Observation – in the era of Internet, why does Global Sources Electronics offline show remains welcomed?
Stepping out from Terminal One of the Hong Kong International Airport, it just takes only a two-minute ride on Airport Express to get to AsiaWorld-Expo.
In early April, Global Sources from Hong Kong hosted Consumer Electronics and Mobile Electronics shows in a row, which featured more than 6,600 booths of emerging technologies and on-demand electronics products from exhibitors of 17 countries and regions.
With e-commerce being so popular currently, why is the offline exhibition still so warmly welcomed by buyers? What can exhibitors and visitors from all over the world get at the shows?
1. Global Sources shows’ differentiated positioning and Hong Kong’s geographical advantage
I flew to Hong Kong from Beijing on April 17 and joined the show over the next few days, attended the opening ceremony of Mobile Electronics show and also interviewed the show organizer as well as many suppliers and buyers, in the hope of getting an answer for my question.
At the crowded show floor, I found lots of electronics exhibitors from mainland places such as Shenzhen, Dongguan, Hangzhou and many more. They showcased all sorts of “Made-in-China” products including smartphones, tablets, speakers, headphones, wireless chargers, smart translation devices, smart watches as well as VR/AR.
According to the show organizer, 90 percent of the booths are from mainland exhibitors amongst the 6,600 booths. Global Sources is regarded as the springboard for mainland enterprises to tap into overseas markets. Many of them have been joining the show for years.
An owner of a Shenzhen smart translation device company said that he has exhibited at Global Sources Electronics show for three consecutive years. “As our old clients will come to the show, we also join to meet them every year. If you miss one time, people may wonder whether or not you are doing well. That’s why we must come for sure,” he said.
Tommy Wong, President of Global Sources Electronics Group said in an interview that Global Sources Electronics show is a B2B platform and provides a meeting point for export enterprises from the Mainland and overseas electronics distributors. It also serves as a platform for overseas brands to look for OEM factories. It is something different from those consumer-facing electronics expos
That’s true as tremendous China enterprises at the shows mainly are doing export business. One Shenzhen enterprise called Leagoo is exporting mobile phones. This brand is not that well-known in local markets, but it is already a big exporter, mainly selling to Southeast Asia and Europe. An iPhone lookalike full-screen smart phone only costs US$100-200. With a steadfast determination about its business, the company is expanding its product range to computers, watches, and smart speakers. “We will do whatever Xiaomi does,” said its staff.
“Our positioning is different from other big international fairs,” said Wong. CES in the U.S. is mainly for product launches by giant enterprises. Every year, Microsoft, Apple and Intel will do their launches there. Sony from Japan, Hisense and TCL from China will also go there for launching their new pieces for brand building purpose. Some U.S. distributors will also head there to source for the next year after Christmas.
The Mobile World Congress held in Barcelona, is a platform where mobile communication operators in the Pan-European area share specifications, standards and products. Big enterprises in the U.S. and China will take the opportunity to show off their technological capabilities and new products.
The positioning of Global Sources Electronics show held in Hong Kong is closely related to the city’s regional characteristics. Wong said Hong Kong was an international trade hub since its opening up 200 years ago. Hong Kong has a well-developed maritime transport, highly efficient jurisdiction and commerce practice, making it a nice place for exchange, trade and re-export.
Global Sources Electronics show is meant to be a platform connecting buyers and suppliers. Hosted every spring and fall, it is like a fashion show convenient for buyers to source. “Across Asia, Hong Kong is the most convenient trading hub. Japan and Korea focus on local markets. Taiwan mainly does OEM. Australia is for leisure and travel. The Philippines works on small volume export. China is for volume agriculture. Brunei engages in oil. Thailand is also agriculture. Malaysia used to do a lot of electronics products, which later shifted to the Mainland. Indonesia mainly manufactures electronics. In terms of Asian region, Hong Kong’s positioning is for trade service.”
2. Fearless of Internet challenges, striving to bring the best exhibition
Global Sources is a Hong Kong company with a half decade history. Started with trade magazines of industry verticals, alongside the rise of Asian export after World War II, the company is deepening its business from media to export trade services.
In the past 50 years, the Asian trade landscape has undergone tremendous changes while technology has been causing an impact on how trade develops. Digital revolution, China’s joining the WTO, and the coming of Internet era are all influencing trade environment and business pattern.
Global Sources never ceases to innovate amid adjustments. In its 40th anniversary history book, I read the following: “if it changes, it works; if it works, it lasts”. It tells of the company’s pursuit for change through innovation.
What made drew my curiosity is the emergence of eCommerce alongside online retail, which is becoming the norm for people to trade. Amazon from the U.S., Taobao, Tmall, JD.com from China are all impacting how people doing trade on electronics goods. Jack Ma planned for B2B business years ago in order to promote Made in China to overseas markets. How does Global Sources confront these challenges?
I asked Wong the same question. He replied that he is often asked this question. “First, Global Sources has its own website while each magazine has a corresponding website. These websites are undergoing constant updates to meet market changes. Secondly, online transactions are a good fit for running a B2C model. Buyers find it easy to place small volume orders, but to exporters, distributors who place orders are corporate clients with huge demand. It usually takes two quarters from order to delivery of a final product. If buy and sell counterparts cannot meet face-to-face to build trust, distributors won’t place orders easily,” said Wong.
Wong cited that after distributors built a connection with manufacturers at the show, they will pay a visit to factories to verify if they possess the production capability. Different from B2C business, purely online transactions are somehow difficult to realize in B2B business.
I also found something interesting at the shows. When I was talking to exhibitors, they would immediately turn to those foreigners who look like buyers approaching the booth, and put me (media) aside.
Wong explained that as Global Sources exhibitions grew in scale, they won the trust from both suppliers and buyers. It is also important to bring about the best show. With concentration, the company can then help both sides realize business.
Global Sources reserved a large amount of daily roundtrip Airport Express tickets, and gave out tickets to those who visit trade shows at densely populated areas such as Airport and Central. On the opening day of the Mobile Electronics show (April 18), you will find a long queue of show visitors for tickets at Central MTR station.
Show organizer also planned F&B areas for visitors. Across the show floor are areas for visitors to have meals, take a drink, and get some rest. VIP Suites are set up for buyers who keep coming to our shows. They are served tea, working computers, and also a separate meeting room for suppliers and buyers to negotiate.
During the show, there are conferences covering different topics, such as VR/AR/MR Ecosystem Summit, and product launches. Top industry experts share their views on market trends, industry development and sourcing tips to help buyers make right judgement and decision.
At Gifts and Home show, there was the Cool Design Awards Presentation Ceremony. Ranking and recognizing winning products that helped buyers locate potential suppliers, and eliminating mistakes and inaccurate information.
The Sample Order Showcase was set up at the show where products open for sample order were displayed. Buyers could try out and test the samples before placing orders, and their staff assists buyers with online ordering.
3. As a springboard for China’s smart manufacturing
Global Sources has become a springboard to overseas markets for many China manufacturing SMEs. Amongst 6,600 booths, 90 percent are SMEs from the mainland China who are engaged in export trade.
There was a Shenzhen enterprise that manufactures mobile phones with functions similar to Nokia at the show. Where do these products sell? I asked the boss. He said they are usually sold to Africa and Europe and such phones costs around 100 yuan.
There are also some companies doing smartphones, smart watches, headphones and wireless chargers only for export. Considering the fierce domestic competition and consumption upgrade taking place in China, local people don’t turn up for these items, but these products still have huge market potential in some Southeast Asian countries and Africa.
However, these enterprises generally do not have their own brands and core technology. A smart translation device company told me his device adopted software produced by big enterprises while his own company works on assembling tasks. They only earn a gross profit of 5 percent at most. Deducting all kinds of utility expenses, there is very little to earn. Looking ahead, they want to build their own brands towards the high-end market.
Wong said changes are evolving in three aspects:
First, many SMEs in China believed in “good wine needs no bush” and worked solely on products without any concern with regard to sales and marketing. However, they are allocating more focus on sales and marketing now in the search for unique selling points. You can clearly see they are dedicating significant effort toward set-up, booth and other details.
Second, China manufacturers have big guts and are very eager to invest in their future.
Third is the growing concern with regard to brands. The Made in China 2025 Strategy was well reflected in the intellectualization of China-manufactured products.
I also observed that almost all the exhibitor staff can speak fluent foreign languages including English. This is reflective that there are more talents engaging in overseas trade and export and companies in China are emphasizing stronger focus on external communication.
Due to the recent Sino-US trade war, big enterprises like ZTE’s chips have been banned by the U.S., causing chaos across the country. This incident prompted both the country and enterprises to speed up developments in the chip industry and also the R&D of core technology.
Massive numbers of manufacturing SMEs in Shenzhen and Dongguan are also facing challenges around industrial upgrade. Core technologies subjected by other counterparts in the market and without their own brands, they are very much fragile and can only manage to get very marginal profit. There is still a long way for Made in China to upgrade.
Looking down the road ahead, Global Sources has its own plan. First, it looks to move beyond Hong Kong. Considering the Great Bay Area as a whole, more planning in the mainland continent is necessary. Second, it requires more effort be devoted toward smart living and IoT products. Third, the company hopes to ride on the Belt and Road Initiative to expand their footprint to overseas markets. Finally, they are targeting more innovations and planning as supported by its mother company Blackstone.
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