Shanghai aims to draw the country's heavyweight exhibitions away from Beijing with the world's biggest exhibition center comprising 400,000 square meters of indoor space and 100,000 sq m of outdoor display areas.
The development in Hongqiao comes alongside the final expansion of Shanghai New International Expo Center into a 300,000 sq m exhibition space.
"Our first criteria when deciding where to host a fair is the space at an exhibition center and the quality of its infrastructure," said Xu Yingxin, executive vice-president of the Sub-Council of the Textile Industry under the China Council for the Promotion of International Trade. "I have to admit that Beijing has fallen behind Shanghai in these areas in recent years. Many exhibitions were forced to move to Shanghai from Beijing because of space concerns, to be honest."
The sub-council is in charge of dozens of textile industry-related exhibitions across China and abroad.
Xu said that he moved the venue for the China International Textile Machinery Exhibition from Beijing to Shanghai as early as 2008. "Many big exhibitions in other industries have been relocating," he added.
"For textile exhibitions, we want a location next to places such as Jiangsu and Zhejiang, which are usually regarded as relatively developed regions for the industry," he said. "Apart from attracting exhibitors, the number of visitors and potential buyers is also our concern. That makes Shanghai our preference."
In 2010, Shanghai held 42 percent of the country's total domestic exhibitions and conventions. Beijing held 33 percent.
Space at the Shanghai New International Expo Center has been booked up until 2014. The center on Feb 15 announced its 12th, and final, expansion in the 11 years since it opened in 2001. According to figures provided by Hans-Jorg Geduhn, its general manager, the popular venue's occupancy was almost 70 percent in 2011.
"Our turnover rate is 32," said Geduhn, meaning that he rented out the 200,000 sq m indoor space and 100,000 sq m outdoor space 32 times last year.
"The center's occupancy rate is about double that in Germany," said Eugen Egetenmeir, managing director of Messe Munchen International, a Germany-based exhibition company that has business in China. He said the average occupancy of a German convention and exhibition venue was only around 35 percent.
"This high turnover is because the business cycle in Shanghai's market is much shorter. For example, in Germany a machine show usually has a longer show period of several months. People only need several days for an exhibition in Shanghai," said Egetenmeir. "But still, high occupancy represents high profits."
The average occupancy for Shanghai exhibition centers bigger than 30,000 sq m was 60 percent in 2011, according to local media. The rate was as low as 25 percent nationally.
Geduhn said he is confident the Shanghai New International Expo Center will turn a profit within 10 years. A total of $600 million was plowed into it by its Chinese and German shareholders.
"We expanded from four halls to the current 12 and we're glad to see many exhibitions grow with us in terms of size during the years," said Geduhn.
It was due to huge market needs that Wu Chenglin, chairman of the Shanghai Convention and Exhibition Industries Association, gave the green light to the world's biggest exhibition center.
"I've talked to exhibition organizers and it turned out that many of them were looking for even bigger venues," said Wu. "Shanghai's auto show, for example, needs more than the 200,000 sq m of indoor space than Shanghai New International Expo Center could offer."
The project involves an investment of 20 billion yuan ($3.2 billion) from the Ministry of Commerce and Shanghai government and is scheduled to be completed in three years.