Lucrative time of the year but some fear the growing setor is bubble that is about to burst

BEIJING - The year's end is always a busy season for various conferences, meetings and parties by businesses and institutions, and this year will be no exception.

As major venues for all business events, various hotels in China are keen to attract the big buyers, most of whom are from social and government organizations, according to the Alliance of China Conference Hotels.

China holds tens of millions of conferences every year, generating a business of close to 1 trillion yuan ($157 billion). And the industry is still growing at a pace of 20 percent a year, said the alliance in its latest blue book of conference economy in China.

The report, as the first overview of the conferences industry in China, looked into 8,270 conferences held in more than 2,000 hotels in 39 major cities.

Conferences and exhibitions have become new economic growth engines for local economies, the report said. But experts see uncertainties in the boom that is mainly supported by public spending.

Corporate meetings account for 49.9 percent of the total in China at present. The remaining majority was made up by various activities of different levels of government organizations and public institutions, according to the blue book.

The country's 1.26 million public institutions in the country have formed a unique conference market. Meanwhile, working conferences of governments at all levels also contribute a lot.

They prop up more than one third of the total amount of conferences in China, said an official with the alliance.

It is an understandable phenomenon because the public institutions, with sufficient funds from public expenditure, actually complete most of their work via conferences, whereas the clubs, most of which adopt market principles, have to be cautious about their spending, the report said.

Meanwhile, conferences with themes related to the humanities make up a dominating proportion of more than 65 percent, twice as much as that of physical sciences. The structure is quite the reverse overseas, where only one third are humanities conferences.

However, with the advancement of reforms of public institutions, it is likely that element will decline significantly over the next few years, the blue book added.

"Conferences have become the new engine for regional economic growth, and much importance is attached to them by local governments," said Xu Jingsheng, secretary-general of China Tourist Hotels Association.

However, Xu pointed out local governments need to put more effort into resolving the low entry, vague definition and disconnection with industry of some conferences.

Nearly half of the conferences have fewer than 100 participants and only 10 percent have more than 500, the report said. By comparison, the average level of conference attendance by more than 500 people was 28.3 percent globally.

Although many Chinese cities tend to crown themselves "capital for international conferences", only six of them, Beijing, Shanghai, Chengdu, Nanjing, Hangzhou and Dalian, are among the top 232 host cities for international conferences, the report said, citing data from the International Congress and Convention Association (ICCA).

The boom in conference centers was much like the building frenzy of stadiums a few years ago, Xu said. "Despite the astonishing scale of the architecture, most of the buildings are actually poorly operated because of low availability," he said.

"Conference business as a modern service sector, although it may not be profitable itself, could dramatically fuel regional economic growth," Ma Hongman, a commentator with China Business News, said in an online commentary.

An example is Davos, a once unknown Swiss town which is now a globally famous conference center because it hosted the 1971 World Economic Forum. The conference facilities in Davos are now occupied 230 days a year by various conferences, bringing in more than 10 percent of the town's tourist income.

But in most parts of China, conferences and exhibitions become a mere formality or vanity projects of local governments, Ma said.

"The establishment of many conference and exhibition buildings was designed to encourage property development and to raise rents in surrounding areas. But they hardly attract any real exhibition projects," he said.

Faced with facilities that are empty for long periods of time, some local governments developed an "ingenious" idea to launch or undertake some "major conferences" proactively, which gave birth to many government-led conferences with little connection to the real demands of the market, Ma said.

"A lot of such conferences never achieve anything substantial but are instead another feast consuming public funds," he said.

"If there is no pre-investment planning in line with market rules, a lack of professionals to support its mid-term implementation and the local market is not attractive enough, the projects are often doomed to end in failure," Ma said.

"In view of this, the trillion-dollar conference business is more of a warning sign, and we must stay wary for any possible burst of the bubble," he said.

China Daily

(China Daily 12/06/2011 page14)