When the government declared it would work hard to make a profit during the six-month running of the World Expo 2010, some local experts said the chances of doing so were quite slim.
"I can't say it definitely won't make a profit, but the possibility, in my opinion, is rather small," said Zhu Ronglin, researcher with the Development Research Centre under the State Council.
With the aim of correctly appraising the economic effects of the World Expo, Zhu submitted a proposal during the People's Congress held in Shanghai in February. He urged the government to estimate the costs and benefits of the World Expo 2010 in a balanced way.
"As the World Expo is such a big international exhibition, it is almost impossible to make it work financially over such a short period of time - only six months," Zhu said. "But we should be clear that the ripple effect of the World Expo will be huge."
Investment in the Future
According to analyses of the last 19 World Expos, researchers found that, with the exception of the Seattle World Expo which made a small profit, the other 18 host cities all lost money.
The one held in Vancouver in Canada lost C$32.6 million. The World Expo 2000 held in Hannover in Germany is estimated to have lost about US$1.1 billion.
According to a consulting company in Toronto, Canada, half of the profit of the World Expo comes from the box office, while another 30 to 40 per cent comes from the souvenir selling. So every host city takes attracting visitors as the key to economic success.
The World Expo in Hannover was originally expected to attract 40 million visitors, but the actual number was only 18 million. Among these, 92 per cent were domestic visitors. This expo only recovered about one third of the investment.
"It is really important for the city to make a correct estimation of the number of visitors. But on the other hand, we can't look on the issue too narrowly, in most countries Expo deficits are considered 'investments in the future' - because the World Expo raises the host city's international status, improve the investment environment, advances the tourist industry and refines the relationship with nearby areas," Zhu said.
"That's why there are still so many cities competing with each other for the hosting right," he added.
Zhu pointed out the direct income, such as the box office, dining, hotel and tourism, which government officials tend to focus upon, actually accounts for only a very small part of the profit brought by the World Expo.
"Such a focus is rather short-sighted. The World Expo can bring far greater benefits if it is staged successfully," he said.
A Challenge for Shanghai
Zhu also worried if Shanghai has the ability to hold the exhibition in a way that meets such expectations. As a city in a developing country, Shanghai has no experience of holding such large-scale and long-term international activities. The 2010 event will be the first time the World Expo is held in a developing country.
"Holding the event is not the same as bidding for it. The latter is just a matter of profiling a city while the former exposes its functional capability," he said.
The expert also worried about the fact the operation of the market economy was still not reutilized in the city.
"The number of exhibitions and fairs held in Shanghai is rising quickly," Zhu said.
In fact, the number of exhibitions held in Shanghai is increasing by 20 per cent every year, with the New International Expo Center, for instance, fully booked through 2004. There are even some bookings for 2005.
"But their scale and standard is not so satisfactory," Zhu complained. "Nevertheless, Shanghai, with a per capita GDP reaching over US$5,000, has to try to communicate and compete with advanced cities around the world.
"Anyway, we need to make a start," Zhu said.
(Shanghai Star April 8, 2003)
