Zhang Min: Why Should the Exhibition Industry be the First to Restart to Stabilize the Country's Economy and the Market Entities?

Author: Zhang Min, executive director of Shanghai Exhibition Research Institute, professor, and doctoral supervisor of Shanghai University. The original title is “[Research Report] Stabilizing the Country’s Economy and the Market Entities, the Exhibition Industry Helps to Break Through after the Pandemic”.

The potential threat of the centennial change and the pandemic lies in dismantling market relations, forcing the decoupling of science and technology, and undermining development expectations. We should take a solid series of policy measures to stabilize the economy and make it our top priority to step up efforts to help market entities out of difficulties. 

To stabilize the economy, we should first stabilize the market entities, and then maintain the market association, create market opportunities, and firm business confidence, and provide development expectations for MSMEs.

The fundamental way to stabilize the market entities is to open the market.

Where there is a market, there are market entities. If there is a market entity, then there is employment, people’s livelihood, and the country’s economy. 

The 2022 (24th) Chongqing International Auto Exhibition was held from June 25 to 27.

As an inter-enterprise market, the exhibition can promote full competition, realize direct communication and save transaction costs through a large gathering of buyers and sellers and the convenient communication of market information, so as to provide the most convenient market and optimal cost performance for localization of global resources and globalization of local enterprises, serve the communication and interaction between the main body of enterprises and domestic and foreign markets, and synergistically help break out after the pandemic. Therefore, it is necessary to take the lead in restarting the exhibition industry.

After three years of epidemic prevention and control, the exhibition site infection so far checked no case, and the conditions to take the lead in restarting.

MSMEs are crucial

According to the statistics of November 1, 2021, the total number of market entities in China has exceeded 150 million. This number, which was 55 million in 2012, reached 150 million in 2021, an average annual growth of more than 10 million.

Among the 150 million market players, the vast majority are MSMEs, and the majority of ownership forms are private or individual. Billions of subjects of the majestic power promote the formation of the development of China’s mega-market and become a pivotal force to stabilize the economic fundamentals, employment, and people’s livelihood.

MSMEs embody the strength of the middle class. With the ability to engage in productive business beyond basic living needs, MSME entrepreneurs constitute the hard-core body of the middle class.

2022 China Cross-Border E-Commerce Trade Fair (CROSS Trade Fair) was held in Fuzhou from June 1-3, 2022.

At present, the unanimous consensus of domestic and foreign academic circles is that the middle class is the backbone of social stability, the guarantee of cultural security, the main force of domestic consumption, and the driving force of development growth. The formation of the middle class means the rise of people with stable incomes and decent life, and the whole society enters the channel of stable development and positive development.

MSMEs contribute more than 50% to national fiscal revenue, more than 60% to GDP and fixed asset investment and foreign direct investment, more than 70% to enterprise technological innovation and new products, 80% to urban employment, and more than 90% to new employment.

The success or failure of China’s post-epidemic breakout, in a sense, depends on initiatives to relieve the difficulties of market players. According to the World Bank, China has made great efforts to improve the domestic business environment for MSMEs. Reforms have led to a continuous lowering of market entry barriers. In recent years, China's business environment has improved its world ranking by 18 places.

Historical experience proves that the prosperity of small and medium-sized enterprises makes the market prosperous, and promotes active innovation, full employment, people’s livelihood, and national prosperity; the decline of small and medium-sized enterprises makes the market withered, low innovation, poor employment, difficult livelihood and the country will be weak. Reform achievements are not easy to come by, we must cherish them.

In fact, along with the substantial growth in quantity, the quality of market entities is also improving significantly.

The 30th China (Shenzhen) International Gifts, Handicrafts, Watches & Houseware Fair & Alibaba 1688 Factory Direct Season was held on June 15-18, 2022, with an exhibition area of 240,000 square meters and 4,500 exhibitors.

Data show that when the total number of market entities grew from 10 million to 50 million, high-tech industry and new service industry enterprises will emerge in large numbers; from 50 million to 100 million, the new business model will be flourished, and the fifth generation of communications, high-speed rail, aviation, and other new technologies will promote the change from “Made in China” to “Made by China”. The ones which perform better have been able to grow healthily and rapidly, and even have entered the main track of the multinational competition, such as Ali, Tencent, DJI, Huawei, Xiaomi, Geely, BYD, etc.

Market-oriented reforms have stimulated the enthusiasm of Chinese people to invest and start businesses, liberating the initiative, enthusiasm, and unlimited creativity buried under the surface. The new market entities are overflowing with vitality, which is not only conducive to preserving employment and people’s livelihood, increasing consumption, and expanding domestic demand, but also conducive to innovation-driven realization, the conversion of old and new dynamics, and international competition and national revival.

Supporting the development of MSMEs is supporting economic development political clarity social stability and cultural prosperity, and is supporting the great rejuvenation of the Chinese nation. In a certain sense, supporting MSMEs is supporting ourselves.

Practical Difficulties and Problems

The key to the survival and development of MSMEs is to maintain close communication with the market, from which they can achieve transaction efficiency and draw economic benefits.

No matter how large or small, an enterprise is an economic organization that pursues profit maximization from input to output. It draws demand and resources from the market, acquires technology, talents, data, and management from the market, provides goods or services to the market, realizes the exchange value through the market, and completes the “thrilling leap from commodity to money” (said by Marx). Modern economics believes that the essence of business operation is to pursue product innovation through communication and interaction to achieve the optimal allocation of resources and maximize transaction efficiency.

The sudden impact of the 100-year change and the century epidemic has caused the factor costs of MSMEs to continue to climb and the return on investment to decline, which not only obscures the market opportunities of globalization for MSMEs and deprives them of their development expectations; but also restricts the innovation input, efficiency output, and the main body to take charge, making them lag behind in the economic cycle and even eliminated by the economic cycle.

The 10th Global Hunan Business Conference was held in Zhuzhou city, Hunan Province on May 22-23, 2022. 

The key to stabilizing the economy is stabilizing the inseparable link between MSMEs and the market.

The problem is that the modern market is dominated by buyers and is a global market with domestic and international connections. The product and service innovations of MSMEs, without exception, are facing world-class competition. The market only recognizes competition and does not ask for identity. The globalization of the local market means that the lifeblood of survival and development for SMEs lies in product or service innovation, i.e., achieving world-class product and service innovation recognized by the market on the basis of cost-saving.

The difficulty is that while facing urgent market needs, MSMEs are forced to take globalization as the yardstick, world-class as the standard, and product service innovation as the premise, and strive to expand transaction scope and improve transaction efficiency. However, limited by the scale and cost of MSMEs, they cannot do internalization of transactions and absorb transaction costs, and on the one hand, they must meet the world-class in terms of cost performance on the other.

Since the problem cannot be solved by MSMEs themselves, they can only turn to the external market or inter-enterprise market. The linkage between MSMEs and the world market in the industry market can and must be achieved only through the mechanism of the inter-enterprise market.

The 30th China (Shenzhen) International Gifts, Handicrafts, Watches & Houseware Fair & Alibaba 1688 Factory Direct Season was held on June 15-18, 2022.

The exhibition industry was thus born.

How Does Exhibition Industry Solve the Market Blockage

An exhibition is based on organized on-site gatherings to promote interaction and communication, provide information support for trading decisions, and become the most common platform mechanism for inter-enterprise markets.

Its basic composition is thematized time and space as the core, new and special expertise as the point of view, expression and display as the means, and cognitive interaction as the content.

The exhibition industry has its roots in the dilemma of the professional division of labor economy and increasing transaction costs, and through globalization agglomeration to meet the demand for product innovation and transaction costs, forming the optimal platform for the globalization of local enterprises.

Nowadays, it is difficult for MSMEs to be as blindly isolated and misguided in the input-output process as they were in the past, with procurement and sales promotion all over the world; at the same time, they are not in a position to organize their own launches or operate experience stores, like multinational companies such as Apple and Huawei, along the direction of vertical division of labor and process-oriented multinational division of labor around complex products.

MSMEs looking for creativity, capital, technology, materials, talents, and management can only and must follow the direction of horizontal division of labor, and realize cross-regional clustering of industry groups of the same subject matter at specific times and places in thematic segmentation fields through the inter-enterprise market provided by the exhibition platform, exhaust the possibility of cooperation in targeted invitations, compete for characteristic strength in competitive displays, realize the best cost performance in diversified choices, deepen understanding and trust in cognitive interaction, and move toward one-to-one transaction decisions in many-to-many direct communication.

China International Medical Equipment (Shandong) Expo 2022 was held in Jinan from June 1 to3.

As the interaction and communication platform of the modern market system, through thematic segmentation of resource elements, cross-regional clustering, competitive display, diversified selection, cognitive interaction, and decentralized decision-making, the exhibition transforms the advantages of the globalized market into the intrinsic power of global resource element allocation and serves to innovate product services, enhance transaction efficiency, effectively improve input and output, resolve circular blockage, and help build a new development pattern in the full competition and direct communication of market-oriented platform.

The value of exhibitions lies in interaction and communication services, and its outstanding advantages are full competition and direct communication; its main functions are to stimulate innovation and creativity, build the market association, optimize resource allocation and reach understanding and trust; its social role is reflected in promoting open cooperation, economic prosperity, political civilization, social integration, and cultural inclusion. Self-driven by the law of increasing scale reward, it leads the exhibition platform from intercity, provincial and international to global, providing possibilities for deeper division of labor and larger-scale cooperation in human society.

The Exhibition Industry should Take the Lead in Restarting to Help Break Out after the Pandemic

The restart of the recovery of MSMEs is directly related to whether the economy as a whole can achieve a post-epidemic breakout. The biggest difficulty for recovery and restart is to rebuild and prosper the inter-enterprise market. An exhibition, as a communication platform for business-to-business interaction, has a unique way to solve the problem.

It is necessary to take the lead in restarting exhibition activities after the epidemic breakout.

The main task of the restart first is to focus on serving the needs of MSMEs under the premise of treating them equally.

The 20th Wuxi Home China Expo was held on June 24-26 at Wuxi Taihu International Expo Center.

An exhibition is the gathering place of market information and the wind vane of enterprise demand. Among the 19 million square meters of the exhibition area of Shanghai Convention and Exhibition, about 90% are horizontal division type exhibitions, 80% of exhibitors and professional visitors are small and medium-sized enterprises, and 70% are served by small and medium-sized exhibitions enterprises as the main official contractor.

Also as MSMEs, exhibition enterprises have the deepest understanding, the most perception, and the most practical help for similar needs.

Second, the exhibition industry should take the responsibility of helping MSMEs to find markets across the region, take advantage of the high level of expansion and opening up to the outside world, and further expansion of imports, to help MSMEs to form their own advantages, accelerate the adaptation to the national unified market, and take the initiative to join the large domestic market as the main body, the international and domestic markets to promote each other’s economic cycle.

Thirdly, the exhibition industry should be based on the innovation of products and services for MSMEs, take the initiative to find products and services, materials and technologies, capital and talents for MSMEs, make every effort to promote them to pursue innovation-driven and improve transaction efficiency, and regard meeting their needs of interaction and communication as their lifeline, and effectively implement them in all aspects of offline, online, planning and operation and facilitation services.

On June 22, 2022, CCBE Chengdu Beauty Expo West - Chongqing Station was held.

Fourth, the exhibition industry should encourage the development of MSMEs and safeguard intellectual property rights.

In particular, high-tech industries, strategic emerging industries, modern service industries, and even digital industries and creative industries, including the exhibition industry as an inter-enterprise market, must rely on technological innovation and digital opportunities to achieve intellectual property innovation, solidify the foundation of intellectual property rights, base on product innovation, model innovation and industry innovation, and build the patent high ground of independent innovation by steadily and step by step.

Fifth, with the world market and national strategies in mind, we should integrate the business development of MSMEs into the world trend and national development patterns, and understand and master the professional information of the globalized market by actively establishing or strengthening the exhibition platform; with the advantage of flexible institutional mechanism of MSMEs, we should seize the opportunity to actively explore the globalized inter-enterprise market such as non-traditional security, medical and pharmaceutical instruments, health, green double carbon, new infrastructure, and new rural areas.

Author: Zhang Min published on [BEN Exhibition] 2022-06-28 08:15 In Beijing

(Images added by BEN Exhibition.)

Translated by Ms. Kong @ LingTong