THE ECONOMY IN MIRROR IMAGE

The predecessor of all modern exhibitions was, of course, the fair - a phenomenon as ancient as the history of trade itself.  One of the first trade and crafts exhibitions in the historical annals of medieval Europe was organized in the French town of Saint Denis in 629 AD.  However, exhibitions reached a peak in the 19th century, after the advent of the industrial revolution and the first steps towards trade globalization.  The exhibitions business today is an inseparable part of any modern, economically developed state, and it has long been a profitable and self-sustaining sector of the economy.

Over a century and a half of intense development, the international exhibition has become a multi-faceted marketing tool.  First and foremost, it is an ideal arena for the development of trade and economic ties with foreign companies and for the conduct of advertising and promotional campaigns to boost sales in domestic markets.  The latter is very important for small and medium businesses because in a market economy, exhibitions provide a relatively cheap way of making the company known.  These forums provide the optimum opportunity for face-to-face dialogue between manufacturers and potential consumers, and this kind of communication lays the foundation for the future success of startup companies.  And for large holding companies and corporations, exhibitions, besides all else, are an indispensible component of their PR strategies.

In contrast to internet exhibitions, which have become popular in recent years and in which products and services are exhibited in virtual space, exhibitions give their visitors an exclusive opportunity to see new products with their own eyes and even test them.  Finally, exhibitions in a number of sectors, for example, the automobile industry or telecoms, have long become shows attracting huge numbers of ordinary visitors who are given a unique opportunity to familiarize themselves with the latest developments of science and technology.

Besides serving purely commercial purposes, the exhibitions are a mirror of the economy, they accurately reflect the state of economic relations and the overall level of development in the country, they make it possible to judge the interest of investors in this or that sector, the level of local products compared with imports and finally, the level of development in high-technology.  So how is Azerbaijan reflected in this mirror?

In the first years of independence, the exhibitions business developed lopsidedly in Azerbaijan and was poorly organized, with the exception of the annual oil and gas forum, Caspian Oil and Gas, which was launched in June 1994 and immediately acquired weighty international status.  All other expos of the period were clearly not of the required level, either in the numbers of participants or numbers of exhibitors.  Besides the oil and gas forum, only republic-wide trade expos, sponsored by the Azerbaijani Chamber of Trade and Industry, and a few national exhibitions presenting the products and services of Turkish, Iranian and UAE companies were organized annually.  However, the national exhibitions of neighbouring countries were irregular and never attained the status of annual exhibitions.

The situation began to change after the arrival in the Azerbaijani market of the British company ITE Group PLC in 2001 and its exclusive partner in Azerbaijan, Iteca Caspian.  That year, a strategic decision was taken to discontinue the republic-wide trade expo, which presented all sectors of the national economy, and to establish individual specialized forums.  During the first three years of ITE's operations, all the exhibitions were organized in the small hall of the Europa Hotel.  The small format enabled the company to practise its skills in organizing specialized expos - construction, food, telecoms, healthcare and so forth.  The main accent was placed on exhibiting the achievements of the non-oil sector of the economy.  The years that followed proved that this decision was right:  eight years later, ITE was able to conduct 23 different specialized exhibitions on a regular basis and organize several international conferences annually.

Eventually, ITE began to take part in the oil and gas exhibition, which to this day has special international economic and political status.  The exhibition, which is organized annually in the pavilions of the Heydar Aliyev Sports and Concert Centre, is the major annual event in the oil, gas and energy sector of the Caspian region.  The opening of the exhibition, which has special support and attention from the Azerbaijani Government, is traditionally preceded by official congratulations from the leaders of the leading states of the world, such as the USA, Britain and Russia.

However, in recent years specialized forums for the non-oil sector - telecommunications, agrarian, construction and tourism exhibitions - have begun to acquire a higher political and economic status.  The personal participation of President Ilham Aliyev in the opening ceremonies of a number of exhibitions is testimony.  From 2005 to 2009, Iteca Caspian organized 85 exhibitions and 9 conferences with the participation of 6,445 companies and 411,500 visitors.  The heads of multinational companies and international organizations, as well as scientists of international renown arrive in Azerbaijan to take part.  These facts prove that the emphasis in the country's economy is gradually shifting towards the dynamically developing non-oil sector, whose importance today effectively equals that of the raw materials sector.

It is worth noting that a clear chronological principle is observable in the broadening potential of specialized exhibitions.  For example, the undisputed leader of the exhibitions business in the 1990s was the oil and gas exhibition:  its opening coincided with the signing of the "contract of the century" and the beginning of development of offshore deposits in the Azerbaijani sector of the Caspian Sea.  Then, from 2000-2003, dynamic growth was seen in agriculture and food exhibitions:  this coincided with a peak in agrarian reform and the beginning of work to privatize processing enterprises in the country's regions.  Since then, the WorldFood Azerbaijan exhibition has hosted more than 800 companies, many of which eventually did successful business in Azerbaijan.  Companies like the German Schaller and Seydelmann, the Turkish Oztiryakiler, Italian Tecnofood and SIPA, Polish Intermik and a number of others were able to establish useful contacts and sign successful deals to sell equipment in Azerbaijan.

The period 2004-2008 was one of significant increases in national budget-funding for infrastructure projects, the implementation of the state programme for social and economic development of the regions and a construction boom in the country, which resulted in an explosive growth in potential for the construction exhibition:  it grew 40% annually during the two pre-crisis years.  The construction forum in 2008 even outdid the oil and gas exhibition in terms of the number of participants and floorspace, and today the largest specialized forum in the Caspian region hosts 268 companies from 27 countries.  By comparison, the construction exhibition BakuBuild hosted only 40 companies, of which only 10 percent were local, when it was first organized in 2001.  In 2010, BakuBuild is expected to grow by 10%; budget funding for capital construction, which remains high, guarantees this.

In the last four years, the telecommunications exhibition BakuTel has shown dynamic growth.  Support from the head of state himself and the work of the Communications and Information Technologies Ministry play important roles here; these factors have helped the forum to hold international conferences and presentations of new regional projects.  For example, a meeting of the communications ministers of 20 countries, at which the Trans-Eurasian high-speed information superhighway (TASIM) was discussed, was organized within the framework of the BakuTel-2008 exhibition.  Today, one and a half years later, the TASIM project, has been approved in a number of the states and by the 64th session of the UN General Assembly.  In late April 2010, when the project was presented at the China Expo 2010 in Shanghai, it was supported by the Chinese Government, and the country's largest companies, the China Telecom Corporation Limited and Huawei expressed a desire to finance it.  It is notable that the signing of a memorandum and creation of an international consortium for implementation of the TASIM project are expected in November 2010, during the BakuTel-2010 telecommunications exhibition.  Following participation in the telecommunications exhibition and establishing contacts with the Communications Ministry and participants in the Azerbaijani IT market, the well-known companies Gilat, Hawker, Huawei, Karel, Ness Technologies, Softline, Telesis, the Penki Continental Group and many others began to operate in Azerbaijan.  Today, they are expanding their operations in the Azerbaijani market by setting up subsidiaries or through partnership networks.  CaTel entered the market with the new brand, Fonex, via the BakuTel exhibition and started to provide mobile communications services of CDMA standard.  At the same forum two years later, the mobile operators demonstrated the high-speed internet technology of the 3G format, which Azerfon has already started to implement.

In the last two to three years, the tourism exhibition AITF has been shown quite rapid growth:  the number of its participants this year increased by more than 25%, and this amid a grave crisis in the international recreation industry.  The stable development of the Azerbaijani economy and preservation of demand from its population attracts new players in the global tourism market to the country.  And yet another novelty of AITF-2010 was the unprecedentedly large participation of the country's regions - the more than four-fold growth in the number of hotels (there are more than 370) makes regional companies serious players in the local market.

In total, more than 2,000 important international contracts were signed at the exhibition between tourism sector specialists, which will now connect Azerbaijan with many places on the world map.

Other specialized exhibitions organized by Iteca Caspian - medical, car, finance, transport and others - have also been successful.  During those exhibitions, different agreements were signed by local and foreign partners, contracts were signed to supply equipment and goods, or local offices were opened.

Naturally, the exhibitions business of Azerbaijan is still in its initial phase.  International experts say that Azerbaijan's exhibition potential is quite comparable with Ukraine's, is almost at Kazakhstan's level and is many times greater than  Georgia's and, especially, Armenia's, where only one general trade exhibition is organized each year.  It is significant that Kazakhstan's and Ukraine's exhibition sectors, which are closely connected to the main sectors of their economies, have suffered greatly from the consequences of the global economic crisis, noticeably reducing the size and attractiveness of exhibitions.  At the same time, the consequences of the global depression have had a relatively minor impact on the Azerbaijani economy and, accordingly, on the exhibitions business.  "In the next three years, the growth in exhibition events will only increase: in light of the completion of the new exhibition centre in the capital, Baku's role as the central exhibitions hub of the Caspian region can only grow," said Farid Mammadov, Iteca Caspian Executive Director.

Indeed, the new Baku Expo Centre International Exhibitions Centre has been completed near the Heydar Aliyev International Airport.  The most modern exhibitions centre in the Caspian region covers 33,800 square metres and, besides the main exposition pavilions, there are modern conference rooms which are equipped to host conferences, seminars and presentations.  "The first exhibition to be held at the new large complex will be Caspian Oil & Gas 2010.  Despite the fact that the world is still experiencing the consequences of the global economic crisis, the Azerbaijani leadership took the decision in this difficult period to put the modern exhibition centre into operation.  We hope that with the opening of the Baku Expo Centre, Baku will consolidate its deserved position at the hub of the exhibition industry in the Caspian region," said ITE Group Executive Director Edward Stroon.

The strengthening of Baku's international status as a regional exhibitions centre is quite clear.  In the last century, the largest expos in Europe and North America were the main venues for demonstrating technological achievements and products of the largest international companies.  However, in the last decade, a new trend has been noticed: regional exhibitions in developing countries are increasingly popular.  This is where the most dynamic markets are taking shape, which is why multinational corporations and international brands are trying to position their brands and services closer to potential customers.  In this sense, the exhibition business in Azerbaijan senses the global interest.  Statistics show this:  Last year, Iteca Caspian's exhibitions had 55,300 visitors, of which 30%, or 16,500 people, were foreign guests.

On the other hand, the number of small companies and medium-sized industrial enterprises, which still occupy small market niches in the regions but take part in the exhibitions in Baku, has increased considerably.  For these companies, exhibiting their products at international expos is still relatively expensive and not always commercially justified.  And the specialized exhibitions by Iteca Caspian are an accessible way of demonstrating their products and organizing mutually profitable foreign ties.  To maintain the interest of these companies, the ITE Group PLC and its Azerbaijani partner are expanding the geography of exhibitions - they were twice quite successfully organized in the country's second most important city, Ganca.  These expos, Ganca's Infrastructure and Construction Expo of the Western Region, are already scheduled to take place for the third time this autumn and, as in previous years, not only local, but also foreign companies will take part in the regional exhibition.

Iteca Caspian has yet another niche for providing services to Azerbaijani companies - assistance with organizing international forums held by the British company ITE Group PLC abroad.  In particular, Azerbaijani food industry companies like Azersun Holding and winemaking companies, have taken part in exhibitions in Russia, Kazakhstan, Uzbekistan, and a number of construction companies and construction materials manufacturers - in Europe's largest Moscow Construction Exhibition.  ITE Group PLC provided flexible and profitable commercial terms to give our companies an incentive to exhibit their products and services abroad.

Forecasts say that the dynamic growth of the Azerbaijani economy will be preserved in the future and it can be said with confidence that exhibitions which reflect this growth will achieve at least the same growth rate.  In combination with the growing competitiveness of the industrial, agricultural and financial sectors of Azerbaijan, this will help Azerbaijani economic organisations integrate with the global market.