Meeting on Neutral Territory

Anna Vostrikova

Hanover Fair CeBIT

German companies capitalize on commercial exhibitions in Russia despite crisis.

Two-thirds of all the world's exhibitions take place in Germany. The country is located at the center of Europe, and its international airports and convenient rail services allow for easy transportation between cities. Modern exhibition facilities and related infrastructure encourage the inflow of both visitors and exhibitors. Germany's 22 international expo centers offer more than 2.8 million square meters of floor space — approximately the same as the entire Arbat district of central Moscow. Three of the five largest exhibitions centers in the world are in Germany — in Hanover, Frankfurt and Cologne (see table below). In addition, the Association of the German Trade Fair Industry (AUMA) lists around 380,000 sq. m. of regionally available exhibition space. The organization estimates that 230,000 German jobs are dependent on the exhibition industry.

For German companies engaged in the organization and hosting of exhibitions, annual returns exceed 3 billion euros. These returns are equal in value to the earnings for the entire German leather and tanning industry, according to the German Federal Office of Statistics.

On average, German exhibition companies conduct 150 international exhibitions each year. These events feature the participation of 180,000 exhibitors and host 10 million visitors. According to the German Trade Fair Committee, around 1,134 exhibitors from Russia participated in German exhibitions in 2014. In total, 70,000 visitors from Russia came to exhibitions in Germany in the past year. Most Russian exhibitors took part in events in Berlin. The event with the most Russian participants was Green Week, an exhibition dedicated to agriculture and food processing (see table below). The Russian government set aside 20 million rubles (273,000 euros) to promote the participation of Russian companies at the Green Week exhibition. Other popular exhibitions for Russian companies were ITB Berlin (an international trade fair for the tourism industry), the Hannover Messe (an industrial trade fair), and the international CeBIT Computer IT-expo.

German exhibition event companies also actively host events abroad. A third of the 303 foreign exhibitions in China were organized by German companies. No less important are India and Russia, where German firms held 45 and 37 events, respectively. The conflict in Ukraine and economic sanctions against Russia did not reduce the interest in working in the country or the size of exhibitions held there, according to the AUMA 2015 annual report released this summer.

In 2015, German exhibition companies plan to hold 40 exhibitions in Russia, says Marco Spinger, director of AUMA's global markets division. He added that the same number is scheduled next year. Exhibition themes do not overlap, so there is no competition between exhibition shows, said Leipzig Messe international project director Ulrich Briese.

The majority of events in Russia are carried out by Messe Düsseldorf. In 2015, the company scheduled 13 exhibitions in Russia, said Spinger, including RosUpack, Interplastica, Metallo-Obrabotka, Neftegaz and Prodexpo. In 2014, 11 percent of Messe Düsseldorf's earnings came from the Russian market — 45.9 million euros.

"After slightly more than 9 years working in Russia, Messe Frankfurt's portfolio represents 12 exhibition projects, which stand out as leaders in their exposition categories. These projects include Interlight Moscow, Modern Bakery, MIMS Automechanika Moscow, NAMM Musikmesse Russia and Hemitextile Russia," said business development director Irina Voronkova. "This year the Comtrans international truck autoshow is quite important. We acquired the project jointly with a British firm, ITE." Russia has always been a priority market for Messe Frankfurt, says Voronkova. "Over the last few years, the company has tripled its turnover and continues to develop — which is demonstrated by the Spring purchase of Comtrans," said the director of the Russian subsidiary. Messe Frankfurt's Russian subsidiary earns 1.4 percent of the company's returns, which were 8.2 million euros in 2014, according to the company's yearly report.

German companies are also bringing new exhibition projects into the Russian market. In October, Nürnberg Messe will be hosting Beviale Moscow, which is dedicated to the manufacturing of beverages. This exhibition hopes to attract companies interested in capitalizing on the long-term forecast for the development of the East European beverage market. According to experts, annual growth in this segment will be at 1.5 percent, said Nürnberg Messe "InformExpo" representative Hubert Demmler. Large German and Italian corporations in the industry see Russia as a huge potential market for product sales and business development, and they are afraid of missing out, Demmler said. If they wait for the normalization of the foreign political situation, then it's possible they'll give the Russian market away to competitors, Demmler added. Beviale Moscow will become an extension of the international exhibition for the beverage production process chain, Brau Beviale, which takes place annually in Nuremberg. In 2014, this exhibition hosted 1,133 exhibitors and 37,200 visitors. Nearly half of the exhibitors and 40 percent of visitors came from outside Germany.

Nürnberg Messe's Demmler thinks that Russia's current economic crisis is a relatively short-term phenomenon. His opinion is shared by Leipzig Messe international project director Ulrich Briese, who said that his company's Russian operations are quite stable. "This is facilitated by established partnerships with many companies — that is, in Moscow and St. Petersburg, the company operates via representative offices," Briese said. Leipzig Messe has two more events scheduled for this year. In October, Moscow will host the Denkmal international trade show for heritage preservation, restoration and museum technology and St. Petersburg will host the People & Health exhibition dedicated to traumatology, orthopedics and rehabilitation.

International companies participating at expos know that Moscow is an expensive city, said Briese, and in the past have found the economic opportunity of participating in Moscow-based fairs worth the cost. Recently, however, Leipzig Messe has noticed that exhibitors are economizing and booking smaller presentation set-ups than originally planned. "Right now, the biggest problem is the weak ruble–euro exchange rate," said Briese, noting that Russian clients fear that prices set in euros will increase after they have been converted into rubles. However, this year is still stable enough for exhibition companies, says Irina Voronkova from Messe Frankfurt. The number of participants from Europe is decreasing, but they are being replaced by companies from emerging markets.

Russia - Germany 2015
Russia - Germany 2015
Despite the difficult political climate and economic downturn, German companies remain committed to Russia. Read about the challenges facing them, as well as success stories in this supplement.
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