sheffield business school - vtcsheffield business school bsc (honours) events and leisure management...

Sheffield Business School

BSc (Honours) Events and Leisure Management

Title Economic impacts of mega-events in China: A case study on

Shanghai EXPO 2010

Name TANG Hoi Yan, Karen

Student No 91206610

Month Year April 2011

Sheffield Hallam University

Sheffield Business School

Title Economic impacts of mega-events in China: A case study on

Shanghai EXPO 2010

FULL NAME TANG Hoi Yan

STUDENT No 91206610

Supervisor: Ray Pine

In partial fulfilment of the requirements for the degree of Bachelor of Science in

Events and Leisure Management.

Month Year April 2011

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Acknowledgement

In this dissertation, I greatly indebted to my supervisor, Mr. Ray Pine, who

gives support to me, helps me to solve problems that I encountered when

doing the project and being patient in reading and commenting on the work I

hand in before. Especially, it is glad to have those professional advice and

guidance that the supervisor provided so that it can keep me doing the best as

I can for the final year project.

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Executive Summary

Nowadays, more people usually link mega-events with economic effects.

During the bidding for the hosting right, every country has prepared the

detailed plan to sell to the important authorities. In order to prepare the bid,

the competitors have to develop the concept and the feasibility study to

evaluate the costs and benefits. This process may require few years when the

country decided to bid the host right.

The study aims to focus on the economic impacts of mega-events, it is

necessary to understand what mega-event is. Mega-event is the larger-scale

event that the host community should bid the right and it can bring the widen

impacts on the host community. The Olympic Games, FIFA World Cups and

World EXPO are the typical examples of mega-events. Using the previous

mega-events as the reference to investigate how mega-events affected the

economy of host community in general.

After investigating the literatures of different previous mega-events, it found

out that the main positive economic impacts are enhancing the tourism

industry, creating job opportunities and increasing inward investment. On the

other hand, the negative economic impacts are focus on the inflated price

during the event and hidden cost after event, such as maintenance cost.

The objective of this study is to find out the economic impacts of mega-events

in China, hence, selecting the Shanghai EXPO 2010 to investigate its impacts

on Shanghai economy. It showed that the positive economic impacts of

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Shanghai EXPO are similar to the previous mega-events mentioned in

literature reviews. Shanghai EXPO also benefits to the tourism industry, jobs

creation and investment, with the influence of tourism industry, it caused the

multipliers effects to other industry, like hotels, retails. Their revenue was

rapidly increased within this period so the tax revenue also increased at the

same time.

Although, mega-events caused the positive impacts on local economy, it still

has the negative impacts. Shanghai EXPO had covered the costs as like as

the normal mega-events, it still had to bear the responsibility to operate and

maintain the remained building, for example, China Pavilion. To spare more

space for the Shanghai EXPO, the local residents had to move out the

selected site for Shanghai EXPO. The local government is required to give

appropriate compensation for the suffered residents. Therefore, it is another

external cost of holding Shanghai EXPO.

After evaluating the impacts of Shanghai EXPO on local economy, it seems

that the benefits are more than the costs. Even there are some benefits of

Shanghai EXPO, recommendations to the future mega-events in China are

needed. It is because the international status of China becomes more

important in the world. Within these few years, China held two mega-events,

both Beijing Olympic Games and Shanghai EXPO. It must be more

opportunities for China to hold other mega-events in future. The

recommendations provided can help China to hold more successful events to

the world.

Table of Contents

Acknowledgement ......................................................................................................... i

Executive Summary ..................................................................................................... ii

CHAPTER 1 Introduction ........................................................................................ 1

1.1 Identification of research ......................................................................... 1

1.2 Background of Shanghai World EXPO 2010 ........................................... 2

1.3 Aim and Objectives.................................................................................. 2

CHAPTER 2 Literature Review ............................................................................... 3

2.1 Definition of Mega-Event ......................................................................... 3

2.2 Relationships between Economic Impacts and Mega-events ................. 4

2.3 Cost-Benefit Analysis .............................................................................. 4

2.4 Economic Benefits ................................................................................... 5

2.3.1 Tourism ........................................................................................ 5

2.3.2 Investment ................................................................................... 6

2.3.3 Employment ................................................................................. 7

2.4 Negative Impacts of Economic ................................................................ 8

2.4.1 Inflated Prices .............................................................................. 8

2.4.2 Hidden Costs ............................................................................... 8

2.5 Summary ................................................................................................. 9

CHAPTER 3 Methodology ...................................................................................... 9

3.1 Data Collection Method ......................................................................... 10

3.1.1 Qualitative Method ..................................................................... 10

3.2 Research Method .................................................................................. 10

3.2.1 Secondary Research ................................................................. 10

3.2.2 Case Study ................................................................................ 11

3.3 Limitations ............................................................................................. 11

CHAPTER 4 Findings and Analysis ...................................................................... 12

4.1 Findings ................................................................................................. 12

4.1.1 Tourism ...................................................................................... 12

4.1.2 Job Opportunity ......................................................................... 13

4.1.3 Investment ................................................................................. 13

4.1.4 Multipliers Effect ........................................................................ 14

4.1.5 Opportunity Costs ...................................................................... 15

4.2 Analysis ................................................................................................. 16

4.2.1 Costs .......................................................................................... 16

4.2.2 Benefits ...................................................................................... 17

4.3 Summary ............................................................................................... 17

CHAPTER 5 Conclusion and Recommendations ................................................. 18

5.1 Conclusion ............................................................................................. 18

5.2 Recommendations ................................................................................. 21

5.2.1 Minimizing the disturbance to local residents ............................ 21

5.2.2 Referring to the previous similar events .................................... 22

5.2.3 Monitoring the progress of event continuously .......................... 22

5.2.4 Attracting more foreign tourists .................................................. 23

5.2.5 Getting public involvement ......................................................... 24

References ................................................................................................................ 26

Bibliographies............................................................................................................ 32

Appendices ............................................................................................................... 33

Appendix A: Type of Sports Event ..................................................................... 33

Appendix B: Investments related to Beijing 2008 .............................................. 33

Appendix C: Shanghai-Percentage Change in Hotel Rooms ............................ 34

Appendix D: Shanghai EXPO 2010 Sponsorship Revenue ............................... 34

Appendix E: Percentage change of foreign investment between 2009 & 2010 . 35

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CHAPTER 1 Introduction

1.1 Identification of research

The World EXPO has a long history but it is never held in Asia. In 2010,

Shanghai has opportunity to be the first city in Asia to host World EXPO. It has

the significant meaning in the world. World EXPO is the third largest event

after Olympic Games and FIFA World Cup that can attract extraordinary

visitors. Although the host country invested larger sums in holding the event,

many countries still want to host mega-event as it can create the perceived

economic benefit on the host country, like bring increased income and jobs

(Porter, 1999; Toohey et al., 2007). Sherwood, Jago and Deery (2005, cited in

Allen, et al., 2008) found out that there were 28.1% of 224 journal articles and

event-related conference papers focused on the economic impacts that it is the

largest ratio. It is proved that hosting an event, especially the mega event, may

cause the effect on the economy of the host community.

After hosting Olympic Games in 2008, the China government presented the

successful event in the world, at the same time it gained great economic

impact. However, it is believed that the economic benefit of Shanghai EXPO

2010 would be 3.5 times larger than the 2008 Olympic Games (Business

Standard, 2010). The World EXPO has been held last for six months, without

any doubt, there are many visitors will visit to Shanghai every day, no people

can predict how it affects the economy in China. It is not only for the

government but also the businesses in China. After the financial crisis, global

economy had suffered from it even the economy of China. In this time, the

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World EXPO can help to boost the economy. Therefore, it is worthy to study

the economic impact of Shanghai EXPO 2010 in China.

1.2 Background of Shanghai World EXPO 2010

China was held the first exposition - The 7th World Expo 2010 Shanghai China

took place from May 1 to October 31 in 2010. The theme of EXPO 2010 is

Better City, Better Life that provide the great opportunity to explore the full

potential for urban living in the 21st century and a significant period in urban

evolution. There are about 242 countries, cities and international organizations

to participant in the EXPO 2010. The total area of expo site is about 5.28

square kilometers which divided into five zones, marked A, B, C, D and E and

it is the largest exposition in the history of World EXPO.

The design of each pavilion can represent their individual culture, like South

Africa Pavilion presented the natural scenery in front of visitors by drawing

zebra pattern on chair pads (The official website of Expo 2010 Shanghai China,

2010). They demonstrated their advanced eco-friendly environmental

technology integrated into their design to increase the awareness of

environmental protection, such as Japan Pavilion used the utilization of solar

power.

1.3 Aim and Objectives

This dissertation aims to analysis the impacts of Shanghai EXPO 2010 on

economic aspects in China in order to maximize the economic benefits of

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future mega-event in China. The study seeks to address the following research

objectives:

Define the mega-event and apply to Shanghai EXPO 2010

A literature review to discover economic impacts of mega-events, both

positive and negative

Research of the economic impacts of Shanghai EXPO 2010

Recommendation to increase or improve the economic benefits of future

mega-event

CHAPTER 2 Literature Review

The literature review is to define the mega-event and to discover the economic

impacts of mega-events, both positive and negative. To identify the economic

impact of different mega-events, such as World Cup, Olympics Games, and to

analysis the economic impacts of Shanghai EXPO 2010. Some literatures

indicated mega-event as an opportunity to improve the economic aspect of

host city (Malfas et al., 2004).

2.1 Definition of Mega-Event

Mega-event is the larger scale event that can yield extraordinarily high levels

of tourism, media coverage, prestige or economic impact for the host

community, venue or organization (Getz 2007, p.25). According to the

definition, Shanghai Expo 2010 is the one of mega-event since it can attract

larger tourists from the world apart from Olympic Games and FIFA World Cups,

during the event, there are about 73 million visitors to visit (The official Website

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of Expo 2010 Shanghai China, 2010), it helps to boost the tourism industry

meanwhile and all the spotlights will focus on this event. Hall (1997) and

Roche (2000) also agreed that World Exposition is the mega-event because it

targets on the global tourism market and the size of event is largest, it can

bring the economic impacts on the hosting country or city.

2.2 Relationships between Economic Impacts and Mega-events

No matter what the reasons of hosting mega-events, it still difficult to compel

people believed that the importance of these reasons higher than the

economic impacts on the community. Andreff & Szymaski (2006) identified

the promise of economic windfall is the main reasons of hosting mega-events.

Gratton, et al. (2000) had classified various kinds of event based on the extent

of the event to generate the economic impacts (Appendix A). Type A is

mega-events, like Olympic Games and FIFA World Cup, which generate

significant economic impacts for the host city. Therefore, there is correlation

between economic impacts and mega-events.

2.3 Cost-Benefit Analysis

Cost-benefit analysis (CBA) is the good method to evaluate the

macroeconomic effects of mega-event (Preuss, 2004). It qualifies the inputs

and outputs as holding the event must relate to larger investment, the

investment may led to the outputs, like the creation of employment or increase

tourist that benefits the economy of local. Costs are either one-off, or may be

ongoing. Benefits are most often received over time. It is to analysis by

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calculating a payback period. This is the time it takes for the benefits of a

change to repay its costs (Mind Tools Ltd., 2011).

2.4 Economic Benefits

2.3.1 Tourism

Roche (2000) measured that mega-event will catalyse the development of

tourism industry in the country. Getz (2007) also agreed that event will be the

attractions to motivate the non-local tourists to travel or stay longer in the host

city.

In 2010 World Cup FIFA, more than 309,000 visitors from different countries

travel to South Africa with the main purpose of attending the World Cup to

watch the competition that generated R3.6 billion to the local economy (South

Africa Tourism, 2010). In Sydney 2000 Olympics, increase 15% visitors to

Sydney during the month of September (Janson, 2007). The Australian Bureau

of Statistics showed that $1.4 billion income related to Olympics during the

September quarter (Haynes, 2001).

It provided an opportunity for visitors to have a first impression in the host city.

2010 World Cup FIFA attracted 59% visitors visited South Africa first time

(Ministry of Tourism Republic of South Africa, 2010). Very importantly, if they

have a good experience, they will visit again that can bring the economy

benefit after the event. For example, almost 90% tourists would visit again in

the future and 96% of them would recommend their friends and relatives to

visit South Africa (Ministry of Tourism Republic of South Africa, 2010).

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In addition to spending at the event, they will spend money on the

accommodation, services and goods in the host city (Bowdin et al., 2006). With

the expenditure of visitors, more about 30% spend on shopping and 20% on

accommodation, the other 19% on the food and drink (South Africa Tourism,

2010). The retail sector will be affected by the tourism. Some journalists would

report all event-related news to their country that increased the exposure of

host city. The broadcast of the mega-event might raise the interest of television

viewers as they might decide to take a trip to the host city in the future

(Matheson, 2006).

2.3.2 Investment

Robinson (2010) believed that event also increased the inward investment in

the region. A study by Kessung (2002) divided the inward investment into

direct and indirect investment. Direct investment includes those costs directly

related to the event, such as construction of stadiums, transportation as well

as media facilities. Indirect investment includes expenditures for the smooth

operation of the event, including lodging facilities and infrastructure such as

roads, railways.

For the Direct investment, according to Brunet & Zuo (2008), Beijing

government invested about US $1871.6 millions on the construction of

Olympic Village and Sports venue (Appendix B). It is true that the huge inward

investment had an important effect on the economic growth of host city. The

study of Zhang (2008) showed that Beijings average economic growth was

12.4%, 1.6 percentage points above the national average from 2003 to 2007.

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For the indirect investment, Beijing government invested about US $26.2

billions on the development of transportation (The Official Website of the

Beijing 2008 Olympic Games, 2008). Some old hotels in Beijing before

Olympic Games, the investors from aboard and local had seen the great

business opportunity in the reconstruction of old hotels, thus they cooperated

with the old hotels with a total sum of RMB$212.62 million (The Great Wall

Adventure Club (Beijing), 2006).

2.3.3 Employment

To host a mega event, it might create some full-time or part-time jobs that

relevant to the event, or even temporary jobs that might last for few months or

days, like construction, hotel, restaurants and tourism industry (Toohey et al.,

2007; Aravossis et al., 2006).

Before the 2008 Beijing Olympic Games, there were about 1.8 million new jobs

would increase across different commercial sectors in Beijing, among all

sectors, construction sectors created an extra 430,000 jobs, the retail and

wholesale industries gained 130,000 new jobs between 2004 to 2008 (The

Official Website of the Beijing 2008 Olympic Games, 2008).

The situation of labour force in Attica or even whole Greece had benefited from

the 2004 Athens Games. There had a greater change of the labour force in

both Greece and Attica. From 1998 to 2004, the labour force of country was

increased about 7% and the Atticas labour force was increased about 11.8%

at the same time (Aravossis et al., 2006). The unemployment rate of Attica was

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decreased successively from about 13% in 1999 to below 10% in 2003

(Aravossis et al., 2006).

2.4 Negative Impacts of Economic

2.4.1 Inflated Prices

Normally, the atmosphere of mega event is high when the event is closed to

the opening date, the business people will take an opportunity to increase their

product price to gain more profits during the event and the price of hotels will

be affected at the same time.

During the Beijing Olympic Games, despite the average rate of hotel rooms in

2008 was lower than before, the average price of hotel rooms still increased

compared the same period in previous year. In August 2008, the average price

of hotel rooms was $1653.4 compared with the average price of hotel rooms

was $513.6 (China National Tourism Administration, 2008). With 221.9%

increased in the average hotel price, the visitors had to suffer from the highest

expenditure in the accommodation.

2.4.2 Hidden Costs

Once hosting mega event, the organizations must invest huge money on

building some new stadiums or facilities. After the event, those facilities may

not make full use. The 2002 World Cup held in South Korea, there were some

new football stadiums. However, Barclay (2009) pointed out that only half of

new stadiums in South Korea had regular tenants. The capacity of each

stadium about 40,000 60,000, it is difficult for the South Korea to make use of

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the stadiums as the professional football attendances in average only 3,000

even in Japan, with a more developed football league, J-League only 16,000 in

average. Although the facilities were out of usage, it is necessary to maintain it.

The maintenance cost would increase and it would be the larger cost for the

government.

In the other hand, some hotels were established in order to accommodate the

increased visitors during the event. After the event, the demand of tourists

would lower than the hotel supply. In this period, some hotel operators cannot

meet the certain room-rate, they might loss and decided to close the hotel.

Teeigland (1999, cited in Barclay, 2009) mentioned that this effect displayed in

Lillehammer after the 1994 Winter Olympics, 40% of full-service hotels in the

region had gone bankrupt within five years of the event.

2.5 Summary

It is clearly understand that why the cities wish to host the mega event, mega

event seems to be equal to the economic windfall for the host city. The above

literature showed that there are some economic benefits of hosting mega

event. However, it cannot underestimate the negative impacts in economy.

The mega event is success or not depends on the management of

organization.

CHAPTER 3 Methodology

The study emphasised on the economic impacts caused by mega-event in

China. Some studies showed that the mega-event would bring effects on the

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economy of host community. It is better to use the secondary data to analysis

the economic effects in China.

3.1 Data Collection Method

3.1.1 Qualitative Method

Qualitative research defined as a form of social inquiry that focuses on the

way people interpret and make sense of their experiences and the world in

which they live (Holloway, 1997, p.1). It always emphasises on the in-depth

understanding about the research hypotheses rather than the number of data

collected. Therefore, this project only uses case study to analyze the economic

impacts of mega-events deeply.

3.2 Research Method

3.2.1 Secondary Research

Secondary method refers to the existing information or data had been

collected for the other purpose (Crowther & Lancaster, 2008). Due to the

majority of the relevant information gathered for this study primarily from books,

journals, internet sources and newspaper articles. Using primary research, it is

better to select the people related to the Shanghai EXPO 2010 to obtain the

information. However, it seems difficult to contact with them to do the research.

Patzer (1995) listed out the main two advantages of secondary data over

primary data are time- and cost-saving. Since secondary data is existing now,

everyone can obtain it within the limited time easily rather than waiting the

research result of primary method. It saves money too as secondary data is

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the research done by other purpose. During the primary research, the

researcher must require cost to do the research, like recruit the research

company. However, secondary data does not spend money.

3.2.2 Case Study

Case study research involves the intensive study of a specific case (Gratton

& Jones, 2010, p.107). Regarding to the objective of this study, Chinese

Government had held different mega-events. Using all mega-events may not

accurately to find out how the mega-event affects the economy in China.

Hence, using the particular case helps to analysis the economic impacts to the

community deeply. Selecting Shanghai EXPO 2010 because it is the

importance milestone of World EXPO and even for the China, it is worthy to

use it to analysis the economic impacts.

Case study provides a greater amount of information to describe the situation

in detail. It shows the positive and negative aspects of the research clearly.

Sometimes, there are some problems the researcher may not discover before

(Lanthier, 2002). If there are problems had been found, the analysis will be

more reliable.

3.3 Limitations

It is realized that the impacts of an event will be affected by some external

factors, for examples, political, global economic environment, etc. Using

Shanghai EXPO 2010 as a case to represent all mega-events in China seems

not accurate.

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Moreover, Shanghai EXPO 2010 had closed for few months but some

information may not publish to the public. It may not gather the more detailed

and accurate data about the event. Although collected those data, it may be

transform into different forms, it may lessen the original meaning. The

accuracy of analysis will be definitely influenced.

CHAPTER 4 Findings and Analysis

4.1 Findings

4.1.1 Tourism

Shanghai EXPO 2010 had attracted extraordinary number of visitors to visit,

there were about 73 million visitors including 3.5 million international visitors

and brought over $12 billion direct income (PhoCusWright Inc, 2010). There

were many hospitality services in the park, like restaurants, retails, the

increased tourists also benefits them. From May to August, the accumulative

total revenue of food and beverage industry in the park was over $1.6 billion

and licensed merchandise sales had reached over $23.5 billion (Cheung,

2010). The expo had drawn 127,400 media and news professionals, about

10,000 out of total media from overseas (Global Intelligence Alliance, 2010). It

helps to promote the destination to the foreign market and attracts them to visit

Shanghai after event.

Shanghai EXPO caused the tourists to extend the length of stay, they might

stay in Shanghai for three days on average (Global Intelligence Alliance, 2010).

Since Shanghai EXPO, the cumulative number of overnight inbound tourists to

Shanghai more than 4 million from January to July, increased nearly 39%

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compared with the previous year (Peoples Daily Online, 2010). With the

influence of tourism, the demand of accommodation was affected. According

to the graph of STR Global (WORLD PROPERTY CHANNEL, 2010), the

demand of hotel rooms during the EXPO was higher than non-event period

(Appendix C). The revenue per room in Shanghai from May to June was more

than 100 percent, 102.9 percent and 113 percent (WORLD PROPERTY

CHANNEL, 2010).

4.1.2 Job Opportunity

After the financial crisis, some organizations may not recruit new employees

and even dismiss the current employees. There are lots of fresh graduates

affected. To cope with this problem, The 2010 World Expo organizer recruited

130 interns from the city's university graduates (Expo 2010 Shanghai China,

2010) which provided them the chance to gain the experience about the

related jobs, such as the management, service.

Therefore, they can obtain the job easily after Shanghai EXPO because they

had a competitive advantage compared with others. According to the

Shanghai Statistical Yearbook 2006 to 2008, the number of new urban

employees was increasing from 67.42% in 2004 to 70.3% in 2007. At the same

period, the unemployment rate was decreased from 4.5% to 4.3%.

4.1.3 Investment

Shanghai EXPO is the most expensive expo in history that invested $400

billion. The Expo has two investment accounts, both construction of accounts

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and operating account (China.org.cn, 2010). For the construction investment,

Shanghai government invested $18 billion in building venues, infrastructure,

World Expo Village, the park transportation, electricity and other facilities. The

operating account including tickets sales, sponsors, licensed Expo products,

and etcetera that might reach $10.6 billion.

Some organizations also support and invest in the Shanghai EXPO, thus the

comprehensive sponsor plan had made to identify the benefits and

contributions to the organizations, comprising of partnership and senior

sponsorship levels. There were 10 partners and 15 senior sponsors for the

expo, both of them sponsored about $281.5 billion to the expo (Appendix D).

During 2009 to 2010, the foreign investment had continuously increased in

every month (Appendix E). It helps to boost the economy of Shanghai, the

GDP in Shanghai had continually increased from 2006 to 2009 (Shanghai

Statistical Yearbook, 2010).

4.1.4 Multipliers Effect

With the stimulation of Shanghai EXPO, the China government and some

companies invested money in the development of infrastructures,

transportation and construction. It required many workers so various

temporary jobs had created. The demand of employees exceeded the current

supply, thus the employers increased the wage to attract more employees.

Apart form this, Shanghai EXPO also benefited to the tourism industry and

related industry, such as accommodation, catering. These industries gained

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the profits from the larger inflow of tourists. No matter the increased of

employees or wages and the profit of business, it still had a closer relationship

with tax revenue. Therefore, the tax revenue increased from $409 billion in

2005 to $776 billion in 2009 (Shanghai Statistical Yearbook, 2010).

4.1.5 Opportunity Costs

The price of land in China maintains high level, especially Shanghai, it is the

central of economy in China. In order to holding the expo, the government

decided the location of Shanghai Expo on both banks of Huangpu River and

between Lupu Bridge and Nanpu Bridge. Some residents were living there, the

government needs to relocate them for the Expo, about 18,000 households

have been resettled in the new living environment (World Expo Magazine,

2006).

The size of expo site about 5.28 square kilometers, the land developers can

invest it for building many apartments and commercial buildings to earn money.

The values of this land cannot estimate and it may be higher than the market

value because it will revalue after few year. However, government used it for

the expo.

After the expo, the China Pavilion was permanent buildings remaining on the

site and reopened for the public to visit. Although it obtained the $20 ticket fee

per person, it still required staff to help for the operation of pavilion and

maintenance, the huge operation and maintenance expenditure may not be

covered by ticket fee.

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4.2 Analysis

Based on the Cost-Benefit Analysis, the money invested in the event will be

the cost and the positive output is the benefit. In the light of the above findings,

it showed that host Shanghai EXPO 2010 had expended some money and

efforts. However, it still received some benefits from it.

4.2.1 Costs

For the cost, the government expended money on the building of venue,

transportation, construction and infrastructure. To allocate the land for the

expo, government needed to arrange the residents who living in the location of

expo to the new environment. It required spending money and resources to

persuade residents to move to the new living area.

Also, the land used for expo can use to generate revenue by selling or

investment. It can be used for other purpose to earn money that may benefit to

the local economy. Therefore, hosting Shanghai EXPO had to cover the

opportunity cost since it gave up the opportunity to generate profits and bear

the risk of failure of event.

Besides, even the expo was already finished, the China Pavilion remains open

for the public. It may be true that it will become one of attraction venue for the

tourists in Shanghai. In the pavilion, different facilities and equipments have to

maintain and clean. It also recruits staff to help for the operation of the pavilion.

Normally, no matter how high the construction expenditure of pavilion, the

maintenance fee must the huge expenditure of the building.

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4.2.2 Benefits

Mega-events always bring some benefits to the host community, Shanghai

EXPO is the one of examples. When the China government won the right of

hosting World Expo, many companies, both local and international, showed

the willingness to support and invest the event. Some private companies were

built the hotels because they looked the expo as the opportunity to let them

generate profit. With the investment, the number of event related construction

projects had increased. To meet the rising demand of labour force, the

unemployment people had been recruited, meanwhile the unemployment rate

decreased.

Before the expo, the government had to launch different programs to promote

the event in the world and invited different countries to participate in this event.

There were over 200 countries to build the pavilion in the Shanghai EXPO, the

media from different countries to report the news about expo and Shanghai.

More people visited to Shanghai because of the news. These visitors always

stayed for few days, the hospitality industry had been benefited from the

increased visitors. It increased tax revenue and GDP of local economy.

4.3 Summary

Comparing to the benefits and costs of hosting Shanghai EXPO, the benefits

are more than the costs. Although the government invested much capital to the

event, some expenditure can be recovered by the event. The sales of tickets,

souvenirs and catering in the park had been already breakeven as soon as

quickly only about few months after the opening of event. At the beginning, the

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development of transportation and infrastructure are mainly for Shanghai

EXPO. However, it stimulated the urban transformation and renewal that

benefits for the community.

Meanwhile, it helps to promote the Shanghai to the international market that

may have long term impact on the local economy. Due to the expo, many

foreign investors visited to Shanghai and they can communicate with others to

enhance the opportunity of trade. They may invest money or have business in

Shanghai because of the potential market. The success of Shanghai EXPO

gave the deep impression to the tourists. After the event, some tourists will visit

again and those tourists are never visit Shanghai will have the motivation to

visit once time with the effect of word-of-mouth.

CHAPTER 5 Conclusion and Recommendations

5.1 Conclusion

In conclusion, mega-events become more important for a country in a recent

decade. It not only represents the competitive advantage of the country but

also brings effects on the economy of host country.

In general, some literatures showed that holding mega-events as the catalysis

of tourism. The athletes and audiences had been attracted to visit to the host

city by the mega-events. Resulting from the larger tourists to the host city, the

demand of accommodations, catering service had also increased. To fulfil the

higher demand of tourists, the current labour supply did not meet the needs of

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market. Therefore, there are many jobs opportunities in wide aspects, such as

hotels & accommodation, tourism, retail service.

Apart from this, the mega-events pushed the urban transformation and

renewal. Host country hopes to present the best area in front of tourists.

Government must spend much money on the redevelop the city and even build

the transportation to distribute the larger inflow to the venue of mega-events.

There are lots of construction workers to conduct the project. The jobs about

architecture work also increased. Moreover, the investors understood the

mega-events as an opportunity to promote their brand to the world in an

efficiency way. More investors decided to invest money to help host city.

However, there are some negative impacts brought by mega-events, like

inflated prices and hidden cost. As the growth of sales rate increased by

mega-events, some companies raised their price to obtain the maximize profits.

The residents had suffered from the higher price. After event, the buildings,

like venue and facilities, still kept. It had to pay cost to maintain the venue or

facilities no matter it had used or not. Sometimes, the maintenance cost was

higher than the construction fee.

Although there are different impacts of mega-events, it still cannot really

understand how the influence of mega-events on China. Hence, this study to

investigate Shanghai EXPO in order to find out the actual impacts on local

economy. After investigation, it proved that there had a direct and positive

relationship between mega-events and tourism. As the influence of tourism,

20

the local economy had boosted because tourists consumed much money on

accommodation, shopping and catering. Companies had profits means the tax

revenue raised. The overall economy had been affected, thus GDP in

Shanghai continuous increasing.

Besides, Shanghai EXPO encouraged the local and international investors to

invest money. They realized that investing in Shanghai EXPO was worth and

more efficiency than other marketing strategies. They only spent a sum of

money then they can get the higher returns. It also created some job

opportunities for fresh graduates so they had a chance to practice before they

really work in the society. They had more experience that can enhance their

competitive advantage when compete with other candidates.

However, many local residents had moved their home because of the expo.

Despite some residents willing to move since they can live in a new

environment, there were some residents did not want to move, especially

elderly. The government had to spend many resources to persuade them to

move. Also, the China Pavilion retained after event and opened for the public,

it has to recruit employees to operate and spend money to maintain the

pavilion. It cannot estimate now but it is definitely true that the maintenance

cost is high expenditure and need to pay every year.

Finally, the economic impacts of Shanghai EXPO seems similar to the general

mega-events although there is a little bit different from both. The bit difference

21

may result from the management of host country and the external factors of

global environment.

5.2 Recommendations

Even through how success the mega-event is, there are some spaces to do

the best. The recommendations list below provided the reference for China

government to hold other events in future.

5.2.1 Minimizing the disturbance to local residents

Actually, hosting the mega-event is a joy thing, government should share the

joy with residents. Nevertheless, while holding Shanghai EXPO 2010, the local

government disturbed the living of local residents and let them to move from

their original living environment.

The host government should conduct a well and detailed study before the

event which helps to identify the problem they would face during the event.

When there are problems arise, the local government has time to find out the

solution to minimize the inconvenience caused to the residents. Sometimes,

the problems might not easy to solve and it cannot avoid the inconvenience to

the residents. The government can negotiate with the suffered residents to let

them understand the situation and achieve the common understanding about

the problem. It not only can let residents to feel respect but also can give them

a time to accept the decision made by government. It helps to reduce the

resistance of residents.

22

5.2.2 Referring to the previous similar events

No event is definitely perfect so that evaluation is necessary stage after event

in order to keep improvement. At the beginning stage of event, planning plays

the vital role. Normally, planning just used for minimizing the serious of

potential risk but it cannot prevent all problems.

According to the experience of previous events, there had some different types

of problems happened. The management team can conduct the detailed plan

to cope with the potential risk or problems before the event. In case there is an

unexpected incident happened, it will know how to solve if it was happened

before on the previous events. It can reduce the harm of event and showcase

the ability of problem-solving to the world.

Although China held Beijing Olympic Games and Shanghai EXPO in 2008 and

2010, it is still lack of experience for China to hold the mega-events. There are

some potential problems China government might not encounter or expect

before when organized Beijing Olympic Games and Shanghai EXPO. Hence,

when the government win the right to hold the mega-event, it is best for them

to refer to the similar events held before to get the knowledge from them. If it is

possible for the government to consult with the experts who had involved in the

previous events, it will help a lot about the operation of event.

5.2.3 Monitoring the progress of event continuously

It requires more than four years from planning stage to implement the

mega-event. During the long period, there are lots of tasks from various

23

aspects need to do, such as marketing, recruiting volunteers, training and

financing. It is required some resources and money for each task, thus, it is

important to place the appropriate resources on the right place at the right

time.

In general, organization must estimate the budget before the event. The

purpose of carrying out the budget plan is providing the capital for the

organization to spend within the particular range. It can control the expenditure

the organization to spend, otherwise, it must out of budget. To generate the

maximize benefits on local economy, it must use less capital to implement the

successful larger-scale event.

Moreover, to ensure the event can operate on time and smooth, all progress of

event must keep on track, hence, the Gantt chart developed for the

organization to identify the sequence of each task. If one of the tasks cannot

finish on time, it will affect the progress of following task. Whole event will

affect so keeping monitoring the progress is essential.

5.2.4 Attracting more foreign tourists

According to the BBC News, many visitors to Shanghai EXPO were Chinese.

70 millions visitors for China is not a larger number because there are 13

billions citizens living in China. To boost the local economy, it cannot only rely

on the local visitors. It should attract more tourists from overseas.

24

For the future events hold in China, government should spend much money

and effort on promoting the event for overseas tourists. Some foreigners have

not visit China before, mega-events can be one of extrinsic motivations to

attract them to visit China once time. Attracting them to travel must let them to

know what the attractive points between the event and the place.

Apart from participating in the event, some visitors to visit the host city will also

travel inboard. If they have a great time during travelling, they will visit the

place again or recommend it to their friends. With the effect of event, it not only

promotes the event and attracts them visit during the event. For the long-term

impact, it also helps to promote destination that enhance the desire of tourists

to travel.

5.2.5 Getting public involvement

The level of public involvement is the one of important factors of successful

event. Holding an event always requires some volunteers, performance groups,

they do not have any remuneration for their effort but they still do their best

because they have commitment on the community. The event cannot run

successful without their involvement. With the public involvement, the

residents will feel proud of the event hosting and cooperate with the

government.

During the event, the tourists travel to the host country must get in touch with

the local residents at the first time. The first impression of tourists about the

host community made will be affected by the attitude of residents. If the

25

residents participate in the event, they will welcome to the tourists and treat

them friendly. Having a good impression, the tourists will visit again or invest in

the host community. It will have a good impact on the local economy for the

long term.

26

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Appendices

Appendix A: Type of Sports Event

Type Frequency Level of impact Event

A Irregular/ one-off Significant economic

activity, media interest

Olympic Games, FIFA

World Cup, UEFA cup

B Annual Significant economic

activity

FA Cup Final,

Wimbledon, Cricket Test

Match

C Irregular/ one-off Limited economic

activity

European Junior

Swimming Championship

D Annual Limited economic

activity

National Championship in

most sports

Source: Gratton, et al.

Appendix B: Investments related to Beijing 2008

Source: Brunet & Zuo

34

Appendix C: Shanghai-Percentage Change in Hotel Rooms

Source: WORLD PROPERTY CHANNEL

Appendix D: Shanghai EXPO 2010 Sponsorship Revenue

Partner Senior Sponsor

Number 10 15

Sponsoring Fees (RMB million) 200 81.5

Subtotal (RMB million) 200 122.3

VIK (RMB million) 800 489

VIK reduction (RMB million) 200 123

Add up of practical revenue (RMB million) 1.8 1.1

Total of practical revenue (RMB million) 2.9

Source: Shanghai EXPO 2010

35

Appendix E: Percentage change of foreign investment between 2009 & 2010

Jan Feb Mar Apr May Jun Jul

Amount of

direct foreign

investment

committed

-2.7% 5.2% 20.0% 13.7% 17.6% 22.7% 32.2%

Amount of

investment

disbursed

5.0% 5.1% 5.5% 4.7% 3.0% 1.8% 0.7%

Source: Shanghai Municipal Statistics Bureau