The Greatest Show on Earth?

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The Greatest Show on Earth?

Will the billions spent on the Shanghai Expo mark a grand global entrance or expensive flop? John D. Van Fleet reports.

Standing atop one of the many high-rises on the west bank of the Huangpu River, south of the iconic Bund waterfront area, it’s possible to get a clear view of the five-square-kilometre plot of  land that Shanghai hopes will help showcase itself to the world.

In recent months, it’s been almost impossible to read a news report from here that hasn’t mentioned the fevered construction of pavilions and facilities—and the municipal reconstruction generally—aimed at making the city’s Expo the greatest show on earth.

In the decade since Shanghai won its bid to host the event, the city has morphed and grown—in 2004, a maglev train started doing 8-minute, 250 kilometre per hour laps to and from Shanghai Pudong International Airport; in March 2008 the airport itself sprouted a second terminal; early in 2010 the city’s other airport, Hongqiao, did as well; and meanwhile the metro system has gained several new subway lines.

Meanwhile, a two-year renovation of the Bund has helped the area recapture some of the aesthetic and pedestrian appeal it lost in the decades following the Chinese civil war.

‘I was born in the Bund area,’ says one 30 year-old, third-generation Shanghainese woman. ‘We had a 13-metre-sqaure room for our family of three, shared one bathroom and one big kitchen with a dozen other families, and had no heat in the winter—and we were considered middle class at the time! But look what’s become of my city in just a few decades. I’m stunned.’

‘Expo’ is short for ‘Universal Exposition,’ the inheritor of the World Fairs that began in London’s Hyde Park, led by Queen Victoria’s husband, Prince Albert, in 1851. Unlike the Olympics, which lasts only a couple of weeks, Expos last half a year and include hundreds of exhibitors (mostly countries, but also other entities) who spend millions of dollars for the privilege of being there.

Traditionally, Expos have been about national pride (and in China’s case, there’s often plenty of pride to salve, with the media and education system frequently reminding Chinese of the so-called hundred years of humiliation at the hands of foreigners from the First Opium War until the end of World War II).

But while to the outside world the Shanghai Expo, which opens on May 1, may be seen as an attempt, like the Beijing Olympics, to showcase China’s emergence onto the international stage, Shanghai’s (slightly) smaller brother and two centuries’ rival is in no mood to share in the festivities.

For while locals here are apt to point out that the Expo will draw an estimated ten times the number of visitors that the Beijing Olympics did, the national leadership has resolutely refused to visit the site. And although Expo countdown clocks are ubiquitous in Shanghai, none are visible in Tiananmen Square, where previous events of national importance, such as the handovers of Hong Kong and Macau and the Beijing Olympics, have traditionally been recognized.

Naysayers say Shanghai’s official visitor number estimates are wildly inflated. But while it’s true that Expos have historically lost money (the Hanover, Germany, Expo in 2000 fell well short of its visitor projections and ended up losing more than a billion dollars), some Expos actually exceed expectations. The 2005 event in the Japanese city of Nagoya, for example, received far more visitors than expected, and turned a profit. And given the general global fascination with China at present, as well as the country’s sheer size, Shanghai may end up beating its own forecasts.

So, if Shanghai does meet expectations, who are the likely winners and losers?

One clear winner of a successful Expo would be the government, with the army of bureaucrats in the Shanghai and central government tied to the event able to claim some part of the credit (which will be officially described as a success whatever happens). Indeed, cynics might also suggest that many of these bureaucrats will also benefit in more tangible ways, given the licenses and other approval processes that must be secured by exhibitors, sponsors and vendors.

Shanghainese, meanwhile, have benefitted from a host of infrastructure improvements and a general sprucing up of the area. Of course they didn’t have much choice in the matter. While in some countries electorates vote on whether or not to bid for an Expo based on their own cost-benefit analysis of the situation, the decision to bid for the 2010 Expo was entirely in the hands of the Chinese government (local and national). Their cost-benefit calculations are not audited, nor are they available for review.

The Shanghai government has, however, taken some steps to at least appear transparent. In late 2008, the Shanghai Daily reported that Zhou Hanmin, deputy director general of the Bureau of Shanghai World Expo Coordination, held internet chats on two popular portals about various aspects of the Expo.

According to the newspaper: ‘The budget for Shanghai Expo can be divided into three parts—relocation, construction and operation. The budget for construction is RMB18 billion (about US$2.6 billion). For promotion as well as operation during the 184-day event, it is RMB10.8 billion (US$1.5 billion). We have also spent tens of billions of RMB relocating 18,000 families, involving 55,000 Shanghai citizens and 272 factories.’

The word relocation is, in some cases, something of a euphemism. Some Shanghainese have been forcibly relocated to make way for the city’s facelift, not only from the five square kilometres of the site itself, but from other parts of the city that have launched Expo-driven renovations. Some reports suggest those being moved have not gone quietly, although there are also reports that residents who tried to petition Beijing about the alleged unfairness of their forced relocation were detained by police before they could reach the capital (a not uncommon tactic among local and provincial officials who try to ‘deter’ their citizens from reaching Beijing with grievances as such complaints can have a powerful shrinking effect on local and provincial officials’ money and influence.)

But despite the construction mayhem and the ongoing loss of some architectural treasures and organic communities, many Shanghainese view the Expo as a net win, with a dramatically improved transportation system, a cleaner city and a bright, internationalized new face to present to the millions of likely foreign visitors.

Yet it won’t just be Shanghai residents who will likely feel like they’re benefiting. Mainland Chinese will generally see the event as the government wishes them to—as another milestone in China’s ‘peaceful rise’—and feel proud regardless of whether they attend.

Calling a winner or loser becomes more complicated in the case of the private sector. The returns on investment for sponsorship or support of an Expo, much like Olympics, will always be a subject of debate. Johan Bjorksten, a long-time resident of China and founder of PR agency Eastwei Relations, says he has a number of private sector clients who are investing heavily in this year’s Expo.

‘Our clients obviously believe that they gain ROI (return on investment) from their interaction with Expo, but we find that both direct and indirect evaluations are important,’ he says. ‘If, for example, a client’s strategy is to invite their customers’ engineers to a seminar at the Expo site, we should evaluate not only our direct success with the strategy, measured by the number of engineers who attend, but also whether the client achieves an increase in sales—the indirect but ultimately more important metric.’

In summer 2008, for example, Samsung reported that it had spent $100 million on sponsorship for the Olympics. Yet although incremental sales increases don’t seem to suggest that such sponsorships consistently generate solid ROI (Samsung would have needed to generate at least $1 billion in incremental revenue from the Olympic sponsorship), big companies continue to sponsor such mega-events in droves. This suggests that the ‘return’ in ROI calculations for such sponsorships should probably be expanded to include chief executive prestige, guanxi with local governments and other such items less amenable to an Excel sheet.

‘Measuring the ROI of World Expo participation is like measuring the ROI of purchasing a gym membership,’ says Jeffrey Bonin, director of events for a number of exhibitors. ‘If you believe in what you’re doing and put real energy into it, you’ll get real ROI. Paying the membership fees and showing up to the facilities is only going to open the door for ROI.’

It’s not just foreign (and some domestic) companies that are hoping to cash in on the Expo—countries are too.

The pavilions of participating countries occupy the lion’s share of the Expo grounds, and the official Expo site reports that more than 190 countries will participate this year. The US Congress famously ended public funding for any US participation in Expos a decade ago, and the United States had its membership in The Bureau International des Expositions (the Expo governing body) withdrawn as a consequence in 2002.

But in early 2009, the US Chamber of Commerce in Shanghai and other organizations tried to cobble together sufficient funding and other private sector support to mount an exhibition. They succeeded, and now a US pavilion costing about $60 million has been created, becoming a monument to US culture—and resembling a shopping mall.

How far into the future countries are likely to want to squander tens of millions of dollars for temporary physical landmarks, though, is questionable, especially with the increasing digitization of the event.

The Shanghai Expo is the first to offer a full virtual option, which will be an impressive trick if they can pull it off, though an awkward interface and, the ubiquitous, condom-like tour guide called ‘Haibao’ with a grating voice are hampering this effort, as has the blogosphere’s discovery that a promotional jingle about Haibao and the Expo was copied from a late 1990s Japanese pop song, prompting officials of the Bureau of Shanghai World Expo Coordination to suspend use of ‘2010 Waits for You.’

Setting aside these hiccups, though, if Expos can eventually meet the announcer’s pledge that ‘Anyone, anywhere, anytime, can enjoy all the excitement’ from their computer, it could go a long way to helping avoid the phenomenal waste (both physical and monetary) that staging such mega-events creates.

But as long as Expos do exist in physical form, foreign visitors also likely are going to feel like winners. Part of Shanghai’s effort to spruce itself up is aimed at the foreign visitors—the city has thrown up bilingual street signs everywhere over the past few years, and most taxis now have English-language hotline numbers posted. An estimated 5 percent of the visitors to the Nagoya Expo in 2005 were foreigners, and about 80 percent of those were non-residents. If these percentages hold for Expo 2010 and the 70 million projection proves accurate, something like 3 million non-residents of China will take in the Expo sights.

History in the Making?

The theme of Expo 2010 is ‘Better City, Better Life,’ and one of the stated goals is to bring together technologies and ideas that will support 21st century urban planning. While talk of sustainability and green cities is trendy these days, razing five square kilometres, erecting pavilions on the rubble, and then destroying most of the pavilions to build something else, is the antithesis of sustainability. But the event has nonetheless catalyzed discussions of urban planning, and China more than any other large nation requires plenty of creative thinking on urbanization in the years ahead, as hundreds more millions of its citizens move to urban environments in the next two decades. The insights that China’s urban planners, and its citizens, will gain from the Expo should contribute to better living environments all over the country.

Some of history’s Expos are now iconic—notably the first one in London in 1851, and the 1889 Paris iteration, for which the Eiffel Tower was built. How Shanghai Expo 2010 will be remembered in the decades and centuries ahead clearly remains to be seen. But for now, the citizens of Shanghai—and Chinese generally—will likely content themselves knowing that the event will mark the moment when the world acknowledges the city as a metropolis whose time has come.