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Following is a question by the Hon Ma Fung-kwok and a reply by the Acting Secretary for Trade & Industry, Miss Yvonne Choi, in the Legislative Council today (Wednesday) :
Question:
Regarding the exhibition services of the Hong Kong Trade Development Council ("HKTDC"), will the Government inform this Council whether:
(a) it has any information on the HKTDC's income from providing exhibition services (including venue rentals and income generated from the construction of exhibition stands etc) in each of the past three years, as well as the HKTDC's market share in Hong Kong's exhibition services industry last year, in terms of exhibition area used and income in respect of exhibition services respectively;
(b) it has assessed if the HKTDC's recent plan to construct the Exhibition Services and Logistics Centre in Tseung Kwan O and to expand the scope of exhibition services projects undertaken by its Exhibition Services Department ("ESD") has exceeded the purview of the HKTDC; whether it has assessed if there are a conflict in role and contravention of the principle of fair competition for the HKTDC, as a public trade promotion organisation, to provide such services; and
(c) it knows if the HKTDC's ESD will undertake relevant projects for exhibitions not organised by the HKTDC; if the HKTDC's ESD will undertake such projects, whether it has assessed the impact on other exhibition services companies, and if the HKTDC will become Hong Kong's largest exhibition services company as a result of this; whether it has assessed, with the continued development of such business, if HKTDC will become a business conglomerate competing with commercial enterprises?
Reply:
Madam President,
(a) According to the information furnished by the Hong Kong Trade Development Council ("HKTDC"), the total income (including participation fees and income generated from the construction of exhibition stands) it received from exhibitions held in 1996, 1997 and 1998 amounted to $285 million, $333 million and $444 million respectively.
Last year, exhibitions held in the Hong Kong Convention and Exhibition Centre (HKCEC) took up 877 000 square metres in total. Of this, 38 per cent (or 330 000 square metres) was rented by HKTDC for launching its own exhibitions. It should be noted that the above figures cover only the exhibitions held in HKCEC. If exhibitions held in other venues are to be included, the percentage will be lower than 38 per cent.
As neither the Government nor HKTDC has statistics on the total revenue of the exhibition industry in Hong Kong, we are therefore unable to indicate HKTDC's market share in terms of the total income generated from exhibition services.
(b) It is stipulated in the Hong Kong Trade Development Council Ordinance (Cap 1114) that the functions of HKTDC are to promote, assist and develop Hong Kong's overseas trade, with particular reference to exports. By virtue of the powers stipulated in the Ordinance, HKTDC should be allowed to choose the most practical and cost-effective means to achieve the above-mentioned aims provided that such means are reasonable and comply with the principle of fair competition.
Organising exhibitions is a very common and popular way of promoting trade in the international arena. The official and quasi-official trade promotion organisations in many places also organise exhibitions. In the case of Hong Kong, local exhibitions provide a valuable channel for our manufacturers and traders, most of whom are small and medium enterprises with little resources for launching promotion programmes overseas, to promote their products.
HKTDC was the first to organise exhibitions in the 1970s. Subsequently, as HKTDC planned to organise larger exhibitions in view that HKCEC, to be completed in 1988, could provide a larger exhibitions venue. To ensure its efficiency of organising large exhibitions and the quality of these exhibitions, HKTDC set up in 1988 the Exhibition Services (ES) responsible for contracting out exhibition works in order to step up the monitoring of the quality of such works. Over the years, ES has been providing services mainly for the exhibitions organised by HKTDC, and has contracted out nearly all exhibition works to private companies. HKTDC considers that ES has played a positive role in helping it develop exhibition services, particularly in enhancing the quality of its exhibitions. In the past decade, the number of exhibitions organised by HKTDC has increased threefold. In the recent years, HKTDC has organised on average 21 exhibitions annually. Most of these exhibitions have been well received by local and foreign businessmen, and have achieved remarkable success.
Since the completion of the HKCEC Extension in 1997, exhibitions organised by HKTDC are expanding in scale. On the other hand, exhibitors have higher requirements of the exhibitions. HKTDC considers it necessary to upgrade the services provided by its ES in order to enhance HKTDC's efficiency of organising exhibitions and the quality of its exhibitions, so as to enhance the effectiveness in trade promotion. Therefore, in 1997, HKTDC decided to construct a new Logistics Centre in Tseung Kwan O with a view to replacing the existing centre in Yuen Long, which has been in use for ten years. HKTDC has advised that even with the completion of the new Logistics Centre in December this year, ES will not expand the scope of its service and will continue to provide services mainly for exhibitions organised by HKTDC.
I wish to point out that HKTDC expects that the exhibition industry will still have potential for growth in the near future, and has set the promotion of Hong Kong as an exhibition centre as one of the themes of its services promotion activities. Upon completion of the new Logistics Centre, HKTDC will consider renting the facilities in the new Centre to private exhibition services companies to help these companies enhance their services.
HKTDC organises exhibitions with regard to the promotion of trade. Its ES has been providing services mainly for exhibitions organised by HKTDC before the construction of the new Logistics Centre, and will continue to do so after the completion of the new Centre. We therefore consider that the establishment of ES by HKTDC to handle the contracting out of exhibition works will not give rise to any conflict with HKTDC's statutory function of trade promotion.
According to the Statement on Competition Policy promulgated by the Government, in determining whether HKTDC has contravened the principle of fair competition in providing exhibition services, we should consider whether HKTDC or its ES has been involved in practices which are restrictive, detrimental to economic efficiency or free trade, and against the overall interest of Hong Kong.
As ES of HKTDC has been engaged primarily in providing services for exhibitions organised by HKTDC, the market accessibility and contestability of other exhibition services companies have not been restricted. Take 1998 as an example, the total income of ES for the year was $78 million, whilst according to HKTDC's estimate, the contract value of projects undertaken for exhibitions held in HKCEC in that year amounted to about $500 million. In other words, the market share of ES was about 16 per cent. In the past decade, the number of exhibition services companies in Hong Kong has increased tenfold, from ten plus in 1988 to 140 last year. This reflects that there is still room for competition in the market for newcomers to explore. Moreover, ES has contracted out the great majority of the exhibition works to private companies. We believe that HKTDC has not violated our competition policy in establishing ES.
(c) As mentioned earlier, ES of HKTDC provides services mainly for exhibitions organised by HKTDC. Last year, for instance, 96.4 per cent of ES's total income was generated from exhibitions organised by HKTDC. In the past, ES undertook projects for exhibitions not organised by HKTDC only at the request of the exhibition organisers or exhibitors. Last year, the total value of the exhibition works undertaken by ES for exhibitions not organised by HKTDC was $2.8 million, representing only 0.5 per cent of the total value of the exhibition works in respect of exhibitions held in HKCEC last year. As the sum amounted to only a tiny market share, we believe that other exhibition services companies have not been affected adversely. Nevertheless, HKTDC has advised that, in future, under normal circumstances ES will not undertake any exhibition works which are unrelated to HKTDC.
End/Wednesday, May 19, 1999
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