The most important thing is a simultaneous development of various economic sectors, and the oil-gas industry will be like icing on the cake, a kind of our safety bag
Caspian Energy (CE): Iteca Caspian has been operating on the Azerbaijani and regional markets for many years. What are the trends of development of the exhibition market?
Farid Mammadov, Director of Iteca Caspian: Iteca Caspian has been operating since 2000. Though, our partner, the British Company ITE Group, used to hold exhibitions in Azerbaijan on its own starting from 1995.
At first, from 1995 to 2000 ITE, which had no office in Azerbaijan, held a trade exhibition called Azerbaijani International Trade Fair hosted at Heydar Aliyev Sports-Concert Complex. The exhibition covered several non-oil sectors of economy: medicine, construction, food industry and ICT. However, 5 years later it was manifest that it would be rather hard to develop this exhibition representing different industries at the same time. A very fertile ground to develop an exhibition-conference business appeared out in Azerbaijan at that period. The government of Azerbaijan supported the flow of foreign companies and investors into the market of the country and consequently it found exhibitions a perfect tool for this process then.
The local office of Iteca Caspian opened in 2000. Later the decision to split non-oil areas, represented by the Trade Fair, into different thematic exhibitions was made. This is the way the Healthcare (BIHE), Construction (BakuBuild), Food Industry (WorldFood) and Telecommunication (Bakutel) exhibitions appeared. For this reason we moved from Heydar Aliyev sports complex to Grand Hotel Europe which can be addressed as an incubator for developing new free-standing specialized projects. Thus, we started from 4 small exhibitions which now occupy entire rooms at Baku Expo Centre. We would like to thank the government of the country for an invaluable support lent through all these years. And of course we are grateful to the management team of the Heydar Aliyev sports complex and Grand Hotel Europe which hosted us and rendered overall assistance in our initiatives.
We had established our own exhibitions development strategy by that time. We managed to improve the exhibition portfolio. In the long term we wanted to be involved in the oil-gas exhibition in Azerbaijan taking into consideration big experience of ITE Company in arranging oil-gas exhibitions. Finally, such opportunity turned up in 2003. We took on this project with big willingness and for many years now we have been organizing an international Caspian Oil&Gas exhibition and conference, one of the biggest exhibitions of the region which has a rich history and significance for the country. High-level state support and economic situation, which has become more favorable since 2003 due to the growth of revenues of Azerbaijan gained from export of oil-gas resources, promoted high-speed development of the exhibition.
The oil-gas industry was a driver from 2003 to 2008, which was also seen in the exhibition industry. The Caspian Oil and Gas overshadowed the rest projects. But from 2008 we have witnessed a very serious attention of both the state and commercial structures towards the non-oil sector. The non-oil sector exhibitions, which our business started with since the far 2000, gradually began showing a positive momentum.
CE: That is to say, it is the period when you felt the market?
Farid Mammadov: We perform regular researches of the market structure and I can say that our position in this regard is more privileged compared with our companies because exhibitions indicate the way a market changes and where it moves. Of course we say the non-oil sector gained momentum in 2008 while in 2014 all our non-oil sector exhibitions grew at fast pace, which was a real breakthrough. At the same time the Caspian Oil and Gas exhibition also kept its profile.
CE: Which sector was developing most intensively at that period?
Farid Mammadov: I think it was BakuBuild exhibition coming first and followed by Bakutel and CaspianAgro exhibitions. Considering the current circumstances, I can say that the agriculture exhibition is now one of the most active and rapidly developing exhibitions in the country. I have no doubts that it will keep developing at this pace because this area is of big interest both to local entrepreneurs and international companies and we do feel a big support of the state.
There are no doubts that we will soon witness the similar support in regard to both the transport and logistics sector because one of the road maps, which has been offered by President of Azerbaijan Ilham Aliyev and thoroughly studied by all, is aimed at turning Baku into a regional transport hub.
CE: Can you remember the projects which failed to develop and the reasons for it?
Farid Mammadov: Of course there are projects which we have implemented successfully before but later we suspended them. I can call AutoShow which was one of the most popular exhibitions that broke all records in terms of attendance. But the market started changing. Import of automobiles to Azerbaijan fell by 5 times last year. In such situation it was hard to convince producers and dealers to take part at AutoShow. Therefore, we decided to postpone conduction of this exhibition.
Both local and foreign companies aspire to be there where it ‘smells of money’
CE: Which problems had the companies faced before the crisis and what challenges are observed now?
Farid Mammadov: When we just started working early in 2000s, many companies were not fully conscious of the essence and use of exhibitions. While meeting with companies we had to convince them of the necessity and importance in communication. To sum up, the exhibition culture was not developed enough at that period. Though, it certainly did not refer to all companies. Among our participants we have companies which have cooperated with us for 20 years and supported us from the very beginning. Now most of the companies are aware of the importance of participation in exhibitions. However, the substantial decline of world prices for energy resources caused the devaluation of manat which made companies revise their marketing budgets. Some companies even had to change their business model.
Some companies started saving funds for advertisement and new production in order to wait out this period. However, life goes on and the main thing for now is to get adapted to the current market situation and continue working. The crisis creates new opportunities and no matter how banal it sounds, that is just the way it is. In this respect, participation in exhibitions is the way to be aware of things occurring in the market and to decide which direction to follow. Exhibitions are a perfect tool to establish new contacts if the old ones are no longer effective. Thus, our current task, as an organizer, is to make an efficient use of the available budget so that to ensure companies’ participation in exhibitions with the least expenditures and in the meantime improve efficiency of their participation.
CE: Did you have to lower prices and get accustomed to new market conditions?
Farid Mammadov: Everything that is happening on the market now has certainly made influence on our activity. Compared to 2015, the space of exhibitions fell by 20% on average. It must be noted that the number of companies participating in certain exhibitions has not changed but the area they rent did reduce. It happens because companies try to save and optimize their expenditures on participation in exhibitions. We understand it and therefore we tried to adapt to the market as soon as possible. Our priority is to apply an individual approach to each company’s participation because our strategy implies maintenance of long-term relations with companies.
CE: Is the international content of companies changing at exhibitions? Which new countries come up with new stands? What is the rate in this direction?
Farid Mammadov: The composition of exhibitions always has new players but the main core of participants is preserved as well. New exhibitors come and the number of countries showing interest in the exhibition is getting higher. I can say that year by year right until 2015 the number of countries which took part in the exhibitions, held in Azerbaijan, increased and reached 65. Companies from 52 countries of the world took part in the exhibition in 2016. Obviously the devaluation made some foreign companies consider Azerbaijan’s market situation more cautiously because produced products offered in firm currency has perhaps turned out too expensive in our market. For instance, the Italian national stand at BakuBuild exhibition used to occupy almost half of the foyer of ExpoCenter, while in 2016 the area of the Italian stand reduced by one third. As the phrase goes, the holy place is never empty. The companies and countries, which have overcome the devaluation of their national currencies and managed to adapt to the market in due time, have occupied their places straight away. Products of these countries, for instance Russia and Turkey, cost cheaper and feature good quality. Accordingly, they managed to get their segments at the local market. Exhibitions are an integral part of an economy, which reflect all the economic changes clearly and perfectly.
CE: That is to say, you feel the pulse of the economy and interest of investors?
Farid Mammadov: Absolutely true. Exhibitions perfectly convey the pulse of the economy. Exhibitions serve as a signal for investors, local and foreign companies as an indicator, reflecting any market change. So they head to markets which feature revival and ‘smell of money’.
CE: Could you please tell whether you have felt the bottom of the crisis?
Farid Mammadov: If to put exhibitions aside, as an economist, I think that the Azerbaijani economy has reached its bottom and I believe this year the situation will start improving gradually. The reason is that businessmen started adapting, notwithstanding the panic that used to be before. Households and companies tried to shift to cash and spend nothing. Now the market started reviving, though very slowly. As far as we, as the exhibition operators, are concerned, we probably will feel the positive dynamics late in 2017. I’ll explain. The thing is that we, as operators, work with companies’ budgets which they laid a year before. For example, when the first devaluation happened in 2015, we did not feel it strongly because we worked with the budgets of companies set in 2014. We are going to hit the bottom, perhaps this year, because now we are working with companies’ budgets laid in 2016.
CE: Predicting that the exhibition business is expected to hit the bottom in 2017, you might have secured yourself against it?
Farid Mammadov: Of course, we hedge our risks. While choosing the path for building the market economy, we had a perfect understanding that there would be both face ups and downs. In principle, such kind of crisis is like a disease of a common man who does not want to be sick because it is hard to overcome. But on the other hand, it helps to gradually acquire immunity and become stronger and healthier in future.
CE: Can you, as an economist with the extensive experience, offer a cure for this disease?
Farid Mammadov: There can be no single cure for it. It is an onward movement, continuation of joint work and mutual support. One needs sometimes to risk, try new options for cooperation. But one must on no condition wait out and stand idle. We understand that it is not so easy for entrepreneurs to make money now unlike it was in 2008-2014. They are more attentive to all their costs, in particular, to marketing costs, including participation in exhibitions. Our task is to offer acceptable options, to provide companies with additional opportunities for the same budget, so that they could get a better return than they used to have previously.
The most resilient ones will stay on the market….
CE: In other words, be creative?
Farid Mammadov: Yes, but this is only a part of measures. We have many points we are working on. These include the individual approach and creativity, and the correct work with attendees. Customer care has been our traditional priority. Our customers follow us towards new markets, towards our new exhibitions, and we believe it is a great achievement. We will continue our efforts in this area. We develop and offer special participation programs for our corporate and loyal customers and sponsors. We have the entire system of incentives for participants with group and national stands. We are expanding our marketing opportunities, attracting professionals, and offering new resources. In my opinion, the most resilient ones will be able to stay on the market and the most customer-oriented exhibition companies will pass the “exam” of living through the crisis.
CE: So you believe the economy will start to grow gradually. What sector is going to be a locomotive?
Farid Mammadov: I had the honor to attend the conference devoted to the results of the third year implementation of the State Program on Social-Economic Development of Regions in 2014-2018 and held with the participation of President Ilham Aliyev. The head of state in details outlined his vision for the coming years. Obviously, we should not rely heavily on recovery of global oil prices that will bring us back to the old model of economic development. Therefore it is very important to continue differentiating non-oil sectors of economy. In this regard, a lot of attention is paid to the agriculture exhibition. The head of state also highlighted that implementation of new construction projects would continue this year in the city of Baku and across the regions. Social housing will be build heavily.
It is difficult to say exactly which sector will become a locomotive for the economy. What we need is to endeavour to develop harmoniously all areas where we can be quite competitive. Today, considering our natural environment, I suggest it could be agriculture and tourism first of all, and the ICT sector in the longer term.
The correct use of our transit potential will turn Azerbaijan into a transport hub. And, no doubt, the development of infrastructure will be even wider after a return of our occupied lands. The multiplier effect from development of all these sectors is very high.
Therefore, it is hard to say that a particular industry is going to be a locomotive to boost all other sectors. Now, in my opinion, the most important thing is a parallel development of different economic sectors, and the oil-gas industry will be like icing on the cake, our safety bag, give us confidence that we have exchange reserves and do not depend on anybody.
We need to put a lot of efforts into raising a generation of specialists….
CE: What do you think we need most now to ensure real diversification of economy?
Farid Mammadov: We have the financial resources and, as you know, at the time the fund was established to accumulate revenues from the oil industry. We are not strongly dependent on external sources of financing. Also, unlike countries with the lack of labour resources, we have them. But here, this is my subjective opinion, the question is about the quality of these resources, their qualification. We need to put a lot of efforts into raising a generation of specialists in the industries we talked about.
CE: How can this be done?
Farid Mammadov: Ministry of Education of the Republic of Azerbaijan is taking important measures to improve the education quality in our country. Young people were headed to abroad in order to return home with new knowledge and introduce it in different areas. It is clear that it is impossible to see the results within a year or two. This process can take years and perhaps even decades. But the main thing is that the vision exists and the process has already been launched. We for our part also try to contribute within the framework of social responsibility. For two years now we have been supporting the ‘Build your future’ project. This project supports children of the poor families and provides them an opportunity to get good education at the expense of sponsors. This project was launched owing to the enthusiasm of simple people who wished talented children to have an opportunity to study. So we also rekindled the dreams of this idea. We are very pleased that many of the enrollees who passed through the ‘Build your future’ project scored high points when taking entrance exams into higher education institutions of the country. Even now some of them are involved in work with new enrollees. Apart from this, the volunteers’ movement has started developing in Azerbaijan since 2012. Young people enjoy a chance to gain experience at international events and different companies. We welcome the voluntary movement and are pleased to see the interest growth among the youth towards the volunteer service which is why we became a partner of the student-voluntary program ‘BIR’ implemented under the Ministry of Education of the Republic of Azerbaijan. The program participants will help us at the exhibitions and I am confident that they will gain an invaluable experience and knowledge.
CE: Currently much is being done in the world to boost the development of Industry 4.0. This is a new industry with zero emissions and waste production, using the latest IT-technologies, energy saving technologies and new fuels. What ideas in this area do you have?
Farid Mammadov: I am not a specialist in this area but I can note that we welcome everything that helps to preserve the resources and the nature of our country. I think that Caspian Ecology exhibition supported by the Ministry of Ecology of Azerbaijan reflects the achievements in this area. Besides, Bakutel exhibition always demonstrates new IT technologies which subsequently enjoy use in different sectors of economy, making human labor easier and contributing to the environmental protection. The Ministry of Transport, Communications and High Technologies of Azerbaijan is working actively in this direction, developing the aerospace industry, robotics, digital technologies. I have no doubts that in the future all these areas will develop successfully in our country. I would like to add that everything that happened in the past year is a certain experience, and not only for us, but for all business circles having business activities in Azerbaijan. I am happy that we were able to regroup, so now we are better prepared for stress situations. As far as the future of the exhibition business of Azerbaijan is concerned, I always believed and hold by my opinion that exhibitions are the best way to establish strong business relations. In the century of digital technologies and shortage of ‘live communication’ exhibitions provide a unique opportunity for personal acquaintance of future partners, a chance to be the first to witness industrial novelties and for small companies to rank with large companies at the exhibition and many other things. In short, exhibitions mean opportunities. Every company has its own way how to use them. Another reason why I can talk about big prospects of the exhibition business in Azerbaijan is that we have a high level of mutual understanding with all interested structures and organizations of the country. Using the opportunity, I would like to thank all sector ministries and other supporting structures and companies of Azerbaijan, international organizations, Media, all our partners, the management of the BakuExpoCenter for help and support lent to our business.
Thank you for the interview