Bulletins

Greater China – September 15, 2010

Already Better Than the Olympics – A Midpoint Review of the Shanghai World Expo

The Shanghai World Expo 2010 is expected to attract 70 million visitors and generate approximately nine billion dollars worth of income for the city and the Yangtze River Delta. Held between May and October this year, it is expected to generate nearly 3.5 times the revenue of the Beijing 2008 Summer Olympics, which lasted 17 days. What are some of the costs and the benefits to date?.

The Shanghai World Expo already boasts several records.

It achieved a new world record for the number of countries and organizations involved (242).
This is the first time a developing country has hosted the World Expo.
It is expected to host 70 million visitors, nine percent more than the Japan Osaka Expo, which claimed the previous record of 64.2 million visitors.

Better City, Better Life

Like the theme for the Expo; “Better City, Better Life”, the enormous investments poured into Shanghai as a direct result of the World Expo will have a long-lasting positive effect on the city and its people.

Experts estimate that the World Expo helped boost Shanghai’s GDP growth by 2% during the preparation period and will help to boost the city’s GDP by 5% in 2010.

The Shanghai World Expo is also expected to create a ripple effect on businesses throughout China, most directly in the Yangtze River Delta and Beijing. Investment in the Yangtze River Delta is expected to rise by more than 50% as a direct result of the Expo.

According to findings from an online survey by CTR, about 36% of the 503 American and European respondents plan to visit other Yangtze Delta cities, such as Hangzhou (25%), Suzhou (23%), and Nanjing (22%). Also, 31% plan to visit other famous Chinese destinations, with Beijing as the foremost destination of choice.

Besides improved long-term economic and trade cooperation amongst international businesses, cities and countries, a host of local industries have benefited.

Tourism, hospitality, convention and related services.

According to Mr. Wan Jifei, an official of the Shanghai World Expo Organizing Committee, the event planning industry experienced a 900% boost in income.

During the six months of the Shanghai World Expo, it is estimated that tourism will help generate RMB 80 billion ($11.8 billion) in income for Shanghai, out of which RMB 9.11 billion* ($1.3 billion) will be direct revenue from Expo’s tickets, catering and souvenirs.

Retailing

According to the China International Capital Corporation, 70% of the visitors to the Expo in Shanghai come from other parts of China and the world. A typical Expo visitor will stay in Shanghai for three days on average and spend RMB 760 (approximately $112) daily, resulting in a boost in income for Shanghai of nearly RMB 111.7 billion ($16.4 billion). This is equal to 25% of Shanghai’s 2008 total retail sales. (Source: CICC)

Chinese real estate, construction and property development

From city planning and construction to urban safety, the Shanghai World Expo required accelerated infrastructure and other construction development in the city.

In the months leading up to the grand opening of the Expo on May 1 2010, the local government invested $45 billion in local transportation systems, recreational facilities and public utilities, some of which include:

Expansion of the City Metro System from seven lines to 11 lines; five lines connect to the Expo Park and one leads to Pudong International Airport;
High-speed railway linking Shanghai to the lakeside city of Hangzhou and the ancient Chinese capital of Nanjing;
Addition of one new terminal and three new runways at the Pudong International Airport; and
Upgrade of Hongqiao Domestic Airport with the addition of one new terminal and one new runway.

One side effect of all these developments has been a buoyant property market. Some economists are now concerned about the potential dangers of the economy overheating and a property bubble.

Investment services

The Expo will reinforce the status of Shanghai as an international financial center and hub for foreign investment.

Both foreign-owned investment and joint-owned investment in Shanghai increased during the first seven months of 2010. In July, the third month of Expo, foreign-owned investment increased by 58.6%.

Table 1: Percentage change of foreign investment between 2009 and 2010

	Jan	Feb	Mar	Apr	May	Jun	Jul
Amount of direct foreign investment committed	-2.7%	5.2%	20.0%	13.7%	17.6%	22.7%	32.2%
Amount of investment disbursed	5.0%	5.1%	5.5%	4.7%	3.0%	1.8%	0.7%

Source: Shanghai Municipal Statistics Bureau

Technology

There are over 230 high-technology projects related to the Shanghai World Expo that involve alternative energy sources, eco-environments, intelligent technology and information networking. About 1,100 different technologies which qualify for intellectual property rights protection have been widely used in the Shanghai Expo.

Various technologies, such as integrated long-span continuous tension cable membrane structures and Sun Valley natural lighting were utilized to construct the Expo Axis. In order to build the China pavilion, the “Crown of the East”, technologies like three-dimensional synchronized construction and cantilever technology were applied to complete the inverted cone shape of the pavilion.

Furthermore, technology specialists successfully developed and applied an interactive virtual reality simulation environment control and management system for planning and project management during the construction period.

Media

The Expo has drawn 127,400 media and news professionals to Shanghai, 10,000 of whom are from overseas. By the end of July 2010, the Shanghai Expo News Center held over 100 press conferences and group interviews. The International Broadcast Center produced live programs whose total length combined exceed 260 hours. The Official Expo News Team created 45 hours’ worth of news material marketed to domestic and foreign media outlets.

Hosting a World Expo comes at a great cost to any city and government. In spite of the costs, the Shanghai World Expo promises to be a major milestone in China’s modernization and urbanization.

* Based on assumptions:

Ticket revenue will exceed RMB 6 billion ($884 million)
60% of the Expo’s visitors choose to have a meal within the Expo exhibition area and the average price of a meal is RMB 30 ($4.4). The catering income will be around RMB 780 million ($115 million).
90% of the Expo’s visitors buy a beverage within the Expo exhibition area and the average price is RMB 10 ($1.5), the beverage income would reach RMB 390 million ($57.5 million).
30% of visitors purchase a souvenir and the average souvenir is RMB 30 ($4.4), the sales revenue of souvenirs will reach RMB 390 million ($57.5 million).

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