Dealing with the cheap-China myth

China may be the fastest growing economy in the world but organisers are finding that there is an ongoing perception among overseas clients that it is a ‘cheap’ destination for a business event, a headache-inducing issue among event professionals.

In line with the country’s growing economy, first-tier cities like Shanghai and Guangzhou are becoming just as expensive as Hong Kong and Singapore.

“The public image of the country has created many negativities and misinformation to the rest of the world,” says David Ong, creative director, China for Off-site Connections Event Solutions, which is now part of MCI Group. “This resulted in unrealistic and sometimes ridiculous expectations for an event that may lead to a long and painful planning process.”

Says Elaine Ng, senior project manager at MCI Group in Hong Kong, who has done events in various parts of China. ”Our clients always thinks that everything is cheaper in China but in reality, it is not the case, especially if the event requires a five-star venue and food FB.”

Organisers find themselves having to manage expectations of the clients and soothe their clients’ initial shock at the higher costs. “If an international company is organising a business event for the first time in China, they need to do some homework before communicating with the local vendors,” says Ong.

Cindy Zhang, regional director for Pacific World in Greater China, has also noted that its clients are often surprised by the prices in Shanghai, especially the rates for quality, international hotels.

“To get around this issue, we will check with hotels to see when there is a low inventory and then recommend our clients to pick the months where they will get a lower rate, especially if their event dates are flexible” says Zhang. “For Shanghai, it is often March and November. During the Chinese holidays, such as the ‘golden week’ in October, the occupancy rates in hotels are also very low, so recommend incentive groups to come to Shanghai then.”

Zhang also advises clients to budget more for the Western FB options, as the cost of the fresh produce and other ingredients come with an import tax. “You can get a good bottle of wine for 20 Euros in Europe but in China, the lowest price starts at 40 Euros.”

Furthermore, says Zhang, “If you are holding a two-day meeting at the hotel, there will be an overnight rental fee on top of the package rate, as the hotel is holding up the space and retaining the set-up for the next day. Unlike the properties in the US, hotels in China will still include that in the invoice.”

Secondary costs

China’s secondary cities still commands a lower rate but these cities may not have the right vendors and suppliers.

Says Ong, “For international events, these cities might not have the infrastructure in place to fulfill the event requirements. For example, you might not find international branded audio-visual hardware in these cities and will have to transport them from Shanghai, which will incur a higher cost.”

According to Zhang, the overall cost will still be less when it is held in a secondary city, especially for large events of over 100 delegates. China’s fast growing economy and increasing standards of living also creates demand for international-grade services and products. “At the moment, there may be a lack of service providers for events in certain parts of China, but it may be different a year later.”

Ultimately, a business event for a discerning audience requires high quality standards in all aspects, which all comes at a cost. However,   Zhang says that clients are just as surprised by the end product. “It’s a pleasant revelation for them, since five-star hotels in China tend to be quite big and new and the service standards are high, plus tipping is appreciated but not required.”

Dealing with the cheap-China myth