2.6 China's MICE Tourism Development

MICE development in China is very recent, appearing in the last decades of the 20th century. According to CNTA (2000) statistics: in 1998 China only ranked 34th in the number of events but, while China's MICE industry is just starting to grow, its development potential cannot be ignored. As Davidson, Hertrich and Schwandner (2004) mentioned, for a rapidly industrialising country like China, the potential for generating MICE tourism is simply enormous. Wei (2004) mentioned in 2000, that China only held 1.74% of the total 9,433 international conventions hosted around the world and ranked 14th. But in 2014, China hosted over 8,009 events, which occupied a quarter of the total world events (Shen, 2016). CNTA also provided evidence of the increased rate of MICE industry in China with a growth of 20% per year. By 2014 China had more than 2,000 event venues of different sizes, while the number of event enterprises keeps growing. The potential of MICE tourism growth in China is large. According to CNTA (2015), apart from the answer of “others”, foreign visitors rank meetings/business as the second most frequent purpose of their visit to China (see Table 2.2).

This dramatic increase is not simply an accident. The MICE industry has attracted attention from the Chinese government, and in 2001 the Chinese State Council promulgated a policy ‘to actively explore the leisure tourism, MICE tourism, new tourism, and the development of marketable special tourism products to meet the different levels and different consumer interest and requirements'. Not only is there active regulation but also a positive economic environment. Since the ‘Golden Holiday' tourism policy was put in place, ‘holiday tourism' has become China's rapidly growing MICE tourism booster. Many cities and regions seek to host different events during the long public holidays to attract more tourists. In addition, there is an enthusiasm to host MICE in China supported by many cities, like Guangzhou's annual import and export fair, the Shanghai APEC meeting, the 1999 Kunming Expo, the 2008 Beijing Olympics, the 2010 Shanghai World Expo, and the 2016 G20 Hangzhou Summit.

However, compared with Western countries, and even with China's rapid economic development, China's MICE industry still stands at an early stage. According to Wei(2004), in 2003 China held more than 2,500 exhibitions, which brought a revenue of 7 billion RMB. However the average production value per convention was 2.8 million RMB. Meanwhile Germany only held nearly 300 exhibitions in that year but generated an average production value of 10 million euros per exhibition. It is obvious that the Chinese production value is far lower than that of Germany. Compared with European countries like Switzerland, which hosts more than 2,000 international conferences every year with its small population, China is currently underperforming. A fashion city like Paris hosts more than 300 international exhibitions every year and is called by many Chinese MICE insiders‘the capital of conferences' (Wei & Qu, 2007). The US is the world's largest MICE hosting country, with a revenue of over a trillion dollars annually. China with its large number of population combined with its varied attractions should possess competitive advantages. However, even though the total number of events is large and growing in China, these events remain limited in size, status, and reputation. What accounts for these deficiencies?

Although the MICE industry has developed dramatically in China, an academic literature is more notable by its absence than presence. During the review of literature, mainly English and many Chinese databases were examined. It should be noted that there is an obvious gap between Western and Chinese MICE research. As noted by Davidson et al. (2004), there had been far less research undertaken on the MICE market for China. The deficiency is obvious. Xu (2002) also provided a similar opinion that MICE research in China was only at an initial stage and most studies were more focused on the descriptive research. Due to its short time of development, there have been limited empirical studies in Chinese MICE research and most remain at the level of simple description or theories of what might be the best. Without this information, it is difficult to identify market opportunities in the current international event market and hard for event operators to manage the event process. There only exists some anecdotal and piecemeal information to help the Chinese MICE tourism business to shape or measure their products to meet the growing demand in the Chinese MICE market. However, based on an urgent need for practical theories and guides, many Chinese tourism researchers like Bao and Dai (2003) have started to pay some attention to the MICE industry. Dai (2005) analysed the 1999 Kunming Expo and provided applicable MICE theories for Chinese MICE market. Liu (2004) and Wang (2004) discussed MICE business sectors like planning, situation,and policies; and Liu (2004) focused on the host destination image. Some researchers have analysed Chinese trade fairs and their state of development (Jin et al., 2010a; Kay, 2005; Yang, 2009), spatial distribution (Jin et al., 2010b; Ju et al., 2006a, 2006b), and the driving forces behind the exhibition industry (Jin et al., 2012). Fu and Zheng (2014) talked about how to better cooperate between MICE and tourism and to build MICE brand is a key factor to enhance the MICE industry development. Wang and Li (2014) also emphasized the important factor to increase regional competitive advantages. Wang and Wang (2015) noted new technology involvement is a trend in the MICE industry, like Internet events through network technology will show the content in the form of a combination of the virtual and the real on the Internet. It can also build a web experience and real-time interaction with other auxiliary functions of exhibition platforms. Although a latecomer, Chinese MICE researchers have undergone an unprecedented catch-up process in terms of MICE industrialisation, technological upgrading, and educational learning. So it can be argued that Chinese MICE research is currently transitioning from an awareness stage to a fast developing stage in research.

Not only is there a lack of academic research in the MICE area, but some limitations have held back its development. During the process of reviewing Chinese literature, it became possible to discern a number of factors that inhibit the MICE development.

Economic Inequalities

China's economic development is obvious to all but this fast development also brings some problems. According to Qian and Wong (2000), China's current huge income gap between the rich and the poor has four divides: first, the income gap between urban and rural areas is widening and the rate of increase in farm incomes has declined and fallen behind urban incomes; second, urban residents in different sectors are experiencing widening gaps especially when laid-off workers' income is low; third, industry income gaps have emerged with some monopoly industries possessing high-income advantage; fourth, a regional income gap with the eastern region being the main beneficiary.

The economic inequality is the source of differences of opinion. Jackson (2006) said significant inequalities in income distribution between inland and coastal regions in China are obvious. Since China started its economic reformation, a dual structure was chosen by the Chinese government, ‘let some people and some regions get rich first and gradually achieve common prosperity' was the core of economic policies and the majority of industries were concentrated in the eastern rather than the western region. The reason for this was based on the redistribution of resources between the urban and rural areas; a large number of rural resources were being redirected to the cities to support the industrialisation process. Since the late 1970s and especially the 1980s, the Chinese government dismantled the previous regional economic structure to preferentially encourage and support the development of the eastern coastal zone. Favourable policies were adopted, for example, the opening-up policy, monetary policy, fiscal policy, and resources allocation policy, in terms of support, enabled the eastern region to achieve industrial and business clustering.

Cui (2006) also emphasized that not only has the GDP and financial revenue gap between the eastern and western regions increased, but the same is also true for many other factors such as foreign investment, credit, and bank loans. This imbalance has already aroused attention from many sides. Many Chinese economists have voiced similar opinions about the increasing income gap among residents and different economic development levels between urban and rural areas that exist in China. According to several economic data from Li and Luo (2007), the Gini ratio between urban and rural area was 0.11:0.13 before the economy reformation. By 1994 this ratio was up to 0.36:0.41 after the commencement of the reform in the late 1970s, which was nearly equivalent to a medium developed country. However, the Chinese Academy of Social Sciences (2008) issued data that showed the income gap between urban and rural residents was as high as 3.22:1.

Due to the economic inequalities, many cities in the middle and western areas find it difficult to develop a MICE industry, especially for big international MICE because of a lack of financial support. However, there still remains enthusiasm to host events among different cities, even in small places. In recent years, several international or national trade fairs have failed to take place in such cities, for example in 2004, a sewing equipment fair in Wuxi even failed in the organisational stage. Due to the intense competition among the event tourism market in China, cities are chasing organisations to hold more events, which have caused more financial and social problems. The following are some problems of such events.

Low Recognition

Lack of economic support is not the only reason that has caused low MICE development in China. A lack of recognition is another important reason. China is a fast-developing country, and although its development has attracted worldwide attention, such attraction is mainly focused on a limited number of major cities. Foreigners only recognise cities like Beijing, Shanghai, Guangzhou, etc. The remaining medium and small cities have little reputation from a world view even though they have amazing resources. These cities find it hard to compete with other famous MICE hosting cities, because most are not metropolises with many international visitors. In fact, a large number of MICE in China mainly attract domestic visitors. International MICE companies will not target their events on this limited domestic visitor base. According to Li (2003), although there were more than 4,000 MICE hosted every year in China, only a few provided a good benefit, possessed a brand and image, and few were recognised by UFI.

Many medium and small cities not only have little world recognition but also little fame at the national level. China is a big country, with dozens of provincial-level big cities and thousands of smaller cities. These cities with different geographical features, economic and political status have different reputations, especially for the cities in the northwest and southwest of China, which are mainly recognised as being at a low state of development and are little known even at the national level.

Lack of Professional Management

Along with dramatic MICE development, one of the main issues faced by the Chinese MICE industry is a lack of professional staff because many Chinese MICE experiences and products are being presented to tourism in a less than professional manner. According to International Business Daily(2005),although there were many universities and colleges providing event studies in China, only 20% of these graduates had become involved in the event business. What a big loss of the human resources! Event business is a project that needs good management. It is important to have professional staff that understand the event market inside and out, and can give correct and timely leadership during event processes. Being provided or managed by non-MICE industrial people, services have been commoditised for tourists. In MICE developed countries 71.8% of employees had first degree and above educational levels, and more than 23.5% had college education.The formal exhibition manager qualification was college level plus about ten years' work experience. In Chinese MICE industry, there still had not formed a professional system. Zhejiang Asia-Pacific Exhibition Industry Research and Development Centre (2007) reported only 1% of MICE employees had real professional training. There is a scarcity of professional Chinese MICE tourism talents. There is an obvious conflict between MICE development demand and employee supply. The Hong Kong Trade Development Council (HKTDC, 2008) provided a ratio between the numbers of professionals' vacancies and job seekers: Shanghai 10:1, Guangzhou 8:1, Beijing 8:1, which showed a very urgent shortage of professionally qualified employees. The MICE professional education and training has lagged behind the development of the industry.

Due to industry competition and the lack of professional management in the Chinese event market, many cities seek to maximize event benefits by hosting as many events as they can. This trend has caused abnormal competition in the event market. As Wang and Qi (2006) wrote, MICE tourism in China was chaotic and immature, which caused the whole exhibition industry to be less competitive. Wu (2005) also mentioned the same opinion that the lack of related laws and regulations made the Chinese MICE tourism chaotic. Too many similar events have been hosted in neighbouring cities or hosted again in the same place at different times with limited attendance. As Wei and Qu (2007) noted, in Chinese MICE industry we could see a multi-level, multi-channel and confusing situation resulting in excessive exhibitions, and even a ‘bubble' phenomenon. Many tourists and delegates do not have high regard for these repeated events and many businesses are intolerant of the repetitive invitations that ask them to attend events and pay registration fees.

Abnormal competition also causes irregular price setting. Zou (2005) noted irregular price setting indicates the same theme and same service, but with different tariffs. Even some national events' prices are set higher than those of international events, but the service and quality levels are much lower. It is imperative to have some formal regulations provided by the government.

There is a proverb of ‘more haste, less speed', which means excessively fast development brings not only considerable benefits, but also many mistakes that undermine any gains made.

Excessive Government Involvement

In China, event tourism as an economic stimulant is always treated as a government goal. So in most medium and small cities, events are normally hosted by local governments, and private enterprises only play a coordinating function. As Wei (2007) said, in China most conventions and exhibitions were sponsored and organised by local governments, enterprises or institutions that operated independently without coordination. Thus, the city government controls the whole process of event programming from planning and organising to final practice, which often involves too many administrative activities in the event process. However, a government-controlled event business has its own advantages including providing higher media promotion, this also can be linked with several weaknesses such as limited enterprise initiative. There are deficiencies that limit professional event companies and the development of professional event management. Government intervention always results in a non-market oriented MICE industry, which focuses on the construction of venues rather than management and service. Kim and Sun (2008) stated the growth of MICE industry in the Asian region is evident from the number of events hosted, the construction of large-scale convention and exhibition centres, and the substantial support provided by governments. In China, to host an event is not a simple process but always requires complex approval procedures. China's cautious approval of MICE is always based on its national security concerns and related aspects, but in fact, most current international exhibitions are scientific, commercial, and leisure and have no such risks. In addition, because MICE is a high profit industry, too much government intervention can cause some other problems much more easily. One might conclude that the event business as a commercial process is better led by business operators than municipal government.

Western Style Boom

Given the potentially prosperous event business, many cities are eager for quick success, which has caused a Western style boom. In order to emulate Western centres, many tourism facilities such as hotel conference rooms, restaurants, parks, and business buildings have been built in the Western style, which has led to a loss of unique Asian features. A special feature in Zhengzhou Evening(2006)criticised this situation arguing that too much city construction is chasing after a ‘Western design' and is willing to pay high prices for such construction in urban planning and project design. In this report, many national experts argued that many cities' architectures were originally of Chinese cultural design but now they try to ‘wear' unsuitable ‘Western suits'. This situation has caused not only a loss of cultural attraction but also wasteful expenditure. According to the report, there were more than 20 million RMB of public investment in projects in Beijing; foreign designers asked for 11% of the total cost of projects where local designers only required 2%. The argument is that China is an old country, where different cities may have unique history and attractions, and blindly worshiping foreign things will make the cities lose the treasure of unique attractions.

MICE Development Symbol: Convention Venue Building Boom

The most representative and substantive witness of the dramatic MICE tourism development is the convention venue building boom. Oppermann (1996a) noted that many destinations around the world have invested in the construction of convention centres with the dual purposes of improving their image while at the same time generating economic benefits for the community. Convention centres not only host large conventions, but attract delegates to the local vicinity where they spend on accommodation, transportation, food establishments, and also leisure pursuits (Weber & Ladkin, 2003).

According to Weber and Ladkin (2003), in the UK the presence of plentiful convention centres is one of the important factors that assisted the UK to obtain a leading place in the MICE industry. Weber and Ladkin (2003) said this growth of building convention centres was fuelled by the UK government, which aimed to promote economic regeneration in many deprived cities. The convention centres were built in a number of major towns from the early 1980s and had a continued boom into the 1990s. For example, as Rogers (1998) mentioned, the International Convention Centre in Birmingham in 1991, the Cardiff International Arena in 1993, the Edinburgh International Conference Centre in 1995, the Clyde Auditorium at the Scottish Exhibition and Conference Centre in Glasgow in 1997, and the Millennium Conference Centre in London in 1997 provide examples of government-supported initiatives. A similar convention centre building boom also existed in the US. Kim, Morrison and Mills (2003) described the largest convention centres in major cities including Denver's Colorado Convention Center in 1990, Philadelphia's Pennsylvania Convention Center in 1993, and the Atlantic City Convention Center in 1997, and there were also many smaller convention centres that opened in second-tier cities. As Fenich (1995) and Ghitelman (1995) indicated, in the 1990s convention centre expansion replaced other new construction as the main focus of attention in major city development. Carlsen (1999) also argued that the convention market drove a proliferation of meeting facilities in star hotels and a diversification in venues. A similar situation also arose in Asia, according to ICCA (2004), the cities of Singapore, Seoul, Bangkok, Kuala Lumpur, and Hong Kong were the key regional centres of international convention activity in 2003, and each of these destinations had large-scale facilities like Suntec and SingEx Venues in Singapore, COEX in Seoul, IMPACT and Queen Sirikit National Convention Center in Bangkok, and the Hong Kong Convention and Exhibition Centre in Hong Kong.

In China the exhibition venue building boom has also been ‘hot'. The statistics from CNTA showed that by 2002, more than 200 convention and exhibition centres had been built in China in order to attract big events. The 2008 Beijing Olympics were hosted in seven different cities, which also brought more demand for suitable facilities. According to Dai (2002), around 1995 there were less than 800,000 square metres of exhibition venue area in China, but as of 2001 the indoor exhibition hall area increased to 5,160,000 square metres. He also listed many examples then under construction or were already built, including: Shanghai New International Expo Centre, Hangzhou International Conference Center, Beijing's new China International Exhibition Center, and Wuhan International Convention & Exhibition Center with a total investment of 930 million RMB, etc.

Many researchers justify the emergence of convention centres as a promoter for MICE tourism development based on economic promotion and benefits. Law (1993) said city event facilities have been built as ‘symbols of civic virility'. Lawson (2000) mentioned that new convention centres have often been built due to a government's policy to promote economic regeneration, particularly in deprived areas. Dwyer, Forsyth and Spurr (2005) noted many governments are often prepared to offer generous funding incentives to attract events and to allocate large expenditure to upgrade the facilities needed for the events.

It is argued that the boom in building event centre facilities may have been caused by ‘over enthusiastic' event market followers. Commentators such as Law (1993) have worried that there is a considerable over provision of such facilities. Convention centre construction is a large-input project dependent on a city's financial capacity, and Richards and Wilson (2004) argued that the cost of building is perhaps one of the more important aspects of interurban competition in recent years. However, after the short-term positive multiplier effects of centre construction, frequent attendance and centre utilisation cannot be guaranteed, thereby creating a potential waste of city resources. Abbey and Link (1994) maintained that, in contrast to permanent tourist attractions, events are temporary, narrowly focused and short-lived. Convention centre occupancy is also not only based on the event timing but also size of the centres. Some centres are more suitable for large events like Olympics, FIFA World Cups, etc. But, for the main part, many existing events are of medium and small sizes that do not need to occupy big convention centres, meanwhile the operating and maintenance costs of such convention centres are high. Safavi (1971), in his early study, said many facilities experienced losses as the building must be let at a low rent in order to attract business because of the competitive nature of the industry, and/or the centres are not used for enough days in a year for the overheads to be covered. That is the reason why Spickard (1996) and Wirtz (2001) suggested in their research that convention centres rarely cover their operating costs and never cover debt service. Fenich (1998) surmised that it is the latter possibility that confirms concerns that convention centres often operate at a loss, as previous research has clearly indicated.

Event Theme Park Building Boom

Due to the varied and mixed event purposes, not only event centres but also many event theme parks have emerged specifically for given cultural and leisure events. For example Kunming Expo Garden was built primarily for the 1999 Kunming Expo, Shenyang World Park was built for the 2006 Shenyang World Horticulture Exposition, and Hangzhou World Leisure Expo Park was also built for the 2006 Hangzhou World Leisure Expo. Each of the theme parks covers a large space after a long period of construction. The event theme park building boom is also not incidental but rose from a search for varied event themes amid strong competition. It was thought that medium- and large-size events need to successfully develop across various platforms, and through cooperation with a park, they can create a new platform for more attractions. Also due to the intense competition, many event planners are struggling to win some advantages over other strong competitors, and thus developing larger and more multi-function parks is one of the competitive strategies employed. For example, Paris Nord Villepinte has decided to extend its exhibition grounds and Kunming Expo Garden is also designing an extension.

Yet amid this building boom there is angst about these event theme parks' future after an initial, specific event. Traditional theme parks are always built for a continuing purpose, e.g., Disney World, sports venues for horse and dog races, and some leisure parks, etc. A specific event theme park is constructed for a specific event, so that after the event or convention is finished the park becomes less attractive to visitors and the number of attendees will fall.The Jiangsu branch of Xinhua News Agency (2007) reported that one of Hangzhou's most famous theme parks, ‘Future World', was facing such a challenge and would be diverted to real estate projects. It is not a unique case and event theme parks tend to have a shorter life cycle when compared with other traditional parks. Richtmyer (2005) noted that even the largest and historically most successful centres need to slash rental rates and even give space away to compete. Thus a very important question for planners to think about is how to survive and compete after the event climaxes.

There is always a conflict behind any thriving phenomenon, for many large cities desire a representative event centre or event park that not only improves a city's reputation but becomes an integral means by which to compete with other large cities in the MICE market. However, it is also true that constructing event facilities needs significant financial assets, which means the city needs a strong financial background. City tourism organisers need to understand that a city's financial and environmental carrying capacity is important. It is regrettable that there has been relatively limited research on convention centres (Fenich, 1998), and this limits the examples that organisers can use for reference. In short, the convention centre building wave is a fuel that can incite higher MICE ‘flames', or a latent risk that will ‘burn' the sponsoring city.