH, to learn more about how the war in Ukraine could affect trade shows in Europe and beyond, how outbreaks of the latest COVID-19 sub-variant are disrupting business in China, and much more.
TSE: Several trade show organizers have announced varying levels of boycotts and sanctions against potential exhibitors/sponsors based in Russia, and in some cases, cancellations of upcoming trade shows in Russia, due to Russia’s invasion of Ukraine. How do you see this situation evolving?
Spirit: It is unlikely that Russia will participate in trade fairs in Western Europe. There may be some exceptions in the case of Russian companies that have subsidiaries in Western Europe, but in general, I think that the participation of Russian companies in trade fairs in Europe will not take place as long as this invasion continues.
There are also a number of Western European-based companies that used to run events in Russia. These shows will also cease to exist for the time being – and several companies have even closed their entire Russian operations. (For example, London-based events company Hyve Group is exiting the Russian market due to the conflict in Ukraine. Hyve has agreed a deal to sell its Russian operations to Rise Expo for up to £72 million, according to the Independent.)
Another aspect to consider for trade fairs in Europe is that some venues can now be used for other purposes, for example to house war refugees. Poland, which is an active player in the European trade fair sector, hosts the largest share of refugees, which could well affect business in that country. But I think that is one thing.
TSE: What effects do you think we might see in terms of further inflationary pressures on trade show materials?
Spirit: The indirect consequences will be the most difficult to detect. By indirect consequences I mean a number of effects that we are already seeing, such as disruptions in supply chains, rising inflation and, above all, energy prices, which are increasing significantly. We have already recorded an increase in prices of about 30% compared to pre-war levels in Ukraine. Of course, all these price increases will eventually affect the exhibition sector. The reduction in trade between Russia and European countries will also have an impact on trade with other countries, which will in some way have an impact on our business.
If we take all these elements into account (the Russian war in Ukraine), the trade fair business in Europe will be affected. It is very difficult to estimate the extent of its impact on our business, especially right after the coronavirus crisis.
TSE: The coronavirus, and more specifically the Omicron BA.2 sub-variant, is spreading rapidly in parts of Europe and Asia. What potential implications could this have for upcoming shows in affected regions?
Spirit: There are still a number of factors that we need to look at, the main one being that the effect will be symmetrical, meaning that it will be very different from country to country. For example, in China, the whole city of Shanghai is in lockdown. Shenzhen has now been released and things are improving. But with the Chinese government’s zero COVID policy, there is a risk that everything could stop at any time without warning, as is currently the case in Shanghai. This was a surprise because we thought that China would recover very well this year and be back on track. If the lockdowns are lifted soon, I think China will return to pre-crisis levels very quickly.
The US domestic market is picking up now that the country is out of lockdown. From what we can see today, this year the US will be at about 70-75% of its pre-crisis levels.
In Europe, the situation has to be viewed in a more differentiated way. Until recently, we were in total lockdown in Germany; now everything is being lifted again. I expect the next month to be quite good for the salon sector. The risk reappears in the fall and winter, because we don’t know whether there will be new variants. So there is an inherent risk that we will have lockdowns again and that business will suffer.
But for now, the outlook for Europe is quite positive as most countries have eased their COVID measures and events can take place, exhibitors and visitors can travel. For now, the mood and outlook are good.
One positive outcome of this situation is that when companies have had to lay off staff, they have created more efficient structures and ways to gain efficiencies and reduce costs. So even if the difficulties and costs increase, these are at least somewhat offset by efficiency gains.
In summary, I think the industry is currently in a positive growth phase. But there are a number of uncertainties on the horizon that we need to monitor.
Let us hope for peace.
Contact Jochen Witt at [email protected]