Profile of Business Media China August 2007
Asian Business Media Tracker
Profile of Business Media China
Asian Business Media Tracker COMPANY BACKGROUND 2
COMPANY HISTORY – KEY MILESTONES 4 o Weekly Newsletter RECENT DEVELOPMENTS IN STRATEGY 5 o Industry Reports KEY PRODUCTS AND MARKETS 6
Update on M+A MAJOR COMPETITORS 10 activities FINANCIAL DATA (AS OF 31 JULY 2007) 11 Media regulations in China FUTURE DEVELOPMENTS 13 India round-up Japan round-up SENIOR MANAGEMENT 14 Development in CONTACT INFORMATION 14 online business
o Profiilles of Majjor B2B FIGURE 1: STOCK PRICE MOVEMENT IN THE PAST 12 MONTHS 11 Mediia Companiies iin Asia Paul Woodward Principal o Tracking of listed B2B [email protected] media companies in Asia Mark Cochrane o Key Exhibition Venues Consultant in Asia [email protected]
Directory of the Top o Kerry Wong 25 Exhibition Research Assistant Organisers in Asia [email protected]
o List of the Top 100 Trade Fairs in Asia
o B2B Online Media Report
o B2B Publishing Report
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Profile of Business Media China August 2007
Company background1
Based in Stuttgart, Germany, Business Media China (BMC) organises exhibitions, publishes B2B trade magazines and manages an outdoor advertising network in China. The company was founded by the key shareholder, Mesago Holding GmbH in July 2004. Mesago is owned by Business Media China founder, Klaus M. Hilligart.
Since 2004, the company has expanded largely through acquisitions, but also through license agreements and developing its own exhibitions and conferences. Revenues in 2006 were EUR 7.5 million compared with EUR 2.1 million in 2005. The company states that 24% of revenues are generated from the exhibition and publishing business and 76% of revenues are from its outdoor advertising network at airports and railway stations across China. BMC has set aggressive revenue targets for 2007, stating that it expects to post revenues of EUR 25-30 million. The company has 230 employees of whom approximately 180 are based in offices across China.
The company has been publicly traded since it took over a shell company on the Frankfurt Stock Exchange at the time of its founding in 2004. Since that time, BMC has quickly acquired or established a network of subsidiaries and associated companies.
BMC manages its network of airport advertising sites through three companies – China Advertising (100% owned by BMC), BMC Flying Dragon Advertising (a joint venture of which BMC owns 51% which was previously named China Airport Advertising) and China Railway Media (a joint venture 60% owned by BMC). The company has secured the rights to operate a network advertising sites at airports in Beijing, Shanghai, Qingdao, Hangzhou and Chengdu.
BMC’s exhibitions and publishing is managed through four companies – Baiwen Exhibitions (55% owned by BMC), Zhenwei Exhibitions (51% owned by BMC), Herong Exhibitions (70% owned by BMC) and Beijing Capital Exhibition also know as CEICO (55% owned by BMC). These companies organise key events for BMC such as China Mining, China Commercial Vehicles and China Beauty Week.
1 Source: Business Media China website www.bmc-company.com and BSG interview
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Profile of Business Media China August 2007
Table 1: BMC company structure
Source: BMC company website
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Profile of Business Media China August 2007
Company history – key milestones
Year Milestone July 2004 BMC founded by Klaus Michael Hilligardt. Sept 2004 Acquires 55% stake in Shanghai Baiwen Exhibitions. Nov 2004 Acquires 55% of CEICO, an exhibition organizer. Sept 2005 BMC secures rights to publish China Mining Journal. Oct 2005 BMC forms BMC Flying Dragon joint venture with Chinese partners. The new company will focus on operating a network of advertising sites at Chinese airports. Nov 2005 BMC subsidiary, CEICO, selected to organise a commercial vehicle exhibition in China. Mar 2006 BMC Flying Dragon secures licensing agreements for advertising at four key airports in China in Beijing, Shanghai and Xiamen. Nov 2006 BMC secures option to operate advertising space at China’s 20 largest railway stations. Mar 2007 BMC acquires 70% stake in TC Gruppe, a German event management and communications company. Mar 2007 BMC organises first Uranium China conference.
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Profile of Business Media China August 2007
Recent developments in strategy
BMC’s current strategy in China has two key components: winning outdoor advertising licenses and acquiring and developing exhibitions. The majority of its capital and human resources focused on these two objectives.
Focus on advertising business growth
According to the company, three quarters of its revenues 2 come from its advertising businesses. So it appears likely that BMC will focus its resources on building its advertising business. The company is already operating outdoor advertising sites at railway stations in Beijing, Tianjin and Shijiazhuang. In late 2006, BMC was granted the right to develop and modernise the advertising networks at railway stations across China. The company will work with its joint venture partner, China Railway Century Media Company, to concentrate initially on the top 20 railway stations in China. China Railway Century Media on behalf of the Beijing Railway Administration (BRA) oversees advertising in China’s railway stations.
Through its joint venture, BMC Flying Dragon, BMC is simultaneously building a similar advertising network at China’s airports. The company now controls significant portions of the advertising space at airports in Beijing, Qingdao, Shanghai, Xi’an, Hangzhou, Chongqing and Chengdu.
Launching and acquiring exhibitions
Although the exhibitions business is growing more slowly than the advertising business, exhibition margins are better than those in the advertising business unit. As a result, BMC is continuing its efforts to launch new events such as China Uranium. BMC is also acquiring exhibitions including the China International Optoeletronic Expo (CIOE) of which BMC purchased 70% in December 2006. It also co-organises a number of exhibitions including China Mining which is co-organised with the Balloch Group and GIMT+AMB which is a machine tool exhibition organised with Messe Stuttgart. Several of these exhibitions are supported by trade titles published by BMC under license in China (e.g. China Mining Journal and ICN China, a cosmetics title).
2 Note: With regards to its advertising business, it is unclear if BMC is referring to fees or billings.
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Profile of Business Media China August 2007
Key products and markets3
BMC’s key businesses are exhibitions, business publishing and outdoor advertising. The publishing unit is less vital than exhibitions and advertising. The publishing unit is generally used to support and promote the exhibitions business. The company has noted that the outdoor advertising is it fastest growing business, but the advertising margins tend to be lower than its original core business, exhibitions.
Exhibitions
CHINA MINING is hosted by China’s Ministry of Land and Resources and it is co-organised by BMC and The Balloch Group. The 2006 edition of the show was held in Beijing in November and recorded over 2,500 attendees and 200 exhibitors.
BMC also organises PPI China (The International Fair for the Food and Drink Processing and Packaging Industry) and FDC China (The International Fair for Food and Drink). These two exhibitions take place concurrently in Guangzhou. The fourth edition of these shows took place in May of this year featuring over 320 exhibitors and 9,200 visitors according to the company. BMC is forecasting the number of exhibitors to reach 500 in 2008. The company also stated that a conference component will be added to the event.
In Shanghai in May, BMC hosted the 12th edition of its China Beauty Expo. The company claims that this year’s show featured 1,105 companies covering 57,500 sqm of the Shanghai New International Expo Centre. BMC reported that attendance reached 193,000 this year. The event is supported and promoted through two trade titles, Estetica China and ICN China, both of which BMC publishes under licence in China.
China SMT Forum is a BMC event focused on surface mount technologies and microelectronic packaging technologies. The first edition of this conference took place in March this year at the Shanghai International Convention Centre. There were 226 attendees from over 100 companies. The majority of attendees were from microelectronic manufacturers.
3 Source: Company website and BSG interview
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Profile of Business Media China August 2007
China Commercial Vehicles is organised in Beijing by BMC. In 2005, the show featured 150 exhibitors covering 22,000 sqm. Over 20,000 visitors attended the China Commercial Vehicles show in 2005. Exhibitors were primarily commercial vehicle manufacturers and parts suppliers. The 2007 edition of the exhibition took place in April at the Beijing Exhibition Centre. Figures from the 2007 event are not yet available.
GIMT+AMB China is a machine tool exhibition organised by BMC and Messe Stuttgart. In 2006, this Guangzhou-based show featured over 400 exhibitors at the Guangzhou International Convention and Exhibition Centre (Panzhou Complex) covering 14,500 sqm. According to BMC, attendance was 15,000. The 2007 edition of the exhibition took place in June. Figures from the 2007 event are not yet available.
China Beauty Week is co-organised by BMC, the Beijing Exhibition Centre and the trade publication, China Beauty Fashion. The event includes a beauty and salon industry exhibition and an industry awards ceremony. The 2006 event recorded over 45,000 visitors according to the organisers.
The China International Optoelectronic Exposition (CIOE) is a Shenzhen-based event organised by BMC. The 8th edition of the event was held in September 2006 at the Shenzhen Convention and Exhibition Centre. It featured 1,600 exhibitors covering 60,000 sqm. Exhibitors included manufacturers of optical communications equipment, lasers and infrared applications, optical displays and LEC semiconductor displays.
The annual China Uranium conference and exhibition is organised by BMC and the Balloch Group in Beijing. The inaugural 2007 event will be held in October at the Crowne Plaza Park View in Beijing. Approximately 300 delegates are expected to attend the event this year. Exhibitors will include uranium mining and exploration firms, mining finance companies, consultants and mining equipment manufacturers.
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Profile of Business Media China August 2007
Publishing
BMC’s publishing business is primarily used to support and promote its exhibition business.
ESTETICA China is a hair and beauty salon trade title published under licence in China by BMC through Hong Kong. The company claims that it has a circulation of 10,000 which are distributed to salons, hair professionals and suppliers in China.
With a claimed circulation of 21,000, ICN China is focused on the cosmetics industry in China. The title targets manufacturers, suppliers and retailers in that industry.
The China Mining Journal is a monthly title with a claimed circulation of 5,000 copies. This trade title targets industry professionals offering articles covering financing, production, marketing and interview with key mining executives.
Outdoor Advertising
BMC notes on their website that outdoor advertising is a key income growth driver for the company. BMC manages its outdoor advertising network through three subsidiaries – BMC China Advertising, China Railway Advertising and BMC Flying Dragon Advertising. Key clients include major foreign and domestic brands such as Coca-Cola, Lenovo, China Mobile and Volkswagen.
Initially, BMC secured the outdoor advertising rights at the Beijing West Railway Station, Beijing Central Railway Station, Tianjin Railway Station and the Shijiazhuang Station. BMC has formed a joint venture with China Railway Century Media Limited which on behalf of the Beijing Railway Administration (BRA) oversees advertising in China’s railway stations. Recently, together with China Railway Century, BMC won the rights to operate the majority of advertising sites at railway stations across China. BMC claims to currently operate more than 3,000 locations in its outdoor advertising network. The network includes various types of outdoor advertising such as light boxes, billboards and pillar wraps.
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Profile of Business Media China August 2007
BMC Flying Dragon Advertising is a BMC subsidiary that operates an outdoor advertising network at key airports in China including Beijing Capital Airport, Shanghai Hongqiao International Airport and Hangzhou International Airport. Other airports that are part of the agreement are Qingdao, Xi’an and Chengdu.
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Profile of Business Media China August 2007
Major competitors
Exhibitions:
eMedia Asia www.eetasia.com/EVENT_DISPLAY_EE.HTM
Reed Exhibitions China www.reedexpo.com.cn
CMP Asia www.cmpasia.com
VNU Exhibitions Asia www.vnuexhibitionsasia.com/English/newsmovee.aspx
Publishing:
Ringier Trade Publishing http://www.industrysourcing.com/English/index.asp
Reed Business Publications www.reedbusiness.com/us.html
Global Sources www.globalsources.com
Outdoor Advertising:
JC Decaux China http://www.jcdecaux.com.cn/en/en_ch.htm
Xinhua Finance http://www.xinhuafinance.com/en/
Focus Media http://www.focusmedia.cn/en/index.htm
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Profile of Business Media China August 2007
Financial data (as of 31 July 2007)
Stock Information Stock Market: Frankfurt Stock Ticker: ISIN DE0005250401, Exchange WKN 525040 Market Cap: EUR 101.0 million Average Daily 5,773 (US$ 152.1 million) Volume: 52 Week High: EUR 28.45 52 Week Low EUR 17.00 (US$ 38.97) (US$ 23.29) Listing Date: 12 October 1999* Listing Price: EUR 22.00 (US$ 30.17) Fiscal Year Ends: 31 December Shares 5,999,466 Outstanding: Major Mesago Holding GmbH (47%) Shareholders: * Note: This is the listing date of the shell company which BMC took over in 2004.
Figure 1: Stock price movement in the past 12 months
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Stock price (EUR) price Stock 21.00
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Profile of Business Media China August 2007
Income Statement (US$ million) 2006 2005 Sales: 10.27 2.89 Gross Profit: -9.45 -1.78 Operating Margin: -92.0% -61.4% Balance Sheet 2006 2005 Total Current Assets: -- 6.50 Total Current Liabilities: -- 0.61 Total Assets: -- 10.73 Total Liabilities: -- 0.61 Total Equity: -- 9.41
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Profile of Business Media China August 2007
Future developments
Expanding airport advertising licences
BMC has signed a number of agreements granting the company advertising rights at railway stations across China. Now it is likely BMC will attempt to secure similar rights at airports across the country. Through its joint venture, BMC Flying Dragon, the company already has licences for the majority of advertising rights at key airports including Beijing, Qingdao, Hangzhou and Chengdu.
Modernising advertising assets
BMC will also need to focus resources on developing and modernising advertising assets at both airports and railway stations. This will require investing in new media formats to expand the advertising options beyond billboards and posters to include light boxes, laser projected advertising, neon signs and prismatic displays.
Executing advertising agreements
BMC has achieved a number of impressive agreements in a relatively short period of time. For at least the next several quarters, the company will likely be focused on capitalising on those agreements. Developing outdoor advertising networks at 20 railway stations in addition to multiple airports will take time and effort. At the same time, BMC will need to sell their going inventory of advertising locations and expand their advertising client list. On the company’s website, they noted that they now manage over 3,000 advertising sites at railway stations across China.
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Profile of Business Media China August 2007
Challenges exist in managing partners and businesses
In addition to keeping pace with the rapid pace of growth in China and retaining key staff in a booming economy, BMC faces several other challenges. The company structure includes seven joint ventures and subsidiaries as well as various exhibition partnerships. Managing local partners in China can be time consuming and BMC has multiple partners across its two key businesses. The situation is even more complicated due to the fact that BMC is managing two very different businesses – an outdoor advertising network and an exhibitions business.
Senior management
Mr. Klaus M. Hilligardt, Chief Executive Officer Mr. Peter Sassmann, Chief Financial Officer Mr. Aat Van Eeden, Board Member Mr. Li Yang Yang, Board Member
Contact information
Website: www.businessmediachina.com
Contact details: Business Media China AG 87, Rotebuehlstrasse Stuttgart Germany-70178 Tel: +49-711-490-8900 Fax: +49-711-4908-9010 Email: [email protected]
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