J
i
In tFO
International
Trade Resources
Organization,
Inc.
Business
Plan
This document
contains confidential and proprietary belonging exclusively to: International Trade Resources Organization,
information Inc.
Michael Athy, President International Trade Resources Organization, Inc. Two Pennsylvania Plaza, Suite 1500 New York, New York, 10121 Telephone: 212-292-4933 Facsimile: 212-292-4920 E-mail: intromail@earthlink.net
This is a Business Plan. It does not imply an offering of Securities.
Business Table of I
Plan ontents
Executive Summary A Markets ................................................................................................... B C D E F G H I J K L Needs of the Markets .............................................................................. Business Description ............................................................................... The Opportunities Competition and Our Products .................................................... and Our Sustainable Advantages .....................................
1 1 2 2 4 6 7 8 9 9 10 10
Our Company ......................................................................................... Milestones ............................................................................................... Projections ............................................................................................... Our Offer ................................................................................................. Use of Funds ........................................................................................... Exit Strategies ......................................................................................... Further Information .................................................................................
II
ompany Overview A B C D E F G H I J K Legal Business Description Government Management Management Organizational Regulations Stock Allocation & Locations ................................................ & Legal Status ................................................. 11 11 11 11 14 15 15 16 16 17 17
& Ownership ...............................................................
Team .................................................................................. Team: to be finalized ............. i........................................... Structure .........................................................................
Outside Support ........ :............................................................................ Board of Directors .................................................................................. Staffing .................................................................................................... Outsourcing ............................................................................................. Strategic Alliances, Marketing Agreements, and Other Cooperative Arrangements .......................................................................................... escription: Exhibition Services Program ESP (ESP) ........................................................ Manual ..................................................
III
Platform Product A B C
Exhibition Services Program Samples of the ESP Database Types of ESP Programs
16 22 27
.........................................................................
I
The Markets A B C D E F G H Market A B C D E F G H I
For ESP of the Market ........................................................................... Sponsors .............................................................................. Funders ........................................ 30 30 31 32 33 34 34 35
Segments Advertising Foundations Trade
& Government-Related
Associations
................................................................................. Liaisons .......................................
Government Participating Trade Existing oals Market Supply Supply Supply Supply Shows
and Quasi-Government Clients Held
.............................................................................. In Japan ...................................................................
Competition Strategies
............................................................................. For ESP ................................................................... ........................................ .............................................. ................................................ .........................................
Share Requirements Side Available Side Available Side Available Side Available
39 39 40 40 40 41 41 42
Methods-Conversion Methods-Deepen Methods-Widen Methods-Expansion
Coordinating Strategies Demand Product
of Methods
.......................................................................
................................................................................................ Side Methods for the North ........................................................................... American Market: ESP-NA
Platform A B C D E F G H I
Background North North
............................................................................................ MarketMarketStatus Trend ............................................................ & Needs .............................................. at North American Shows...
43 43 44 45 45 46 47 47 48 48
American American
Need for More Exhibitors Need in Getting Product Launch Marketing TargetsEconomics
and Attendees Exhibitors
International
and Attendees
......................
Description Requirements Approach Number
................................................................................ ............................................................................. .............................................................................. Exhibitors & Groups ..............................
of Japanese
J
II
& Outsourcing for North PETS
...................................................................... America: Product Testing
Supplemental & Evaluation A B C D
Product Services
Background Market Product Revenue
............................................................................................ ..................................................................................... ............................................................................... .....................................................................
49 49 49 50
& Needs Description Sources
& Pricing ii
E F
Existing Sales
Competition
for PETS ..............................................................
50 50
Channels
.......................................................................................
IlI
Subse-uent A B C D E F
Product
for North
America:
Market
Entry Program
MEP 51 51 51 52 52 53 OIP 54 54 55 55 56 56
Background Market Needs
............................................................................................
.................................................................................................... of the Exporter Partnering Description Requirements for ............................................................................ ........................................................................... ...................................................................... ...................................................................... Internationalization Programs
Early-Stage MEP Product Completion
I
Subse-uent A B C D E F
Product
apan: Organizer
Background Market Product Targeted Market Notes
............................................................................................ ....................................................................................... for OIP ................................................................ ...........................................................
Sample
Descriptions Clients
& Sales Channel
Goal for OIP .............................................................................. on OIP .......................................................................................... Product for Internet apart: ebsites irtual Shows America in North for Organizers ...................... America .......
Subse-uent A B C D E F G I
Background-
& Trade
Shows in North
57 58 58 58 59 59 60
Uses of the Internet Prices Japanese Market Product Market for Virtual Market Need
by Trade Show Organizers Shows in North America
...........................................
......................................................................................
.......................................................................................... ............................................................................... Goals for Organizer apan: Trade Show Websites Management ................................ Services TMS
Description & Financial Product for
Subse-uent A B C D E F G
Background Market Product Sales
............................................................................................
61 61 62 63 63 63 63
for TMS ...................................................................................... Description Channels Streams & Financial ...............................................................................
....................................................................................... .................................................................................... Goals for TMS ........................................................
Revenue Market Notes
on TMS Timing
............................................................................
iii
b
II
Subse-uent A B C D
Product for apan: All- apan Trade Show & Need for Information
ebsite 64 64 65 65
Background Partnerships
.....................................................
Product Description:
All-Japan Trade Show Site .................................
...........................................................................................
Market & Financial Goals for All-Japan Website .................................. of Trade Shows eld in apan
III
Ac-uisition A B C D E F G H
Background:
Trends in North America ................................................. for Intro ......................................................... in Japan ..........................................
66 66 67 68 68 69 70 70
First Mover Opportunity
Players in Japan ..................................................................................... Acceptance of Foreign Organizers Overall Market for Trade Shows in Japan ............................................. Priority of Acquisition Targets ............................................................... Contact Channels ................................................................................... Market & Financial Requirements and Goals for Acquisition ...............
I
reation of New Trade Shows in apan A B C D E F G H Background: Association, Government, & Media Support Critical ...... Underserved Industries- Real and Artificial Reasons ........................... Changes in the Market ........................................................................... Market Needs ......................................................................................... Filling the Market Need .......................................................................... Synergy ................................................................................................... Role of Intro ............................................................................................ Revenue Model ....................................................................................... 71 71 72 72 73 73 74 74
Financial Pro ections A B C D E Notes to Income Projections ................................................................... Income Projections .................................................................................. Notes to Balance Sheet Projections & Statements Statements of Cash Flows ......... Balance Sheet Projections ....................................................................... of Cash Flow Projections ..................................................... Appendix Please refer to Appendix Table of Appendix • ontents which precedes the 75 96 98 99 100
Tables.
iv
J.
3
I. Executive
A. Markets
Summary
We are building a billion dollar company in the $20 billion North American and Japanese trade show markets. Four of our products also serve the even larger B2B advertising industry and five provide international market entry services to the world's two largest economies. virtual shows and new revenue streams, such as With 13% annual growth, the show industry is increasing in both the size and number of events. It now includes Internet-based corporate event sponsorship. appeal. B2B advertising Its "killer application" of personal interaction retains strong
expands as sponsors seek focused targets and results. The market and removal of trade barriers let even smaller-
entry industry grows as logistical improvements sized businesses participate. B. Needs of the Markets
The North American and Japanese markets have needs exclusively addressed by our products: 1. Needs of Trade Show Organizers. North American organizers need exhibitors to fill (and their exhibitors) want internationalization.
surplus space. Most Japanese organizers 2. Exporter Confusion.
Over 2,000 North American firms participate in Japanese shows. methods. Thousands more programs.
They use overpriced facilitators or expensive "do-it-yourself"
want to participate, but lack information and need effective, results-driven
3. Market Access. Promoting or advertising in Japan is costly. Media is sold in bulk to advertising agencies who reset prices at high levels. Despite the government's PR efforts,
some sectors of the economy resist competition and exclude foreigners from certain shows. 4. Outdated Management. Japan's show technology and management is behind and many
shows are run as social events, not marketing opportunities.
They lack motivation to grow.
5. Scarcity of Shows. Japanese cities have created commissions to better use their exposition sites. Organizers focus on their own goals, rather than seeking alliances with the numerous trade associations desiring to hold events. Japan produces only 8% as many shows as the U.S. and participants 6. Fragmented want dynamic, focused and internationalized shows.
Trade Show Market. Though profitable, the Japanese show industry is quickly.
fragmented among 220 organizers, with 162 producing only one or two underperforming events annually. Meanwhile, the North American show market is consolidating
J
C. Business
Description battery of products fills these needs and creates shows. Seamlessly integrated introducing organizer B2B promotional products, we will
Our "one-stop" programs, become
including the leading
sponsored facilitator,
international manager
and internationally-focused and tested comprehensive
in the industry. for
Level One: Since 1995, Intro has developed North Americans entering satisfying Japan; servicing
service packages
over 150 firms with a repeat exporters, organizers events associations, increased
use rate of 65% and and government offices.
simultaneously Parallel
the needs of sponsors, for Japanese
development
of packages
their numbers
of exhibitors.
Level Two: Intro improves management provides
and expands
organizers'
by providing
professional Intro for success. in
services, comprehensive services
Internet
presence
and internationalization. their chances
value-added
for show exhibitors shows presently
to maximize
Level Three: Intro will acquire cooperation American with well-established and Japanese players,
run by others Through
and create new shows alliances
trade associations. we will consolidate
with key North industry.
this profitable
but fragmented
D.
The
Opportunities
and
Our
Products Intro products. delivers Japanese exhibitors recruitment
1. Internationalization --Exhibition to North Service
is the focus of three synergistic Program-North shows. America
(ESP-NA)
American
Services include cross-marketing and vendor coordination.
with organizers,
of exhibitors, --Exhibition participating seminars, adaptable systematic, introduce
pavilion Services exporters
design, Program
(ESP) combines sponsors Japanese time-studied Tailored
events, Internet in North websites,
and other media and Japan.
to promote of
and corporate
America
ESP's menu
shows, activity
paid advertisements, groupings already
and other marketing under varied
uses flexible, for ESPs to:
and tested
conditions exposures,
cost-effective and reinforce sponsors
execution. brand needing
to create low-cost,
targeted
recognition exposure
with a high profile and positive PR,
platform
indispensable
-corporate
-trade associations -foundations -government -Japanese --Organizer will establish
needing
to offer services
to their members consistent
who seek sales,
seeking agencies show
highly visible programs, promoting needing development
with their goals, and and prestige. Americans, Intro
and their own programs, exhibitors, exposure
organizers
international
Internationalization a global network focused
Programs
(OIP), initially
focused
on North
to bring exhibitors show management
into Japanese company.
shows.
This brands
as th.____e internationally
2
2. Providing --All-Japan industry revenues
Market Trade participants
Assistance
to Exporters.
Four products
address
this at different for all
levels:
Show Website
uses our proprietary Japan.
database
as a resource
active in or considering convention centers, resource
It will generate institutions,
listing and advertising and others. This is the
from organizers,
financial
only comprehensive --Exhibition a) Market Services
English language Program through
for information exporters with:
on shows held in Japan.
(ESP) provides product
Knowledge
testing and advice on import regulations licensor's success in the market. meetings, results.
and laws which can impact b) Care and Feeding and persistent c) Show of Buyers.
on an exporter's Extensive
pre-show follow-up
publicity, all combine
showroom to maximize
but patient
post-show
and Non-Show beyond
Services.
Intro invested
years
to develop
and test ESP's
service menu d) Sponsorships
just trade shows Third
into multi-channel party grants clients.
marketing. participation to exporters
and Financing. increase
and loans enable assistance
and dramatically and tailor programs --Product Evaluation
potential
We provide budget
to each trade association's Service goods.
to make things happen.
and Testing
(PETS) builds on ESP to create market
tests appropriate --Market
for most consumer
Entry Programs
(MEP) fill the needs
of the 75.3% of surveyed
U.S. companies
that
want programs Including experience knowledge 3. Market
to get part of the $192.7 billion the U.S. exports adaptation, testing, sales penetration
or invests annually education,
in Japan.
product gained
and export
MEP uses market
from 1995-98 pilot programs
to overcome
two major obstacles:
and staying
power. MEP clients will be converted participation, even in "closed"
to ESP for reinforcement. Knowing unwritten rules
Access.
Intro secures is essential
shows. results
and key people
to save clients from disappointing knowledge, still market shows, show connections
or hidden
costs. ESP, staff.
MEP and PETS utilize 4. Updated Management.
our insider's Organizers Virtual
and bilingual/bicultural
show space like ad space. U.S. organizers extensions, Organizer and on-line Website showcases and Virtual are Show
have adapted
to the Internet.
now key to their marketing products managers. applications, streams
and service mixes. Intro's
bring these innovations Virtual Shows include
to Japan and strategically floor plans, exhibitor Sponsorships
position
us ahead
of other show
listings and links, downloadable and the Internet are new revenue royalties.
and other needed
resources.
for organizers,
supplementing
space sales, admission
fees, and concession
Seminars trade (rMS)
and workshops
create income directory
as sponsors
underwrite Show
them for access to the Management through Services
(e.g. wall banners, brings organizers of proven
copy). Intro's
Trade
into the new age of event management methods unified and technologies publicity, revenues including
comprehensive technology travel.
implementation upgrades,
event coordination, events, and group brand
cross-registration,
traffic builder and uniquely
These lower organizers' show manager. 5. Market
costs, increase
Intro as th___e_e innovative and acquiring existing ones.
TMS is also a door-opener Most industries
for creating
new shows
Expansion.
have only 1 or 2 shows
and are underserved as exhibitor numbers if
by the grow
current Japanese
show selection.
Many shows are oversubscribed (?%). Insiders
faster (15%) than the number organizers can deliver relevant,
of events
expect dramatic
increases
well-produced
events. The high attendance
at Japanese
shows
(some outdraw product Japanese testing
U.S. counterparts and introduction.
by 300%) can, if better organized, Exhibitors and sponsors North
make for efficient at one site capacity
get as much exposure events. Exposition
show as at three or four dispersed associations willing to support
American combine
and numerous 145 Japanese
events
to create a large potential. alliances
trade associations
currently
run shows.
3,500 more do not. Forging revenues
with them, we will expand 6. Consolidation. Inroads
the market by foreign
and increase organizers
for our other products. Reed Elsevier) player through 12.5% of all shows can raise show but we have
in Japan to become
(e.g. Miller-Freeman, a dominant market
and our own experience creation of shows
indicate
opportunities of existing that North
and consolidation predict American
ones. Foreigners American
ran about
in Japan in 2000 and experts profits by 20%. The North first mover advantage without
operating
methods
show industry
is in the heat of consolidation, from our products
in Japan. further
Cash flow and profits capitalizations.
will pay for shows
being acquired
E. Competition Competition provider
and
Our
Sustainable
Advantages but there is no fully integrated areas of competition include: media service
exists for some of our products, with us. Some partial
to compare
1. Competing offers low-cost America restricted advantage, sponsorships packages corporations
for Sponsors exposures
who have a wide choice of media. ESP's integrated and positive PR with market a truly integrated, can advertise Trade Show and target choices. low-cost in Japan. Website, media
Both in North package. our Website as Some
and Japan, we offer sponsors products (e.g. tobacco, Show,
alcohol), All Japan
To maximize and Organizer
ESP, Virtual
will be sold through
compensated
advertising
agencies
and promoters American America.
or a la carte. Among in Japan
the targeted
sponsors
are the 3,000 North active in North
and the 2,000 Japanese
corporations
4
2. Competing Intro's
for Funding.
Other projects with liaisons
compete
for foundation
and government
support.
tight coordination address
and inclusion are attracted
of liaison travel to Japan in our events. will
programs
this. Foundations measurable
by the PR of ESP's high-profile accountability reports.
ESP's and MEP's be presented 3. Competing These officials
results exceed
required
Programs
through
well-accepted
compensated
fund-raisers
to maximize
our advantage. Liaisons. is our key. enlists
for Cooperation are swamped
from Trade
Association
and Government proposals.
by floods of half- baked are a "win-win".
Completeness
For the association, support, performs
ESP and ESP-NA intra-association positive
Intro designs funding
the program,
recruitment,
arranges
and sponsorships, our paid benefit from Intro's programs. facilitator quotes
issues reports participation reporting,
and produces
PR for the association.
ESP includes agencies
in the association's PR, and results for Exporter companies exhibitors Competitors. without Client
events
and media. Government their resources
spending
promoting
deficient
4. Competing North American
Companies.
The only other Japan-focused less complete
8 times more than Intro for a package
than our ESP.
Do-it-yourself 5. Internet
spend
4 -5 times more than using a more complete offers Japanese-only turnkey and virtual websites
Intro package. virtual
One company
to would-be
show organizers No other company Our exclusive to integrate
but their system is neither offers ready websites
nor profit-producing shows precludes to Japanese competition
for the organizer. trade show organizers.
partnering
with US- based providers
as does our ability All-Japan own trade competition.
Internet
into a full program.
There is no English-language
comprehensive
Website. Our partnering association 6. Market will combine Entry Service
with existing Japanese-language with our databases Competition. and research
sites and the organizers' capability to prevent
Our MEP and PETS products
have no competition.
Some segments can be arranged
of these packages, through research
such as in-store promotions or marketing without consultants,
or buyer focus groups, but fees are prohibitive real-world The show for
such single-channel ?. Trade Show
analyses,
especially
accompanying and Creation.
sales results. management
Management,
Supplementing
firms in Japan are few, small, and not aggressive offer Internet presence, show coordination,
in their pursuit upgrades, show
of clients. They do not nor product.
management offers a turnkey
internationalization. 8. Show cannot Acquisition. be pursued
No other company Japanese in the direct,
creation
companies North
or their major assets, such as show portfolios, way. Our intimate of their association knowledge of the
American
organizers
and retention
of the past President
as senior consultant
place us on the inside
track. As first mover
in acquisition,
we have a major advantage. 5
9. Sustainable
Advantages.
In addition to the barriers to competition cited above, our have resulted in procedures have thoroughly integrated
business requires a physical presence in both North America and Japan capable of delivering a wide array of services. Our intensive research and development (220) and tight-knit. Intro's 6 years of research and development for the execution of our products which cannot be readily imitated. In Japan, organizers are few us into this community. Our relationships with key exhibition site management is also
protection against competition. Intro functions both as an American and Japanese companya major advantage in both markets. We are the first mover in Japan and will, with variety of services, proprietary know-how, and depth of experience, outflank any competitors.
F. Our Company 1. Senior Management years international Team: Our entire team averages 5 years with Intro, having combined prior consulting; 14
cumulative experiences including: 20 years U.S.-Japan trade; 15years international
accounting; 9 years marketing; and 8 years market research. Our senior team is:
Michael Athy, President, is also VP of Intro Japan. After 10 years in U.S.-Japan trade, he partnered in a consulting firm providing Japanese clients with business establishment services and feasibility studies for 11 years and became an Intro founder in 1994. His exhibitions experience and analysis are key to this PLAN. A graduate of Queens College (New York), he is conversant in Japanese and French, 43, and married with one child. Kenji Izumi, Vice-President and Chief Operating Officer is also President of subsidiary Intro Japan. His international experience includes vehicle export; steel trading; supplier sourcing; and promotion of Japanese investment in Los Angeles. A Japanese native, fluent in English, he is a graduate of St. Mary's College (Moraga, California). He became a founder of Intro in 1994, and President of Intro Japan, K.K. in 1997. He is 43 and married with two children. He holds an L-1 U.S. Visa and serves on the Government Relations and Food & Agricultural Committees of the American Chamber of Commerce in Japan. Atsushi Yoshida, Operations Manager (NY), directs preparation of statements, forecasts
and budgets of Intro and Intro Japan. He gained extensive experience in international accounting during assignments in the U.S. and Japan as auditor for the trading arm of Japan's largest transporter. (permanent Joining Intro in 1996, he lives in New York with his wife. A Japanese native U.S. resident), and graduate of Chuo University (Tokyo), he is 37 and holds a
4th degree rank in the Japanese martial art of kendo. 2. Management Team: In addition to the above senior team, Intro maintains management will be finalized for additional positions.
and staff. As this PLAN proceeds, candidates
6
3. Outside
Support:
Outside
advisors
provide provides
support
for management, and system
including: consulting.
Ernst and Young, Arthur Andersen,
LLP. (NY, Tokyo)
financial
LLP. (NY) provides & Walker,
tax and transactions
consulting. corporate services. consulting. and be compensated approval. by business positions allowing opportunities. expertise. partners. and legal advice.
Paul, Hastings, Graham
Janofsky
LLP. (NY, Tokyo) provides intellectual trade industry
provides property
and James, LLP. (Tokyo)
Michio Izawa, Consultant 4. Board of Directors: in accordance 5. Staffing growth.
(Tokyo) provides
show industry professionals
The Board will include growth. Members
with Intro's
will meet with investors' Staff will increase
and Organizational our exclusive
Structure: operations
as required
Through
testing and manualizing,
staff-level seamlessly; research
will be easily trainable Intro to effectively 6. Outsourcing: A key function 7. Strategic recruitment, co-marketing,
and replaceable a rapidly outsourcing personnel
so that staff are integrated growing provide business
conduct Qualified
and continually of overhead
flexibility
and detailed these strategic including
of supervisory
is testing and coordinating Arrangements: arrangements, companies,
Alliances
and Other facility
Cooperative
Alliances
endorsements,
use or publicity
cross-marketing, and agencies
and sponsorships market
with established presence, revenues,
associations
will increase strategic
and credibility.
G. Milestones 1994- International Adoption 1995- Negotiations 1996- Initiation Trade of trade Resources name Organization, approved. Inc. incorporated in Delaware.
"Intro"
NY office established. 100 shows opened to foreign exhibitors.
with Japanese of pilot programs
organizers in United
begun.
States and Japan. subsidiary: Intro Japan, K.K.. First cooperative to Japan through and Agriculture. Intro.
1997- Incorporation venture 1998- Expansion
of wholly-owned
Japanese
with U.S. Department of cooperative
of Commerce
brings 40 companies of Commerce
ventures
with Departments brought of research
First Canadian 1999- Conclusion
clients signed.
151 companies and initiation
to Japan by Intro with 65% repeat. and testing of Virtual of ESP, MEP, OIP,
of pilot programs
TMS, ESP-NA, Organizer 2000- Research,
and PETS. Field research and All Japan Trade
and surveys
Show Websites,
Websites, further
Show Website. concluded. for Trade Databases constructed. and
field tests and manualization finalized.
SBA financing Acquisitions
for development initiated. Business
Research
Show Creation reviewed,
Plan concluded,
documented,
and adopted.
H.
Projections:
With
or without
acquisitions
--- a solid
& profitable
business
model
Version
1: Performance 64 month
without Summarized Me.
Acquisition
of
Existing
Trade
Shows
P&L : (rounded Me. 29- 40 49.3 26.6 22.7 18.8 .21 18.6 Me.
to US $ millions) Me. Total 349.9 173.8 176.1 24.9 151.2 1.0 150.2 (*) Months after funding. Excludes preparation period in months 1- 4
The
Numbers:
Me.
Sales Less Cost of Programs =Gross Profit Less G & A Expenses =Adjusted Gross Profit Less Dep. & Amort. =Pre-tax Profit The Comparisons: Gross Profit as % of Sales Adj. G.P. as % of Sales Pre-tax Profit as % of Sales Version 2: Performance 64 month The Numbers:
5-16" 17-28 16.4 28.7 9.,$ 15.8 7.0 12.9 1.6 5.4 .2 5.2 10.3 .2 10.1
41-52 53-64 91.0 164.5 45..__Z! 76.3 45.3 88.2 6.4 38____ .2 38.7 9.9 78.3 .2 78.1
2...__66 3.__99
42.7 32.9 31.7 with
44.9 35.9 35.2 Acquisition
46.0 _ 38.1 37.7
49.8 42.7 42.5
53.6 47.6 47.5 Trade
50.3 43.2 42.9 Shows
of Existing (rounded Me. 41-52 150.7 85.7 65.0 10.6 54.4 .2
Summarized Me. 5-16" 16.4 9.4 7.0 Me. 17-28 34.9 20.2 14.7
P&L"
to US $ millions) Me. 53-64 277.4 149.6 127.6 Total 554.1 309.1 245.0 (*) Months after funding. Excludes preparation period in months 1- 4
Sales Less Cost of Programs =Gross Profit Less G & A Expenses =Adjusted Gross Profit Less Dep. & Amort. Less Interest due to Acquisitions' Purchasing** =Pre-Tax Profit The Comparisons: Gross Profit as % of Sales Adj. G.P. as % of Sales Pre-tax Profit as % of Sales Intro Revenue % of All Revenues Profit* % of All Profits By each Product: Revenue 4.2 .8 3.2 1.4 All-Japan Website & Profit 8.0
Me. 29- 40 74.5 43.9 30.6 6.0 24.6 .2
1 .__66 3.1 5.4 11.6 .2 .2 O 5.2 .5 10.9
16.6 38.4 111.0 206.6 .2 1.0 8 ..__22 14.9 102.6 190.7
1.._.99 4.4 22.5 49.8
(**) Except for Interest due to acquisitions, no other interest expenses are projected
42.7 32.9 31.7
42.1 33.2 31.2
41.1 33.0 30.2 Model: 13.0 2.3 6.4
43.1 36.1 33 64 Months 17.1 3.1 8.4
46 40.0 37 (rounded 24.2 4.4 12.7 5.5 OIP 54.6 9.9 19.7 8.5 MEP
44.2 37.3 34.4
By Product 9.2 1.7 5.3 2.3 PETS
to US $ millions) 59.2 10.7 47.4 21 TMS 160.4 28.9 67.1 29 ESP 204.1 36.8 54.0" 23.4 Acquired Shows
1.4 5.9 2.6 ESPN.A.
2.7 Show Creation
3.6 Organizer Websites
I (*) interest expense for purchases of acquired trade shows is already deducted from profits. I 8
I. Our Offer $5,500,000.00 in development, infrastructure. The participating -22 % equity - representation funding is sought market products, during conclude product testing and research on products of
retire debt accumulated The minimum investors stake investment will receive:
testing and complete
the building
unit is $55,000.00.
in Intro; of Directors; product is focused testing; seasoned toward a successful team and short loading IPO in the United period;
on the Board
-solid ROI from our completed -IPO bouncesfollowed -Multiple the company
States,
by a second
IPO in Japan; besides IPO, Intro is amenable acquisition. to other arrangements. Execution
exit strategies-
of this PLAN will make Intro a desirable -Favorable reduces tax considerationsIntro's
Put arrangements during product
can be considered. development tax possibilities.
NOL accumulated
taxes, Our wholly-owned diversification: based media are diversified, and revenue
Japan subsidiary
presents
advantageous
-Quadruple
-solid trade-show -Intro's -Intro's -potential -Favorable products markets
lends diversification ranging
to any IT- heavy
portfolio.
from show to Internet and aimed
services.
sources
are diverse
globally.
clients are unlimited Relations-
as every industry trade
uses our media. is good business at every level.
Public
international
promotion
J. Use of Funds This is the summarized schedule for deployment of funds sought under this PLAN:
Purpose: Preparation Expenses Purchase of Equipment Projected Cash Need Months 1-5 Product Development Payoff ESP-NA Launch PETS Launch OIP Launch Organizer Website Trade Show Creation Reserve for Months 7-16 TMS Launch Trade Show Acquisition All Japan Trade Show Website MEP Subtotals Total
Months 1-6: $409,780 29,420 568,600 1,492,200 180,000 100,000 120,000 100,000 150,000
Months 7-10:
$1,300,000 180,000 235,000 200,000 435,000 $3,150,000 $2,350,000 $5,500,000
9
i
K. Exit Strategies Four options may be considered: Option 1: Initial Public Offering. Pursuant to stockholder and subscription agreements, a time frame and market condition targets for an IPO will be established. Option 2: Double Public Offering. Under current laws, an IPO of our wholly-owned
Japanese subsidiary would have to follow an IPO in the United States. Option 3: Acquisition of Intro. Executing this PLAN will position Intro as the best
path for North American and European show producers and integrated B2B media firms to enter the world's second largest market: Japan. The barriers to entry are formidable and this reinforces Intro's position. For further information concerning the North American consolidation trend, its players and implications for Japan, please refer to sections XIII and XIV of the full PLAN. Option 4: Put arrangements. The founders of Intro are in this industry for the long term with the prospective investor.
and are prepared discuss buy-out arrangements L. Further Information
Our complete Business Plan and related Appendix Tables are available for your review. For further information concerning Intro and its management, please refer Section II of our PLAN. For further information concerning our platform product, Exhibition Services Program, please refer to Sections III, IV, and V of our PLAN. For further information concerning our other products targeted to the North American market, please refer to Sections VI, VII, and VIII of our PLAN. For further information concerning our other products targeted to the Japanese market, please refer to Sections IX, X, XI, and XII of our PLAN. For further information concerning the creation and acquisition of shows, please refer to Sections XIII and XIV of our PLAN. For further information concerning our Projections and assumptions, to Section XV of our PLAN. please refer
l0
II. Company
A. Legal Business International
Overview
Description Trade Resources & Locations Organization, status Inc., was incorporated Revenue in Delaware in
1994 and elected
"C" corporation
with the Internal
Service. Headquarters
are at Two Pennsylvania the Company Prezioso Prefecture. established
Plaza, Suite 1500, New York, New York, 10021. In 1997, a subsidiary: Intro Japan, K.K. which is located at 3F Parco
Building, Company
1-21-1 Nakagawa-chuo, and Subsidiary
Tsuzuki-ku,
Yokohama,
Kanagawa to any
are in good standing
and not parties
legal proceedings. B. Government Regulations & Legal Status requiring regulation export beyond or import licensing, standard Intro is not subject
Aside from transactions to any state or federal C. Stock Allocation
labor, taxing and other authorities.
& Ownership 40,000,000 shares of Company stock, 30,000,000 2,499,967 shares shares are common have
Intro has authorized and 10,000,000 shares been reserved under
have been designated our 2000 Long-Term protection
preferred.
of common
Stock Incentive nor issued
and Option Plan. Currently, awards. 17,000,033 all of whom
we do not have anti-dilution shares of common are currently
stock option
issued and outstanding
to the founders,
are active in the Company: Shareholder Michael Athy Kenji Izumi Atsushi Yoshida Sachiko Inoue Total: Shares 8,105,976 8,105,976 675,498 112,583 17,000,033 % of Issued 47.7% 47.7% 4.0% 0.6% 100 % in Company: President Vice-President Operations Manager-NY Operations Manager-Japan Position
D. Management Our current Michael esponsi Oversees alliances.
Team management President team consists of seven trade show and marketing experts:
Athy, ilities
marketing, Establishes
development Company
and finance. Seeks opportunities policies and objectives;
and strategic of
also Vice-President
Intro Japan.
II
Bacpground After more than a decade Corporation, providing in U.S.-Japan trade, Mr. Athy in North became America a partner in Kyodai studies of
Japanese
corporations
with feasibility
and establishment international and feasible, and analysis
services.
In 1992, he conducted in Japanese
a study
concerning
the expansion
participation became
shows and, finding
such an application
was worthwhile
one of the founders
of Intro in 1994. His experience of Queens College
in show exhibiting of
is key to this Plan. He is a graduate in Japanese & Chief
of the City University with one child.
New York, and is conversant Kenji Izumi: Vice-President
and French.
He is 43 and married
Operating
Officer
esponsi President Baquground
ilities of Intro Japan, directs marketing, research, accounting, and government relations.
In 1984, Mr. Izumi joined the trading in 1987. Named U.S. divisions:
firm Pastoral Izumi
Co.,Ltd., becoming was responsible
Import
Division
manager of two
VP of its U.S. subsidiary, import/export
for the profitability Requiring to japan;
and real estate development/investment. the scope of business included sourcing vehicle export of suppliers in California.
extensive steel piping North America
travel in Asia and Europe,
trade from Japan to South Korea and Australia; and Southeast the Intro project President Asia as well as promotion
in Europe, Pastoral
of investments
chose him for and he became and graduated
in 1994 due to his extensive
trade and exhibition
experiences, in English,
of Intro Japan, College
K.K. in 1997. A native of Japan, of Moraga, California (Business).
he is fluent
from St. Mary's
He is 43, married
with two children, Relations and
an avid golfer, and holds an L-1 U.S. Visa. He serves on the Government Food & Agricultural Atsushi esponsi Directs Yoshida, ilities preparation of budgets, Prepares forecasts, analysis and consolidated of operations statements for management Issues Committees Operations Manager of the American (NY) Chamber
of Commerce
in Japan.
of the Company guidance.
and Intro Japan. Bacpground Graduating Nittsu
financial
from Chuo University
(Tokyo-Trade largest
& Commerce)
in 1986, Mr. Yoshida
joined
Shoji Co.,Ltd.
(part of Japan's
transportation
firm) as a staff accountant of its U.S. subsidiary. to Nittsu's Tokyo office.
and was transferred His experience Joining
to New York in 1990 to supervise accounting resulted
accounting
in international
in his promotion
Intro in 1996, he is based in New York and supervises A native martial of Japan (with permanent U.S. residency), and fluent
the accounting
of both Intro and ranking
Intro Japan.
he holds a 4th degree in English (native
in the Japanese
art of kendo,
is 37, married,
in Japanese).
12
Sachiko Inoue, Operations esponsi ilities
Manager
(Intro Japan)
Directs Intro Japan's office management, BacIJground Graduating
staff, outsourcing and procurement.
from Tokyo Language College in 1990, Ms. Inoue joined Yonnex, Japan's where she gained experience in the rules
leading tennis and golf equipment manufacturer, in market adaptation her outstanding
and procedures associated with import and distribution of products in Japan. Her experience brought her to Pastoral Co., Ltd. which recruited her in 1996. Due to
work, she was invited to join Intro Japan and named operations manager
in 1998. She is 31, conversant in English, and lives in Kanagawa, Japan. Chifuyuko esponsi Yamaguchi, ilities Marketing & Sales Manager (Intro Japan)
Market planning, promotion, and strategic activities. Directs marketing staffing and training. Bacllground Ann Klein, Donna Karan, Stacy Ames, and Catalina are a few of the brands Ms.Yamaguchi introduced to Japan during her years with Takihyo Co.,Ltd. (a large textile house) and Epoc International (part of yarn/fabric maker: Nisshinbo). After graduating from Aichi University (Foreign Studies), she joined Takihyo, rising to licensing director. She duplicated her success with Kansai Yamamoto, developing and supervising worldwide licensing for the renowned the world, Japanese designer. After five years, Epoc recruited her to expand its trade and she followed that success by developing the U.S. market for Parton. She has traveled throughout visiting exhibitions on five continents. Joining Intro Japan in 1997, her input has been essential to product development. Utayo Iriyama, Exhibitions esponsi ilities exhibits for clients in varied She is 52 and resides in Kawasaki City, Japan. (Intro Japan)
Manager
Designs and produces attractive, thematic and purposeful BacIJground As assistant promotions manager for the supermarket in-store and advertising promotions,
settings including trade shows, in-store promotions and showrooms. chain Seikatsu, Ms. Iriyama planned
product mixes, and layouts. Her combination of
experience in trade expositions and product promotion brought her to the attention of Intro Japan in 1997. As Exhibitions Manager, she assists Marketing in the execution of sales efforts. Her knowledge of the industry is thorough, from the nuts-and-bolts of dealing with have contractors to the design of private shows. Her creativity and procedural know-how been used extensively in our products' design. A graduate of Sangyo Noritsu College (Marketing), she lives in Kawasaki City with her husband and son. 13
Takashi esponsi
Kushiro, ilities
Research
Department
Assistant
Manager
(Intro Japan)
Coordinates Bacgground
research
for product
specifications,
market possibilities,
and applications.
In 1998, Mr. Kushiro
graduated
from Oregon
State University
(Portland-
Research).
During
six years living in the U.S., he was active in organizations Intro was fortunate been instrumental services. to recruit him in 1999. He worked in upgrading the Company's
fostering
U.S.-Japan understanding. in product design and has
extensively
own research
capabilities
and use of outsourced
He is 27 and lives in Yokohama. Team: to be finalized with the implementation positions:
He is fluent in English
(native in Japanese).
E. Management In conjunction finalized
of this Plan, suitable individuals
will be
for the following
Senior Vice President Direct
& Chief Financial
Officer (North America) of budgets, forecasts, financial statements, Manage capital.
financial affairs. Oversee and condition
preparation
financing
requirements.
Arrange
for audits of accounts.
VPs & General Direct operations.
Managers Participate
(North America
& Japan) and implementation. and fluency in Japanese and English.
in decision-making experience
Must have executive-level Client Development Direct North management Public American
international (Sales)
Manager
(North America) Must have sales or advertising & Japan) trade association, of the public relations. and site background.
sales efforts, staff and outsourcing. experience with an exhibition
and association
& Government
Relations
Managers
(North America organizer,
Direct outreach management Company Research
efforts with various government,
officials. Direct public relations Must have experience
firms to raise awareness in government and/or
and programs. Managers
(North America research
& Japan) and applications for new products. Oversee
Direct and coordinate improvements and outsourced foundation
of concepts
on existing products research
in coordination
with other managers. and government,
Direct in-house and
into market opportunities
sponsor research.
support.
Must have experience
in market or sponsorship
14
L
F. Organizational
Structure to conduct its business and continually operations our Japan research opportunities within
Intro will be positioned its area of expertise. staff organized staff organized maintained the Company
We will expand
North American and increase Flexibility
to four regional
offices, with
into four departments into five departments. the well-chosen
presence
to two offices, with are chart for 1 & 2.
in organization outsourcing.
and cost control
through
use of specialized staffing
The organization Tables
is below. More detailed
charts are found
in Appendix
[ i
Board of Directors [ President [
J
[ Organization Chart [ at Month 6
North America I VP& General Manager I
Japan [VP& General Manager [
]M_ager] I i v, es I I
I s Lff I I
'
Manager I Operations Staff [Manager I I Research[]
I Managerl PR/Govt ,1 Marketing] Manager
II
I
L
Ma|agern ] Operations ] ]Manager [ ] PR/Govt ] Research Manager i Staff
Manager ] Exhibitions Staff
I
I /
II
Staff
I /
I
I
I
I
II
Staff
I I
I I
St!ff [
/
I I
I
I I
lOut.. ,urce II
Outsource II Outs°urcel
L_outsource J t Outsource] [Outsource] ] Outsource] I Outsource ] I Staff[ I
G. Outside Outside
Support advisors provide support for management decisions and creativity:
Accountants Mr. Michiaki -Partners:
and Business Koyama,
Consultants: Miyairi, CPA (Japan)
CPA (New York) & Mr. Masayuki financial and systems
Ernst & Young, LLP. Provide O. Brundage, Andersen,
consulting.
Mr. Douglas -Partner:
CPA (New York) LLP. Provides tax and international transactions consulting.
Arthur
Mr. Jeffrey -Formerly Mr. Hiroaki -Yamaguchi consulting Mr. Manabu -Partner:
Wolf, CPA (New York) of Touche Ross, LLP. Provides Takahashi, Preparer (Japan) Office. Provides financial and tax tax review and preparation services.
Kaikei Jimusho, relating
Tax Accounting in Japan.
to operations
Yamaguchi,
CPA, Consultant Co., Ltd. Provides
(Japan) advice on Japanese equity markets.
MS Consulting
15
[
Mr. Michio Izawa, Consultant
(Japan) Press, 1999).
-former Chairman of the Japan Association for Promotion of Creative Exhibits (]ACE) and author of How To Run A Successful Trade Show (POP Shuppan
Provides extensive knowledge and personal contacts in the Japan trade show industry. Ms. Noriko Makita, MBA, Consultant (New York)
-Information System Analyst: IPI, Inc., graduate of New York University & Bernard Baruch College (MBA-CIS). Provides extensive assistance in IT applications. Mr. Takashi Izawa, IT Consultant (Japan) Corp. (division of Siemens). Graduate of advice.
-Marketing Manager: Siecor International
Santa Monica College. Provides IT evaluation and implementation Legal Advisors: Mr. John Altorelli, Corporate Mr. John Steed, Corporate Attorney (New York) Attorney (japan)
-Partners: Paul, Hastings, Jan0fsky & Walker, LLP. Provide corporate and financial consulting in both North America and Japan. Mr. Shigeru Miki, Trademark Attorney (japan)
-Partner: Graham & James. Provides intellectual property services in Japan. H. Board of Directors Intro's Board of Directors will include qualified industry professionals to assist management in making decisions and taking actions. We will endeavor to have members of the Board meet with investors' approval. We intend to compensate outside directors commensurate with the growth of the Company. The proposed composition of the board shall include: -one member with sponsorship/fundraising -one member with governmental expertise; -one member with North America-Japan marketing experience; relations experience; -one member with finance and initial public offering experience; and -one member with Japanese management experience. I. Staffing Staffing will increase in accordance with the Company's business and introduction of products. As part of the intricate planning of the products, staff-level employee positions have been designed to be easily trainable and replaceable. Each activity within each program has been tested, and time-studied that staff and strategic outsourced to be gradually implemented and will be put into instructive manuals so partners can be integrated seamlessly. Staffing levels
are detailed on Appendix Tables 1 & 2. 16
J.
Outsourcing Wherever of overhead, the Company's the testing, Company -payroll, -secretarial -travel, -exhibit -freight -products' the Company apportionable over-all can obtain efficiencies, costs, detailed it utilizes qualified and economy outsourcing for flexibility to
expertise,
of scale, contributing personnel in which the is
success.
A key function
performed
by supervisory partners. Areas
directing
and coordinating
of these strategic vendors include:
has, or may use outsourced health insurance, support; site preparation; promotion
and human
resource
functions;
seminar,
and in-store
design customs
and execution; clearance, warehousing, distribution;
receipt and forwarding, testing;
-data input and management -brochure, newsletter,
and IT system control design,
and maintenance; and printing;
and publications
translation
-spokesperson -receptions -fundraising
and character and banquets;
arrangements; and arrangements for clients.
and sponsorship
K.
Strategic Cooperative agencies
Alliances,
Marketing
Agreements,
and Other companies,
Cooperative
Arrangements and government will can
arrangements
with established credibility,
associations presence.
will increase revenues, types of agreements candidate
and market
The Company
seek different include
for its various recruitment, co-marketing,
products.
The types of agreements publicity and funding
endorsements,
facility
use arrangements, funding
arrangements, agreements.
cross-marketing, Appendix
sponsorships,
conduit
Table 3 contains and which products
a detailed
listing of the types
of organizations, alliances,
types of agreements, marketing agreements,
are to be targeted arrangements.
for strategic
and other cooperative
17
III. Platform Product Description: Exhibition Services Program (ESP)
A. Exhibition Services Program (ESP) Getting quality exposures for sponsors through the profitable exhibition of North American firms at Japanese trade shows and other events is the core of ESP. ESPs meet the needs of: -sponsors needing exposure and positive public relations in North America, Japan, or both; -trade associations needing value-added services for dues-paying members;
-the associations' member companies seeking sales from Japanese buyers; -government offices needing to promote business development and export; and prestige. -Japanese show organizers needing added exhibitors and international
ESPs are made from activity groups (clusters) consisting of specific activities (phases), each custom assembled and manualized for seamless integration of staff and outsource partners. ESP's menu, which makes each ESP as extensive or modest as the budget and needs of sponsors and clients, has been field-tested 1. Cluster 1: Planning a) Overall activities: -Design and budget the specific ESP (sponsor-driven -Identify target government and non-government -Secure sponsorships or association-driven) and Recruitment repeatedly. ESP's Clusters and Phases are: Services
liaisons
-Evaluate needs of the target client group and tailor program accordingly and/or funding for the program -Provide exposures for sponsors to the group of prospective clients -Provide export and market training for prospective clients (as needed), and -Recruit client companies from the target group and conclude agreements b) Specific phase activities in Cluster I: In Proposal Planning (PP), trade associations or government agencies are contacted to organize or improve an exhibition. Feasibility safeguards eliminate groups which cannot execute or get sponsor funding. Extensively using our proprietary show databases, Intro secures terms with organizers. In Outreach involvement Phase (OP), sponsors, trade associations, and government are contacted
for financial participation, endorsement,
or recruiting cooperation. Government funding. Strategic
is sought for added credibility and funding; associations are sought and for sponsor arrangements.
for credibility, recruiting ability and as conduits for foundation partners are used for fundraising
18
In Recruitment sponsoring.
Phase
(RP), Intro works
with liaisons
to sign participants and can include:
and finalize
Sales methods mascots
will vary with the recruiters or spokespersons to prospects to prospects trade media and liaisons
-use of character -fax or email -direct
for the program
broadcasting
mail and telemarketing in relevant
-paid advertising -publication -targeted
of newsletters and consistent
for prospects
press releases linking
concerning of a program and
the program website
-construction -exhibition -registry
and appropriate at North American
trade shows,
of the program
in appropriate seminars
directories
and journals with recruiters. and business
Export Education These sponsor/liaison development
(EXED) Phase's showcases funding. tracks
are coordinated
make ESP eligible for community
foundation Phase,
PC, Pre-contract and as needed, 2. Cluster a) Overall -Prepare -Execute b) Specific 2: Market activities: clients'
prospects
as they become
clients.
As available
Intro will assist clients to locate and apply Preparation Services
for loans and grants.
products
for exhibition, promotions 2:
and and selective marketing of products
Japan-side phase
advance
activities
in Cluster Phase
In Preparation categorizing
for Exhibition of products
(PEP), our databases for import restrictions
and contacts
ensure
proper
by screening
or other requirements.
Preshow
Phase
(PRE) are the promotional/logistical BIOS Phase and selecting Phase Japanese (Before Invitation promotional media Only
procedures Show),
needed inclusive
to exhibit. of inviting shows.
A more extensive targeted buyers,
replaces gatherings
PRE for private at Intro's in bringing
Showroom Leading makers.
Preview
(SPV) hosts advance marketers
showroom. in decision-
innovative
find SPVs effective
Many major buyers in-depth
will not visit a supplier's research.
exhibit until a subordinate venue for such
has conducted research
product budgeting.
SPV is a superior
and purchase
19
3. Cluster 3 : Trade Show Services a) Overall activities: -Generate exposures for sponsors and quality sales leads for clients -Manage specified events successfully and productively, and -Assist clients and liaisons who are visiting Japan b) Specific phase activities in Cluster 3: Intro's experience creating and running powerful exhibits comes to the forefront in the SHOW Phase; and at private shows in IOS (Invitation Only Show).
Japanese and North American shows have differences, including: The Japanese shows are more thematic and comprehensive.
(E.g. a "beer" show will include beer, brewing equipment and beer-themed accessories. These would be found at separate shows in North America). -Advantage The Japanese -Advantage Consumers -Advantage The Japanese Intro: This widens prospect groups for ESP recruitment. shows are better attended. 3-1). Intro: Sponsors get larger, yet still targeted audiences. mixed at the Japanese shows.
(Some Japanese shows outdraw their North American counterparts
and trade are sometimes
(Some Japanese shows allow the public to visit or add a "consumer day"). Intro: Exhibits get consumer shows are faster-paced. and trade exposure and feedback.
(Generally, Japanese shows are conducted over 3 days versus the North American 4-5 days average). -Advantage Japanese Intro: Some indirect exhibition costs are reduced.
shows themselves Intro: Attendees
tend to be much more expensive. are focused to get their jobs done. orders.
(In space and service costs; travel and lodging expenses for the buyers). -Advantage Japanese
shows result in leads rather than hard purchase Intro: Post-show follow-up
(Exposure allows buyers to show interest and start the buying decision). -Advantage -Advantage brings more sponsor exposures. in Japan for follow-up competition. Intro: Need for physical presence limits Intro's potential
20
Seminars in the Direct Import Promotion Phase (DIP) increase buyer awareness while REC (Reception), a traffic builder held with an IOS (Invitation Only Show), or SHOW, encourages relations between Japanese buyers and North American suppliers and sponsors. Contest Phase (CON), features competitions prestigious by organizers (e.g. "best new
product") or in magazines where ads are planned. Selection as winner adds exposures while contest evaluations add perspective to reports.
Visitors to Japan get a better market sense as Intro accompanies them to shows, events and for market study in NAVJ Phase (North Americans Visiting Japan). NAVJ is used as an incentive to liaisons to recruit clients. 4. Cluster 4: Non-Show a) Overall activities: -Use additional venues and media for promotion and sponsor exposures and -Monitor responses of buyers b) Specific phase activities in Cluster 4: Internet Phase (INT) ensures e-exposure. A Japanese homepage is made, monitored and linked to the Intro site, the ESP's site, the show organizers' Japan's e-commerce potential is tapped by Intro. In-Store Promotion Phase (ISP), held at prestigious consumer-goods stores, sites, the client's site, and to numerous e-commerce sites and various search engines. Services
provides publicity, test-marketing
and consumer feedback. ISPs are market-builders,
covered by free media, then used as bell-ringers to close other buyers. Paid Advertising (PA) is the placing of ads in targeted Japanese media and
is coordinated with other phases, such as placement in a trade show directory or media timed with a show. It is proven to increase the show's booth traffic. Press Release Phase (PUB) generates effective press releases to increase awareness and intent to purchase. Sponsors benefit from the resulting media pickups. Intro's strategic partners deliver top design and effective follow-up for their clients which include Andersen Consulting, R.J. Reynolds, Coca Cola, Nissan, Johnson & Johnson, General Motors, KFC, Hewlett-Packard, and Toyota.
21
5. Cluster
5: Follow-up activities:
Services
a) Overall
-Qualify leads generated -Gather -Report buyer information
at events required for the clients concerning with buyers events and results, and
to clients, liaisons and sponsors
-Assist clients in their initial negotiations b) Specific phase activities in Cluster 5:
Post-Show's PIOS phase planned
(PS) buyer follow-up (Post Invitation-Only
and showroom Show)
meetings shows.
are replaced Effective
by the PS is
for private
early in PEP and, due to the shows' sponsor exposures
hectic nature, is essential both
for additional Program funders, designed Disposition results
and sales of clients' products. are presented Services Report to the clients, liaisons, Phase (ESR) in formats
and recommendations in Exhibition allowing
and sponsors
with their input, of samples
for ready inclusion
in their own reporting. in ESR
and final accounting and sponsors
are done. Solid performance ESPs.
is key to re-closing B. Samples
liaisons
for future
of the ESP Database pages provide
Manual a small sample of the procedure and costing manual experience for
The following developed
for ESP. The manual, concentrated
which is the culmination
of four years'
and two years' maximum instructions time-studied,
effort in manualizing, provides
costing and field testing full bilingual
reliability
and effectiveness,
(English and Japanese) detailed have been efficient, of
on each activity costed
of each ESP phase. The procedures under varying conditions
and executed
to ensure systematic, and smooth connectivity
and cost-effective the manualized In the attached
execution procedures, samples
of each ESP. Due to the detail we are able to execute multiple
ESPs simultaneously. prospective are also
from the Pre- Contract
Phase
(PC-003 & PC-014),
clients are screened scrutinized. The attached each Phase. The attached to liaisons sample
prior to becoming
part of an ESP program.
Their products
BIOS- 019 gives a taste of the attention of a pre-private
to detail
which
is built into
In this case, the results sample
show press release
are disseminated. of reports
from the Post- Show Phase, PS-014, details
the sending
after the show is concluded. pages are drawn from Intro's proprietary ESP database without and
The following should consent
not be reproduced, of Intro.
distributed,
nor transmitted
the prior written
22
J
p
Title of Phase: Pre-Contract
Reference IPC-003
Phase
1
I English
I
Dop ........ ion, It-oNYlo p .... Department:IJ
NY_'_ IN CHARGE:
IR..... I . h
I J
OUTLINE:
iNY
Determination new-to-export Determination
I
of candidate etc. of candidate export-status:readiness; probability of being new-to-market;new-to-region, funded according to sponsor/funder req.
Description:
IN
THIS ACTIVITY, ESP PROGRAM.
EXPORTERS
ARE
QUALIFIED
FOR
THE
Candidate Target: i. Research in terms (a) export (b) opinion 2. 3. Procedure:4. Operations offering Research to & Client of: level of of Development development from opinion client's re: & Operations using liaisons candidates' to ability to meet of financial obligation of DOC have rating meeting system to review the candidate
candidate
provides plan. matches if up
application be the
requirement are
funders/sponsors as:
determine
candidate department
will heads,
accepted. candidates grouped
By decision of C-l)Fundable C-2)Funding
questionable fundable as C-3, them CD in calls PC-004. Required Unit Time (hm/min, 1 1 1 15 FullTime 1 1 1 1 2.5 2.5 4 5 10 16 10 1000 etc) Unit Rate 31.25 31.25 31.25 0.10 18.23 18.23 18.23 1.00 Total Extension 78.13 78.13 125.00 7.50 182,30 291.68 182.30 1,0OO.O0 -1,945.03 ii_ liaison to discuss. If liaison feels they
C-3)Probably not D-l)Self-funded 5. For candidates can participate,
rated include
Cat.
Cost ID
Br. 01 01 01 01 01 01 01 01
Dept. 02 04 03 03 02 03 04 04
Description Staff Expense - Supe_isor Staff Expense-Supe_isor Staff ExpenseTel - Domestic Staff ExpenseSupe_isor
Unit
20 080 20 080 20 080 20 162 20 081 20 081 20 081 20 179 Duration:
S_ff Expense - Full Time Stuff Expense - Full Time Charges - O_er
_days
Previous Estimated
items: completion
time:
_C-002
23
E
Title
of
Phase:
Pre-
Contract
Phase
IEnglish
I
Reference
IPC-014
1
Dep ...... t :I_o_eration Department:NIOperations
s
IC.D-
I
I
INY/I,T
I
OUTLINE:
(aIJ)Importable inf°rms NY (b) importable
if products but any intended with labelling ESPrequirements are: but with import restictions and will require ARE testing./ INFORMED RESULTS. NY contacts client.
(c) combination of (a) and d not yet determined to Descriptio$: IN THIS
(b) be importable EXPORTER PRODUCT
I
Target: Client IJ A) Case i. 2. One: If If Procedure: B) 3. Case i. 2. C) Case i. 2. NY i. 2. 3. NY i. 2. 3. 4. 5.
ACTIVITY, ABOUT PRE-SHOW
CLIENTS SCREENING
Operations: Product Importable But Labelling Required is required, inquire to of products and quality. for printing them in Japan NY inspection for shipping to
product was judged importable but labelling agent or public office re: ingredient label importable for NY but requiring at and client's await But labels, site client gather or US affixing of above affixing
estimates
labels
Advise Two: If
response
through
Product was
Importable judged or public
Restricted but re: there and are significant and proper client Testing formal extra client testing, response gather through estimate NY. on of await samples required. import import response restrictions, procedure through NY. inquire to restrictions await
product customs NY
importable, office on the Be and on
agent of
Advise T_ree: If
restrictions
products
Importability cannot time NY & CD do not need of
Cannot
Determined possible the products
Without quantity and
consultants
determine
importability
without
costs, Advise
involvement, restrictions
Operations For from OP OP products IJ
label,
but
have
some
restriction,
receive
situation
and
estimates
Operations. together and discuss political situation
translates to English & CD review IJ Info.
Operations After After Memo Send a) b) c) d) meeting receiving to fax CD to re: IJ with CD, to prepare get of and send send fax to client fax regarding confirmation to to the IJ's of estimates what Intro will do Telephone follow-up client with client client, response. client
response the is to
response following issuelabel IJ are is information advise himselfartwork the issue if according client IJ agrees if situation: or IJ if to he wants and IJ IJ to send of arrange labels client or label wants also
if labelling only on Japan-side if if if client if client import import decides only on
advise and will and
client is
print advise to
wants
arrange labelling IJ if
printing
himself. involvedto
restrictions labelling restriction
decisions product e) if further
the
issue-advise
client
wishes
change
another
testing
is
required-advise
IJ
if
the
client
agrees
or
if
he
wishes
to
change
to
another Cat. Cost ID Br. 02 02 02 02 02 02 02 01 01 01
product Required Dept. 04 04 04 04 04 04 04 04 03 03 Description SUrf Expense - Full Time Staff Expense - Supe_isor Printing Tel - Domestic Fax - Domestic Fax - International E-mail Stuff Expense - Full Time Staff ExpenseSupewisor Unit Unit Time (hrs/min, etc) 2 1 25 1 10 10 1 1 1 1 6 8 4 120 4 12 80 20 ,5 6 Unit Rate 17.86 30.49 0.09 0.09 0.09 0.09 0.09 18.23 31.25 18.23 Total Extension 214.32 243.92 9.00 10.80 3.60 10.80 7.20 364.60 15.63 109.38 989.25
50 081 10 080 10 102 10 162 10 164 10 165 10 160 20 081 20 080 20 081 Duration:
Staff Expense-FulITime
_days
Estimated
Previous i .....
completion
time:
c012Pc0 3I
26
i
Title
of
Phase:
Before
Invitation
Only
Show
Phase
IEnglish
I
Reference
NO._BIOS-019
I
" Department:NY Depart ..... I_pR NY lMarketing Io_erati°ns I
OUTLINE:
21ipping _ollection Update Issuance of
monitoring of of media client's thank
Qf info you
Press folder
Release with to any
for press media
pickups. clippings using PR received. materials. RESULTS
pick-ups. letters
Descriptio[
IN
THIS ARE
ACTIVITY, COMPILED AND
PRE-SHOW
PRESS
RELEASE
DISTRIBUTED.
NY/Media Target: PR I. 2. Dept: Receive final report of pick-ups from PR company Check on above when receiving copies of pick-ups communicate w/ PR company, and record into in reporting form (album) from PR company. If there outsourcing DB. press did release not use color make info. info. copy. to send to MY and data is any format.
problem, Procedure:3. 4. 5. 6 7.
Present clippings & background Send thank-you letter to each Send :thanks for considering
on media to Marketing Dept• media company which did use the us: letter to media companies If by DB. PR client. company
which
Compile reporting form from PR companies Print OUt of each media's info from PR • Gather media Dept> press NL of clippings of and same. how DB as of and data. for Input into next (if data (if (such , copies & descriptions, and
necessary, & request
report
Operations
Marketing Receiving Input Record a. b. Hold a b. c. Make a Is Any
them Client
into DB.
Visuals Print IJ do color to it.) Discuss copy
filing out do in it.) from to marketing's describe, DB as point of view. IJ by can use the format of Product info sheet.
result into color meeting buyer there for
(history) pick-up copy to any each
pick-up article. to
US
topics
issue. media allow of yes, as allow IJ pick send to up.
Scanning
(if media use
concerning report part of
immediately? article of media
version) etc.) which
layout, record in
phrase, to
how
further Media
marketing articles
activities? and Reporting Product analysis
Analyze Japanese
Derations: I. Receive to materials send from PH with Dept. other for BIOS NY report info. UnitTime (hrslmin, 1 0.6 etc) Unit Rate 30.49 Extension 18.29
2. Hold
together
Required Cat. CostlD Br. 02 Dept. 04 Description Staff Expense - Supe_isor Unit
40 080
"7
iiiiiiiiiii iiiiiiii iiiiiiiii iiiiiiiiii i_iiiii ii_< i_i_ _i
40 081 40160 40 102 40 010 10 080 10 081 10 167 10 102 10 162 10 164 10082 10 080 10 081 10 081 10 102 10 167
02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
04 04 04 04 05 05 05 05 05 05 05 02 02 02 02 02
S_ff Expense - Full Time E-mail Printing International Freight
1 1 60 16 1 2 160 24 6 4
2.5 50 1 3.6 12 12 3.6 160 10 10 18 3 8 3 30 30
17.86 0.09 0.09 8.93 30.49 17.86 0.45 0.09 0.09 0.09 11.00 30.49 17.86 17.86 0.09 0.45
44.65 4.50 5.40 514,37 365,88 428.64 259,20 345.60 5,40 3,60
Staff Expense - Supe_isor SUrf Expense - Full Time PostagePrinting Tel * Domestic Fax-Domestic StaffExp ..... Pa,-Time Domestic
._:i _ii
1 1 1 3 10
198,00iii_ii 91,47 142.88 160.74 27.00 40.50
Staff Expense - Supewisor Staff Expense - Full Time Staff Expense - Full Time Printing PostageDomestic
3
10182202To, tie 0 D ....
10 174 10 102 Duration: 02 02 02 02 _days Supplies Printing
3 30
3 10 5 20
009 810 ii 0
0.89 0.09 Total 13,35 18.00_ 2,695.57 _
Previous Estimated
i..... completion:
_7BIOS-018
}INT-005
I
t
t
t
25
Title
of
Phase:
POSt
Show
Phase
IEnglish
I
R._erence: [ Ps-014
D:partme_: NIY_ : C NY _ IN [Marketing IOperat ions CHARGE:
[
[PR 1
I _
OUTLINE: _Y When IJ iWhen Description: IN sent
INY/ia
sends to copy IJ to of possible, receives possible, THIS
I
liaison report to who copies who for all govt. officials or and or endorsed sends endorsed REPORTS PARTICIPATING to officials who who visited report report the show. Copies distribute officials report officials Japan-s/de sponsored from NY sponsored visited in-person. who visited in-person. Japan-side receive ARE liaisons receive
show
ACTIVITY,
POST-SHOW TO ALL
DISPATCHED
LIAISONS
Liaisons Target : NY: i. Group 2. 3. 4. 5. Procedure 6. 7. 9. I0. Ii. IJ PR: l. IJ clients by liaison and by sponsor. each liaison's group and each sponsor's group Prepare Prepare Send Issue fax any compilation format C/L notice "thank of of copies re: you report on and sent dispatch notes" required version of report which to any are related to the show. of any visiting official report. NA-side to copies re: of counterpart select to use IJ as to report non-partlcipants. distribute release or Intro NL
Prepare Dispatch Operations Sending Review receives
non-participating non-participating non-participating also prepares to IJ from Show copies who
8. Dispatch
compilation number PR
appropriate and from
materials show
contact NY and or to
agency to
Press
report officials
sends endorsed if
Japan-side receive can be
officials
visited.
2.When IJ PR &
possible, I. 2.
sponsored
report used in
in-person. Intro NL and/ or IIC NL
Marketing:
Review File
visual and note
materials materials
see
any
accordinqly Unit Time (hrs/min, etc) 1 1 1 2 1 1 10 10 1 2 10 12 10 2 4 30 Unit Rate 30.49 17.86 0.09 17.86 30.49 11.00 0.45 0.09 Extension 30.49 35.72 0.90 428.64 304.90 22.00 18.00 27.00 _:iiiiii :_._ ,, _% _
Required Cat. Cost ID Br. 02 02 02 02 02 02 02 02 Dept. 02 02 02 05 05 05 05 05 Description Staff Expense - Supervisor Staff Expense - Full Time Printing Staff Expense - Full Time Staff Expense - Supervisor Staff Expense PostagePrinting - Part-Time Unit
20 080 20 081 20 102 40 081 40 080 40 082 40 167 4O 102
Domestic
40174 205sup°,. 0
40 162 40 178 40 150 10 081 10 080 10 167 10 102 10 103 10 164 10 081 10 165 10 102 10 168 10 160 10 081 10 162 10 179 10 105 10 102 10 179 Duration: 02 02 02 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 05 05 05 03 03 03 03 03 03 04 04 04 04 04 05 05 05 05 05 05 Tel - Domestic Translation Local Travel - Transportation Staff ExpenseFull Time
10 1
10 20 50 37.5 15 5 1 2 60 1 4 1 2 58.333 1 4 2 500 33334 1 506 1 3 1 1 50 500 & Duplication 1 50 1 2 200 5 1 1 1 1 1 3.334
089
0.09 8.93 0.89 18.23 31.25 0.33 0.30 1.00 0.20 18.23 0.40 0.30 0.60 1.00 18.23 0.10 1.00 300.00 0.30 1.00 Total
18.00 446.50 100.13 273.45 158.25 16.50 300.00 60.00 10.00
890 1
ii!:
Staff Expense - Supervisor Postage - Domestic Printing Photo Developing Fax - Domestic Staff Expense - Full Time Fax - International Printing Postage-International E-mail Staff Expense - Full Time Tel-Domestic Charges-Other Design Charge Printing ChargesOther
'_
72.92 0.80 120.00 175,00":' 1.00 72.92 0.20 500.00 1,000.00 1,000.00 500.00 5,700.21
i_!
_ ,_
_ -
1
_days
Previous Estimated
i..... completion
time :
_-012 26
C. Types of ESP Programs ESPs will be sold in several different program types. Here is a summary: 1. Basic ESP Basic ESP's Planning & Recruitment Services Cluster results in a total client base of 32-40 companies per program sold, broken into two groups of 16-20. After Planning & Recruitment, group l's program is executed. As this winds down, group 2's program execution begins. Basic ESP will be offered to associations, government sponsors immediately after the substantial completion of preparation agencies and described in
this PLAN. Final costs and number of exposures will vary with media type and shows selected, with each participating exposures and sponsors client paying $4,688 to $5,860 for about 5,893,670
paying $82,185 and $164,370 each for about 22,212,107; a cost Table 4 for estimates).
per exposure range of $0.0037 to $0.0076. (Please see Appendix is a Basic ESP, but as recruitment
From beginning to end, duration will be 8-12 months. Intro's takeover of existing pavilions is not required, pricing will be done case-by-case.
Durations:
[
Planning
& Note that durations will vary with the scheduling of the shows. Reduction of average duration for Planning I from 180 to 150 days in & Recruitment Cluster Plan Year 2 is based on factoring in repeat programs.
Day 1-180 t PlanYr2-5 Day 1-150 t I Recruitment Cluster PP PlanYrl OP RP EXED PC Plan Yr 1 t Day 151-240 t ay 181-270 PlanYr2-5 I Group 1 Execution PEP PRESHOW SHOW PS ESR Group 2 Execution PEP PRESHOW PS SHOW ESR
IDay 271-360/Day 240-330 / PlanYrl [ PlanYr2-5
II
t
[
Day 360 PlanYrl
Day 330 [ PlanYr2-5
27
11
"i _
2. ESP PLUS ESP PLUS will introduced with Basic ESP. ESP PLUS includes all of the services of Basic, adding optional phases such as In-Store Promotion, Paid Advertising, ESP PLUS works with one group of 16-20 clients proceeding ahead of a second group of similar size. Depending on the media type, shows, and optional phases selected, clients pay $5,150 to $6,438 for about 6,294,631 exposures with sponsors paying $92,056 to $184,112 for about 23,014,029 exposures; a cost per exposure of $0.004 to $0.008. Optional phases will be blended into execution: Durations: Day 1-180 Plan Year 2-5 Planning & ] etc.
J
will that durations Note vary with the scheduling of the shows. If the duration for Group 1 exceeds 90 days, Groups 1 & 2 will temporarily overlap.
PP Recruitment Cluster OP RP EXED PC [ Group 1 Execution PEP PRESHOW SHOW PS ESR [
Plan Year 2-5 Day 181-270/300/330 Depends on the combination of options selected Plan Year 2-5 Day 271-360/390/420 Depends on the options selected combination 3. ESP Doublex of
Selected Optional Phases will be executed [ during each group's program: ......PA ..... NT I SPV DIP REC NAVJ PUB CON
I Group 2 Execution I PEP SHOW PS ESR [ PRESHOW
ESP Doublex clients appear at two trade shows in Japan, allowing products that straddle industry groupings to be shown at two different venues. After Planning & Recruitment Services, the clients are divided into two subgroups, each starts their program execution together. Doublex includes all of Basic along with Internet phase and North Americans Visiting Japan phase. Preshow, Show, and Post-show phases are all done twice per group (two shows), followed by ESR. Depending on the media type and shows selected, clients pay $7,116 to $8,895 each for about 13,502,840 exposures; with sponsors paying $127,264 to $254,528 for about 37,430,447; a cost per exposure of $0.0034 to $0.0068. Service duration is 9 to 14 months.
28
Y
4. ESP Doublex Plus Doublex Plus includes two shows with optional phases in between. Depending on the specific media type, shows, and options selected, clients pay $8,028 to $10,036 for about 14,688,740 exposures. Sponsors pay $143,288 to $286,576 for about 39,802,247 exposures at a cost per exposure of $.0036 to $.0072. Duration will be between 9 and 14 months: ESP Doublex Plus (2 shows per group with options) Duration Day 1-150 Planning & Recruitment PP OP RP EXED PC Cluster
Group 1 Execution Day 151-391 Duration INT PEP NAV] PRESHOW-A SHOW-A PS-A PRESHOW-B SHOW-B PS-B ESR Show (IOS) Optional Phases will be executed during each group's program: DIP REC PA ISP SPV PUB CON
Group 2 Execution INT PEP NAVJ PRESHOW-A SHOW-A PS-A PRESHOW-B SHOW-B PS-B ESR
Note that duration will vary with the scheduling of the shows.
5. Invitation-Only
Invitation Only, or Private Show invites a select group of buyers and is organized by Intro. When possible, an IOS will be held concurrently with a related show. However much of the reason for an IOS would be the lack of an appropriate show in Japan. To increase traffic, IOS includes extensive pre-show work (BIOS), Internet publicity (INT), Showroom Preview (SPV), seminar at the show (DIP), visits by North American clients or liaisons (NAVJ), and reception (REC). To control costs, the number of clients participating (IOS being their second show). Depending would be a minimum of 80, with 100 as a target. Clients can be drawn from ESP Doublex and other programs on specific media selected, client companies with sponsors paying pay between $3,614 and $4,518 for about 19,019,294 exposures;
$162,500 to $325,000 for about 21,104,247, at a cost per exposure of $0.0077 to $0.0154. The higher costs per exposure (compared to Doublex) are due to the intensive efforts needed to gather this captive, pre-selected audience who, without the distractions of non-Intro exhibits, will be more receptive. Service duration will be 10-12 months.
29
J
IV. The Markets
A. Segments Advertising government Japan;
For ESP
of the Market sponsors; foundations and government-related liaisons; client companies; of the market funders; trade associations;
and quasi-government competition
trade shows held in for ESP.
and existing
are all segments
B. Advertising 1. Benefits
Sponsors for Sponsors benefit exposures media, from being visibly associated to desirable audiences. with Intro's ESPs: ESP
Organizations a) Low-cost to other ESP Program Type Basic Basic Plus Doublex DoublexPlus Private Show Average b) Positive owned sponsors c) Flexibility allowing
Appendix
Table 5 compares
for example
with trade-level Estimated Sponsor Exposures 22,212,107 23,014,029 37,430,447 39,802,247 21,104,247 26,912,615 ESPs focused
print at $0.1236 per exposure: Cost per Exposure Range $ 0.0038--.0076 $ 0.0040--.0080 $ 0.0034--.0068 $ 0.0036--.0073 $ 0.0077--.0154 $ 0.0046--.0091 Native-American, spin to sponsors. Comparable Media Cost $2,745,416 $2,844,534 $4,626,403 $4,919,558 $2,608,485 $3,326,399 or femaleJapanese
Sponsorship Range $82,185- 164,370 $92,056- 184,112 $127,264- 254,538 $143,288- 286,576 $162,500- 325,000 $123,798- 244,905 public relations.
on minority,
firms or targeted also can shine of target sponsors
rural/urban by promoting
areas give positive two-way trade
and internationalization. America and Japan,
audience. to appear
ESP events
take place in North depending
in one or both markets, like in-store
on targets.
Some events focus on trade; others, allowing shows sponsorships
promotions,
on consumers, may choose promotions. show
by level. Sponsors brand
eager for B2B exposure
while others seeking business.
reinforcement
may choose in-store
d) Immediate booths, would
Millions seminars,
of trade-level
eyeballs Besides
will see ESP's mailings, national
brochures,
and other events. sponsors.
firms, each ESP ESP for trade
have its own specific received support
As example, banks
a 1996 proto-type
craft makers journal: immediate insurance
from Vermont include
and from the industry positioned airlines, to get
GIFTWARE results, providers,
NEWS. Sponsors such as shipping long distance
companies
firms, freight carriers,
forwarders,
banks,
and Internet/e-mail
service providers.
30
2. Sponsor Types: There are several categories of companies who will sponsor ESPs: a) Related trade businesses
North American and Japanese companies, national and local, benefiting directly and immediately b) North American from ESP's participants. companies with presence in Japan (approximately 3,000 )
Members of the American and Canadian Chambers of Commerce in Japan (ACCJ and CCCJ), are prime candidates. Advertising, sets 1998's expenditures Dentsu Research's 1999 Marketing &
in Japan at $56,058,394,000 with continued
increases from the growing North American firms there including Apple, ATT, Citibank, Coca Cola, HP, IBM, Sun Microsystems, and Xerox. Intro's ACCJ membership permits us access to decision-makers at these firms. 2,000) in
c) Japanese owned/affiliated
firms in North America (approximately
All Nippon Airways and Teikoku Database (a D & B-style credit reporter) have recently sponsored export-to-Japan events. Other firms, which are well-established North America, support programs promoting exchange through sponsorship related foundations. Lexis/Nexis' Company Honda Toyota Canon Nissan Sony Panasonic C. Foundations Samples of Japanese advertising in the U.S. 5/98-4/99 Standard Directory of Advertisers include: Company Mitsubishi Mazda Isuzu Nintendo FujiHeavy Industry Bridgestone Funders adult education, (includes business) U.S. $1000 $174,147 151,315 108,853 93,967 81,457 28,000 Company U.S. $1000 Yamaha $10,000 Casio 9,300 Yokohama Tire 5,800 Japan Air Lines 4,500 Fuji Electric 2,000 Japan Tourism 2,000
and from
U.S. $1000 $2,139,694 1,227,513 910,514 768,678 555,850 497,000
& Government-Related
55% of 448 surveyed foundations and minority/rural organizations development
funded community,
projects in 1997-99 (Appendix Table 6). Ranging from American trade is a proposal
$5,000 to $1,000,000, these grants (one-time and continuing) are channeled through local or trade groups (NPOs). Japanese-North with community, are disadvantaged. economic, and social benefits; especially when the involved communities Intro's creation of an NPO under IRS Section 501(c)(3) would be a
way to apply in cases where clients are not members of an NPO. Our clients have received grants from NAFTA relief and metric conversion programs. Tangible examples of export
31
promotion financing include the Department of Agriculture's export marketing costs) and New Hampshire's
M.A.P. program (50% of
revolving grants. Other programs are
available at regional, state, city and county levels. Interviews with exhibitors in Japan indicate that small manufacturers and food producers have wide access to these. Excluding of Labor
the states' and localities' programs and those funded by federal block grants, a partial list of federal agencies from which ESP funding is available includes the Departments (8 programs); Energy (8 programs); State (2 programs); Housing and Urban Development (2 programs); Export-Import Bank (2 programs); and Overseas Private Investment (3 programs). Intro has worked with the two main sources of funding, the Department of Agriculture, with 35 programs, and the Department of Commerce (72 programs run by its Women's Business Ownership Office, Minority Business Development Business Development Agency, Small Trade
Centers, Export Assistance Center Agency, International
and Foreign Bureau, Commercial Service Agency, Trade Adjustment Bureau, Small Business Innovation Research Agency, and Appalachian Regional Commission). D. Trade Associations ESP can proceed without a trade group (e.g. direct clients, government testimonial-provider sponsorship), but a
partnering association (40,000 in the U.S.) can act as a conduit for non-profit funding; as a to add credibility; and as a client recruiter. ESP expects clients to related firms (such as members of proceed through the program in groups to maximize effectiveness, especially when Intro's recruitment of client companies is needed. Geographically the same local Chamber of Commerce) may be too industrially diverse to benefit from an ESP, whereas firms within the same trade association (regional or national) are not. The efficiency of designing and executing recruitment, sponsorship and marketing for a single industrial group, even when products and manufacturers within the group are diverse or
competitive, is an obvious one. Intro's experience with combined groups of food producers illustrates this efficiency. At some venues, all of the clients' products were appropriate, the retail outlets. Research into programs associations offer and wish to offer members indicate that export is on the "hot list" in both manufacturing Comprehensive and service sectors. Japanese shows allow a wide variety of firms to exhibit successfully at the but the group had to be dispersed for in-store promotions, due to the more specialized nature of
relatively few shows held. For example: food, food processing equipment and beverages are all at the same thematically linked show in Japan, whereas they would require entirely different shows in North America. Appendix Table 7 illustrates the industries exhibited at the shows and provides a road map for which North American industries will benefit from group exhibiting.
32
E. Government
and Quasi-Government
Liaisons
ESP's market includes federal, regional, provincial, state, and local economic/export promotion agencies-some targeted solely at Japan. In addition to its embassy and 3 bank: consulates, Canada boasts 4 provinces with Tokyo offices (Alberta, British Columbia, Ontario, and Quebec). Mexico maintains Tokyo offices for the government BANCOMEXT, and trading firm NAFIN, SNC, in addition to an embassy and consulate. Most visible of all, the U.S., with an embassy and 5 regional consulates also has 2 separate offices for the Department of Agriculture's Foreign Agricultural Service (Tokyo and Osaka). 32 U.S. states maintain their own offices in Japan as do San Bernardino County and the City of Vernon (both California), along with the Port Authority of N.Y. & N.J. Other government and trade missions. efforts in Japan include sponsoring pavilions at shows
Four factors influence a government
agency's export promotion activities: budget, constituent
pressure, job justification, and competition from other national, state or regional governments. ESP is designed to work with these agencies. Experience shows that, like trade associations, they are effective and credible recruiters with exceptional willingness to co-market (seminar space, direct mailing cooperation, etc.). Although a certain early resistance can be expected from some (due to fear of total privatization of their functions), no agency is positioned to produce an ESP. Proper crediting of liaisons in press releases and providing them with statistical reports in the language and format required for their own reporting are key to maintaining good relations. Also, Intro will be a customer through purchases of market reports, pavilion certifications, and other fee-for-service items. Positioning itself as a resource, Intro can turn initial bureaucratic reluctance into a desire to cooperate for the benefit of constituents.
Competition among countries to enter the market also affects government. As per Appendix Table 8, 252 Japanese shows surveyed 1999-2000 revealed foreign participation 8,740 exhibits from 104 nations, many of which subsidize. At least an additional not included in the survey had pre-1999 foreign exhibitors (Appendix Table 9). Participation of NAFTA nations, (Appendix Table 10) compares well, but continuous pressure to further open Japan is a driving force within the U.S. government, making its stake more pronounced than that of other nations. Quasi-governmental (utility companies, regional authorities, duty-free zone administrations, center organizations) Many have discretionary funds to spend on trade promotions. agencies world trade ones. grew to 141 shows
are valuable liaisons for the same reasons as the government
33
F. Participating The market or product companies
Clients for clients includes testing in Japan. already exporting. all North American dollars firms interested in trying, expanding, because they measure
Statistics
on trade
are not adequate
As a snapshot
of export interest, a 1998 survey of Commerce (Appendix
of 623 Vermontshowed 75.3%
based firms conducted of were interested As this survey at U.S. exports The Department (22% of Japan's investment largest
in connection
with the U.S. Department in export promotion programs
in participating interest
Table 11 ). firms, looking
indicates to Japan
levels of new-to-market in calculating
and new-to-export ESP's potential
can be helpful estimates
client base. to Japan 1998-1999
of Commerce imports)
$182.2 billion was exported invested
and $10.5 billion directly (1999 economy: partner
(1/3 of Japan's second As many
foreign is the have
received).
Japan trading
$4.3 trillion-world's
largest) exporters
non-NAFTA
for the U.S. and Canada.
no contractual an interest
nor ownership
relationship
to buyers, even after market and regions where
entry, they maintain sell.
in increasing
the number
of customers
products
G. Trade
Shows
Held In Japan and Sizes of Shows so their number 100 countries and availability deserves consideration.
1. Numbers Shows
are a basic ESP media, from more than held in Japan Tables
Companies shows being
will exhibit about
1,348,116 times at the 3,295 332,971,399 visitors.
2000-2005, attracting
(See Appendix 2. Organizer
12 (a)-(c) and 13 (a),(b) for history "Comfort Level" participation
and projections).
Type and
An organizer's market
type impacts
the foreign
permitted in foreign
and establishes exhibitors varies with served.
parameters
(See Appendix
Table 14). Interest
the organizer's By number
type; current
show popularity;
and the market
of the industries
of shows
(not adjusting
for sizes), market
share by organizer
type is:
Type of Organizers: Japanese companies -not mainly in trade show business Japanese trade associations Japanese government Foreign, non-governmental Japanese trade associations using management companies Japanese trade show companies Foreign governmental Totals
Year 2000 Share 35.0% 31.0% 15.8% 11.4% 4.4% I -can combine 1.3% [ these to 5.7% 1.1% 100.0%
34
r
The pattern competition.
is that trade associations
protect
members in getting
against
non-member
foreign
As NPOs, they are not aggressive usually reacting entities, to complaints
new exhibitors,
except when
the government, are owned is defined management Government
itself, exerts pressure.
As most expo sites "comfort level"
by government as allowing companies
this can be tangible.
For this category,
up to 10% of all exhibitors tend to allow up to 30%. organizers
to be foreigners.
Associations
using
and quasi-government of foreign attendance.
lack profit endorse
motive,
but respond
to the
P. R. and prestige government
As agencies
and help other organizers, varies with the
participation
is not limited to its own shows. concerning non-tariff
Involvement
criticism Japan may be receiving "Comfort Foreign
barriers
or other unfair practices.
level" is 30% for this category. organizers, from the same types as the Japanese (private companies, trade about but to 70
association, shows.
government)
come from the U.S., U.K., and G.F.R., and operate they are motivated "comfort for international
Being foreign
themselves,
exhibitors,
the private
ones observe
the Japanese
level" of 30% on foreigners
in order
better blend into the market. Private foreign organizers countries are generally for exhibitors with the current exhibitors the most receptive and visitors. to expanding their shows and look to soliciting foreigners shows to
Their interest
in actively Plainly,
varies inversely
success of their shows. and so shortsighted private organizers, horizons
the more popular
can fill with Japanese court foreigners. or media sometimes Japanese quality groups,
organizers
may not be motivated
More successful
often subsidiaries
of large publishing Government
have longer planning
and desire to internationalize.
exerts pressure exhibitors,
to allow more foreigners, foreign exhibitors
but the push can also come from to increase the number and
realizing buyers.
are a draw
of visiting
"Comfort
level" is 30% for this category and exhibitors
but does go higher. the
Using the extrapolated "comfort (please H. Existing
number
of shows market
for 2001-2005, we estimate 56,176 foreigners
level" for the overall refer to Appendix Competition for Sponsors
to be 280,879, averaging
annually
Tables
15 (a)(b) for data
and adjustments).
1. Competing Sponsors PLAN. targets, distillers), shows,
have a wide choice of media, the detailing ESP's mixed markets media
of which
is outside
the scope of this of
offers low cost per exposure, restricted
positive at home
PR spin, choices (tobacco
and levels. Some advertisers, in Japan,
firms, alcohol of ESP (trade
have no such barriers allowing agencies
especially
within
the core media
print, Internet), advertising
them to be sponsors. and promoters
ESP is designed
to sell through
established
to maximize
our advantages.
35
2. Competing
for Other
Funding who solicit foundation and government funding for
The thousands projects compete
of applicants
with ESP's participating ESP addresses
trade associations ways:
and client companies
for available
dollars.
this in several
a) Tight coordination Such endorsement b) ESP programs
with government/quasi-government is a major advantage to get funding liaison travel
liaisons for government
funding.
which can be hard to pinpoint.
include
to Japan as an incentive. attractive points to foundations having a
c) ESPs are high-profile strong penchant
and event-driven; their efforts. needed
to publicize results
d) ESPs have measurable
for the NPO accountability fundraisers to present
reports
now standard.
e) Intro will use professional, and other foundations. 3. Competing for Cooperation
well-established
ESPs to corporate are indispensable.
In the closed NPO world, from Associations
such connections
& Government
Liaisons However,
The flood of proposals Intro's turnkey program
crossing
these desks compete precisely
with ESP for attention. the attention
is so complete
to capture the program support,
of trade and Intro works
government
officials.
For the trade association, the program, funding
is a "win-win". perform
with them to design recruitment, all the while program produced enhanced, arrange keeping
enlist government
intra-association and issue reports; Intro's
and sponsorships, flow of positive
execute
the program
up a steady Intro's
PR for the association. in shows, prestige, events, internal
also includes
paid participation The association's
and media and external, government is
by the associations.
while the use of its own resources
is minimal.
Participating
offices also get a "win-win". resources exporters
As Intro plays a supporting "half-a-program", which
role, less of their own is the case when reporting system,
are spent on promoting
must pay 100% of costs. They also benefit and results. Companies
from Intro's
PR machinery, 4. Competing a) Client
for Client Options facilitation business.
Profitable of Intro's
of sponsored No turnkey
exhibits
at trade
shows
in Japan is the core exist,
program
from organizers
for foreigners
so firms wanting
to exhibit have four options: a Japan-side a North (DIY) agent or distributor export agent
(i) Exhibit through (ii) Exhibit through (iii) Do it yourself (iv) Use a facilitator
American-side
36
f
I
Option
(i) involves
a relationship
beyond
just exhibiting
and does not apply when
testing in to
the market.
Connecting
with an agent or distributor (ii) also involves
is often the reason for exhibiting and requires the exhibitor
the first place. Option pay upfront require market
a long relationship
costs of the show relationship needed
plus 15-20% of sales in commissions. with the exporter Although about and the exporter it appears
The agent may does not get the option often
an exclusive information
to succeed.
the most economical, and procedures
(iii) can be the most costly. Lack of expertise combine investment with an inability meaningless. to conduct
the market
post-show
follow-up
to render
the "do-it-yourself" exhibit versus an Intro
Below is an illustration
of a do it yourself
ESP (using ESP Basic Plus NAVJ and U.S. dollars Cost Category: -Single Booth Space (3m x 3m) -JACE estimate of exhibit costs (Table 21) -Intl.Airfare (NY-Narita economy class-l) -Hotel-5 days (Tokyo) -Freight/import of samples -Class B Translator for show -Translation Subtotal: Other services of basic brochure (2 pages)
@ $1.00= 100 yen to compare): $ Cost DIY 4,000 10,336 2,200 1,500 300 600 200 $19,136 $ Cost ESP Included Included Included Included Included Included Included $4,926--$6,119 are:
included in Intro's
ESP at same cost-to-client
of $4,926-$6,119
-Monitor responses of buyers, qualify leads -Provide export and market training -Assist in initial negotiations with buyers -Pre-show promotions & pre-marketing -Generate quality publicity and sales leads -Additional promotional venues and media Option (iv), facilitators, The types of facilitators -Agents American offer a range of services, include:
-Secure sponsors & funders -Assist clients visiting Japan -Prepare products for exhibition -Erect, operate, dismantle show -Gather buyer information -Report about event and results the most extensive of which is Intro's.
of the organizers:
Two Japanese organizers
have commission-based to vendors.
North
agents selling space. All other concerns programs: Agencies handles
referred
-Government
(North American arrangements,
and Japanese) sporadically
buy
space to retail. Exhibitor -Private companies:
the show, and follow-up. fee-for-service by independent On the next versus a
Other
than Intro, there is one other Japan-focused their Japan operations are conducted
firm in North America. contractors,
However,
thus pricing is higher
than Intro's far more extensive
package.
page is a comparison quotation received
of Intro's ESP (Basic Plus with NAVJ and ISP phases) July, 2000 from JETC (Japan Export & Trade Consultants)
of Seattle,
Washington:
37
f
Re: The 26th International Food & Beverage Fair Venue: Makuhari Messe Exhibitor Services Including: Booth Rental Electric Services Site Prep. and Management Wall Creation Wiring Services Sign Creation Script Preparation Wall Decoration MD Deck Demo. Stage Speakers, Amplifiers Power Outlet Long Tables Import/Export Microphone/headset Clip Spot Lights Set-Up Monitoring Box Monitor/VCR/AV Rack Planning & Design Carpeting Table-Top Shelves Promotional Computers Interpreter-_ days Removals Catalog Stand Promotion MC-4 days Registration Setup Supervision Shipping & Receiving
Intro's ESP Basic Plus NAVJ & ISP ....................... $7,926 $47,000 [ JETC Quotation for above .................................................. --$6,119 ] Here are some other services included in Intro's Program, requiring extra fee or not available from JETC: Assist clients visiting Japan Secure sponsors & funders Tools for product decoration Travel to Japan/local travel Execute pre-show promotions Use media for promotion Monitor responses of buyers Export and market training b) Selling Points of Intro Some of Intro's selling points to client companies include: (i) Thorough market knowledge. Pre-show importability testing, a routine Intro service, is a make-or- break item for many categories such as food or cosmetics. (ii) Proper care and feeding of buyers. Pre-show publicity, showroom meetings and persistent, patient post-show follow-up maximize the results of exhibiting. in the first place. Certain sectors of the Japanese economy Gather buyer information required Erect, operate, dismantle exhibit Generate & qualify sales leads Prepare products for exhibition Generate & qualify publicity leads Use additional venues for promotion Report concerning event and results Assist in initial buyer negotiations Insurance & taxes Cooking utensils Samples security Supplement show Sales efforts
(iii) Ability to participate
remain resistant to foreign competition, including not allowing foreign firms in trade shows. Intro has a Japanese subsidiary and can secure participation. (iv) Relations with show organizers, government (v) Show & non-show (vi) Arrangement student services. Each developed, and third-party & trade associations. Intro is in Japan. Knowing unwritten rules can make all the difference. tested, adjusted over four years funding. As any college to get the client the "biggest bang for the buck". of sponsorships, knows, the college you can go when you must pay-in-full from your pocket and function. Intro and Intro Japan, operate seamlessly as
is different from the one you can attend by getting outright grants or financing. (vii) Unity of purpose one Company. A thoroughly bilingual and bicultural staff is found at both.
38
f
L
V. Market
A. Market
Goals
& Strategies
For ESP
Share Requirements sponsors spend in Japan and in the U.S., spend for business and community development, and export, promotion, spend on business/export
As detailed in the previous Section, ESP's market can be viewed several ways: 1) The amounts that advertising 2) The amounts that foundations 4) The amounts government
3) The amount that trade associations spend on member development and quasi-government
5) The amounts North American companies spend for export promotion, and 6) The number of trade shows held in Japan. To calculate the market share that Intro must achieve to reach revenue goals, the most useful of the above is the number of trade shows held in Japan. Projections show that 1,178,856 companies will exhibit at Japanese shows during 2001-2005. It is estimated that organizers would be comfortable with 280,879 of these being foreign firms. Surveys show that once NAFTA firms are introduced organizer's into a show inJapan, they generally achieve about 4.75% of the total number of exhibitors, or about 18.7% of the foreigner comfort level. Using these two, it can be estimated that exhibits of up to 55,760 NAFTA firms are possible in 2001-2005. Intro's ESP projections require it to service only 2,960 firms during the same period. Gross Market (In number of exhibitors) Total projected exhibitors ................................... Total projected foreign exhibitors ...................... Possible NAFTA participation ............................. Intro Projection 2001-2005 .................................. Estimated 2001-2005 1,178,856 280,879 55,760 2,960 Intro's Projections as % of estimated 2001-2005 0.25% 1.05% 5.31%
Intro has 4 supply-side methods to achieve projected revenues and profits: conversion, deepen, widen, and expansion: B. Supply Side Available Methods-Conversion
Of the 284 shows surveyed by Intro and found to have NAFTA exhibitors 1996-2000, 261 reoccur 2001-2005. Due to different frequencies, the total number of times these shows will be held by their 109 respective organizers will be 1,091. Projections indicate that 26,102 NAFTA exhibitors should be expected at these shows. Converting these firms from using other facilitators or from DIY exhibiting is Intro's first market goal.
39
C. Supply Side Available The above-referenced an additional
Methods-Deepen
shows have a total projected foreigner comfort level of 135,841
exhibitors. After reducing this by the 26,102 NAFTA firms already expected, we see that 109,739 foreign firms would be permitted into these shows. NAFTA presence at these shows, already validated by the presence of North Americans, can be deepened. D. Supply Side Available 33 of the 109 organizers Methods-Widen above run an additional 188 shows. These shows have not but do service industries similar to shows that have. potential is: Projected Foreigner Comfort Level 14,861 15,073 18,631 18,034 23,273 89,872
yet attracted NAFTA participation,
Widening means working with organizers to bring exhibitors to these shows. Using comfort level calculations, this submarket's Year 2001 2002 2003 2004 2005 Total
Projected All Exhibitors at 188 shows 52,080 53,341 65,311 63,967 81,598 316,297 Methods-Expansion
E. Supply Side Available
"Expansion" means bringing North Americans to 130shows in the same industries as those with established NAFTA experience, but that are run by 110 organizers who have not had experience with North American exhibitors. Contact with these organizers is included in the scheduling of this PLAN. As these shows present the most challenging situation, we will gauge interest from the organizers, then use the shows of the most cooperative as "second" shows in Doublex ESPs. Using comfort level calculations, this submarket's Year 2001 2002 2003 2004 2005 Total potential is: Projected All Exhibitors at 130 shows 32,397 34,866 42,602 44,061 54,556 208,482 Projected Foreign Comfort Level 5,257 5,569 6,915 7,089 8,971 33,801 for the 130
Appendix Table 16 provides category assessment of industry-appropriateness additional shows to be considered by Intro under the above-described
"expansion" method.
/
40
F. Coordinating Coordination
of Methods of the above methods Converting is achieved by Intro's overall policy of choosing in Japan the path to return to
of least resistance.
companies
who have exhibition
experience
the same shows while on Japan, builders
switching
to Intro is the least resistant shows.
as the company as testimonials
is already
"sold"
and on the use of trade
Using these companies
and groupinto these
is the path of least resistance within the same group
to bring newcomers of organizers the venues shows
from the same industries exhibitors
shows. Working
and bringing at which serving
to their other shows exhibit.
is the path of least resistance Working industries with different
for widening
North Americans
organizers
that produce bringing
these same, NAFTA-inhabited export experience to shows
is the next path. Finally, experience
exhibitors
with limited
with no NAFTA G. Strategies
is the most challenging
path and is currently
given lowest priority.
There is a two-track
strategy
for selling ESP, both in North
America
and Japan:
1. Track One: In North America: a) Referral 2. Contact Strategy past NAFTA exhibitors lowering at the shows of costs; rub-off to offer ESP from sponsors,
2. Stress completeness; trade associations, 3. Reward previous b) Association 1. Identify 2. Contact, exhibitors exhibits Strategy
and government. who introduce with reduced trade/government offices from
cost or free travel for next show.
the trade associations
applicable
to the shows' begin as per PP. rub-off, work.
industries.
and based on level of interest, and attractiveness, from recruiting sponsor
3. Stress service for association c) Liaison Strategy
and revenues
and conduit
1. Identify 2. Contact
liaisons
(all levels) applicable on level of interest, service,
to the shows'
exhibitors.
and based
begin as per PP. to their constituents,
3. Stress completeness, PR rub-off, d) Sponsor 1. Identify possible
and attractiveness
free travel to Japan.
Strategy potential sponsors for the industries of the exhibitors. sponsor benefits.
2. Design preliminary 3. Present 4. Present preliminary models
ESP with accent toward model through agencies
to gather response.
to trade associations
and liaisons.
41
i
i
2. Track
Two: In Japan Strategy organizers having NAFTA exhibitors to negotiate exhibit rights and/ financial
a) Agency 1. Contact
or exclusive participation
NAFTA toward
agency
(commission costs). exhibitors;
basis or with organizer
promotional to increase
2. Stress sales potential
creation
of added without
events NAFTA
for shows exhibitors
(DIP, etc.); PR rub-off and marketing (widening). b) Liaison This affects 188 shows
of other shows
run by 33 of these 109 organizers.
Strategy the applicable the Japanese North American government applicable liaisons in Japan. promotion of
1. Identify 2. Identify
government
liaisons
to import
the industrial 3. Contact
categories
of the shows. on programs. Based on interest, to constituents, begin as per PP.
for information
4 Stress completeness, H. Demand Side Methods:
attractiveness
PR rub-off.
As per Appendix run the gamut the general
Table 17, the types
of shows at which
NAFTA
companies
have exhibited in As
of industries.
On the higher category
end, 29.4% of these shows can accept products while only 0.22% are appropriate categories for cosmetics. does provide
industrial
equipment
seen below, grouping look at which industry Groupings:
the industries groupings
of these shows into wider the NAFTA companies
a better
currently Appropriate w/ ] [
exhibiting
in Japan are from:
% of shows Includes: General Merchandise, Import Goods Jewelry, Gift, Toys, Household Goods Internet & Computer Sports, Entertainment, Recreation Food, Agriculture, Nutrition Education & Government B2B Services Industrial Machines, Parts, Materials Environment, Petrol, Resources Cars, Trucks, Transportation Health & Medical Construction, Architecture Apparel, Textile, Personal Care Optical, Cameras, etc.
at: % of other Shows organizers(Widen) run by same 12.03 10.36 14.01 8.85 9.63 11.51 9.51 11.53 9.06 9.18 6.77 7.82 5.79 9.13
(Conversion/Deepen) NAFTA exhibits 15.97 14.37 13.97 11.88 11.30 11.24 10.76 9.69 8.43 8.35 8.12 8.05 5.94 5.75
42
i_
VI. Platform
Product Exhibition
for the North American Services Program-NA
Market:
Note: Although this PLAN's focus is our Platform Product: ESP, investors are provided descriptions of other Intro products. These are divided by the major market they address: North America or Japan. Intro will ally with North American organizers for cross-marketing in pursuit of ESP.
With the aim of building good relations with these organizers, the logical outgrowth is a program aimed at increasing Japanese exhibitors and visitors at the North American shows. A. Background Japanese participation in North American trade shows is showing signs of increase.
Thousands of small companies in Japan, heavy contributors to the GDP, are looking for means to export their goods and circumvent the current oligarchy of trading firms. Indications are that activity among Japan's 800 export trade councils and 3,000 trade associations to pressure government to reinvigorate exports is having some effect. Not yet sponsored booths at numerous in inverse relationship to the decline in at the mid-1980's level when the Japanese government North American shows have increased dramatically government
shows, Jetro and some individual firms have resumed exhibiting. Japanese buyers attending Japanese exhibitors. The exchange rate, lowering of air fares, relaxation of regulations, and promotions all combined to make import an option, even for retailers. Though being about 50% of the United States), even small Japanese firms are When organized, there are fewer Japanese than North American companies per industrial category (Japan's GDP and population export-conscious when compared to their North American counterparts.
this realistically translates into a greater willingness to spend and pressure their associations and government agencies to spend on export promotion than is found among most sectors in North America. Though the dollar-yen relationship is no longer lop-sided in favor of exports from Japan, fully 67% of Japanese firms with 50 or more employees do export. Intro's interest stems from the long-term goal of building relations with North American organizers by becoming a resource to them. Strategic alliances can be made with some, particularly those considering eventual international expansion. B. North American Market- Status
Compared to the Japanese market, the North American trade show landscape is huge. 8,000 shows were held in over 200 cities covering hundreds of industries in 1999. Limiting its definition of a trade show to B2B expositions having 50 or more exhibitors, the Trade Show Week Data Book 2001 estimates the United States organizers' approximately revenues at $12 billion dollars. This figure excludes smaller shows and excludes all 43
secondary organizers American
revenues
(freight, booth construction,
travel, etc.). Many North A number many
American of North functions. Missing
are large, tending shows
to be from media and publishing.
are run by trade associations, organizers are also substantial
which subcontract in North America
Foreign-owned
(VNU, Reed).
are the government-run and restrictions have exhibitor concentrated Information Medical Home concern waiting
shows
seen in Japan. All shows are generally shows
open to foreigners often are
only very popular lists. 42% of Trade groups:
which, due to space shortages, surveyed 4,637 shows
Show Week's
in five industrial Technology
( 483 shows);
& Health Furnishings
Care (460 shows); & Gift (405 shows); (317 shows) and
Building Sporting
& Construction Goods
& Recreation dispersal exhibitor
(301 shows). and large number of shows held per year per industry at all except major national in North has
The wide geographic the effect of lowering For example, only 2 draw servicing
and visitor attendance per year which
shows.
of the 90 shows buyers
cater to the gift industry to Japan,
America,
in excess of 60,000; a contrast some of which
with 6 shows greater
annually
this industry,
post show attendance
than 175,000. and 411
The top 200 shows exhibitors,
surveyed
by Trade Show Week averaged exhibitor spending produce
20,500 visitors
with the average
$7,374.00 at the show. The 500 trade an average of 15 shows per year each
show organizers with revenues Research
active in North of approximately by Cahners'
America
$34.4 million Research
(about $2.3 million
per show produced). show producers B2B Media companies)
conducted
shows
that 85% of trade integrated
(both those described reported operating a 26% revenue profit
as "pure play" or parts of larger, increase from their shows
in 1998 over 1997 with an average
of 29%. MarketTrend & Needs acquisition are the trends players behind in the North American taking
C. North American Consolidation show market
and expansion for 1998 through Abry Partners, Primedia,
through
2000. Key financial DLJ Merchant Veronis Banking
the consolidation & Friedman, their
place include Pfinsgten growth
Partners,
Hellman Pincus.
Partners,
Suhler, and Warburg American
To sustain
rates and profit margins, to acquire
the North
organizers
and their financiers
seek new properties concerning
and need to grow the shows they buy. More information trend and its international developments are found in
this consolidation section
the Acquisitions
of this PLAN.
44
D. Need
for More Exhibitors conducted
and Attendees
at North
American
Shows
In a survey American
in September,
2000 by Trade Show Week, 96% of North revenues from their shows by 60% over
show producers
aim to increase
their 1999 levels by 2003. Their methods Will increase revenues increased increased increased by:
for doing so include: Percentage Responding YES 56% 44% 29% 26% 26% 26% 22% 22% 20% their growth, Percentage they answered: Responding 58% 58% 43% 41% 37% 25% 18% 11% Exhibitors and Attendees and 14% of for YES
exhibit space revenue at current shows sponsor revenues at current shows attendance revenues at current shows
acquisitions of existing shows reproducing current shows in new markets adding conferences and seminars to shows joint ventures with other show producers creating new shows in current industry sectors creating new shows in new industry sectors Asked to cite what challenges they foresee in sustaining
Challenges to meeting revenue growth targets: difficulty in finding additional exhibitors difficulty in finding additional attendees competition from other trade shows external market conditions finding suitable venues and exhibit spaces competition for corporate resources finding appropriate personnel arranging external capital and financing E. Need for Assistance presence in Getting International
Foreign visitors
in the North shows).
American As North
shows is low (11% of all exhibitors American trade show producers
in the largest
look abroad Challenges
exhibitors
and attendees
to keep up their growth,
they face new challenges.
cited by organizers
in the Trade Show Week survey were: In Getting International Exhibitors 58% 49% 36% 16% In Getting International Attendees 46% 65% 39% 30%
Challenges Cited by North American Organizers Selling Value Quality Lists Time, Staff Finding Partners
45
Among their current and intended methods for attracting exhibitors and visitors from abroad, the surveyed producers cited: Methods Desired Internal Intl. offices Intl. reps Intl. publications US publications Intl. Organizations US Commerce Dept. US Trade Associations US reps. ,To get Foreign Exhibitors 89% 16% 7% .... .... 11% 13% .... 2% To get Foreign Attendees 87% ----44% 40% 29% 27% 18% ---
Use of the Internet is also considered by many of the North American producers. Though only 22% of organizers with web sites feature a language other than English, 75% of them intend to add multi-lingual capability to their sites within 18 months. Only 4.8% of all North American organizers with web sites feature Japanese. The attraction of Japanese exhibitors for organizers in North America (ESP-NA) is apparent. Clearly, Intro's delivery of large numbers of Japanese exhibitors to the North American shows through ESP-NA satisfies many of the organizers' F. Product Description: ESP-NA is a program for North American organizers with whom Intro wants to establish relationships in pursuit of ESP and OIP (described later). The cross-marketing has packages designed on two bases: Retention and Expansion: 1) Retention Basis needs.
Services such as acting as the organizer's Japan office, contacting exhibitors for re-closing, including them in the various Intro Japan seminars, newsletters, and other contact would be tailored for retention of current Japanese exhibitors. 2) Expansion Basis In addition to the above services, would include: (a) Japan-side direct marketing: or signing deadline) or signing deadline) (at show announcement
-Publicity Releases (show announcement -Paid Advertising -Direct Mailings -Telemarketing
(to targeted exhibitor-candidates) (to targeted exhibitor-candidates) to Japanese
-Internet solicitation (to targeted exhibitor-candidates) -Virtual show extensions websites translated
46
(b) Japan-side -Exchanges -Marketing -Export
cooperative
marketing: organizers shows (exhibitors at trade shows and buyers) in Japan
with complementary of the North American
education
seminars
-Government
cooperation marketing in Japan
-Trade Association (c) Exhibit -Pavilion -Selection G. Launch
coordination: design & organizing for Japanese exhibition groups
and supervision
of vendors
to facilitate
exhibiting
Requirements to North American rather organizers during contact for ESP. No extensive
Intro will offer ESP-NA market research
will be conducted, of service-providers).
the focus of preparation
is operational to potential Japanese
(coordination exhibitors gauging
Except for retention, basis, limiting
all marketing
will be done on a group of the interest
preparation
to marketing
costs and the liaisons.
levels of organizers,
sponsors,
associations,
and government
H. Marketing ESP-NA Japanese North visitors
Approach will be sold to North American shows targeted organizer organizers whose shows cross-reference later in this PLAN). with the When a and
for ESP, OIP, and TMS (detailed commits to working
American
with Intro to bring Japanese Japanese
exhibitors organizers,
to his shows,
Intro will market trade
his shows to appropriate As an example, medical
exhibitors,
and affiliated American
associations.
as arrangements and health shows
are made (460 major
with the North shows
organizers
who produce
run by 28 organizers), show organizers
Intro will finalize
arrangements
with the 11 appropriate shows and with the 53 sector. to all exhibitors America service)
Japan-side
who run the 31 medical agencies
and health
trade associations Ideally, Intro's
and 52 government
involved
with this industrial is being offered
ESP (from North shows
America
to Japan service) ESP-NA
at the North
American
while Intro's
(from Japan to North Due to the disparity
is being offered the North appropriate (where
to all exhibitors
at the shows in Japan.
in size between no ESP
American
and Japan trade show industries, show exists in Japan.
there will be cases where by Intro's
cross-reference American
This is addressed
the North
organizer
can run a moderately-sized Trade Show Creation
show in Japan as an product (detailed later
ESP Invitation in this PLAN) agencies American
Only Show) and by Intro's in which
Intro will seek out appropriate to produce
trade associations,
government
and others organizer.
in Japan
a new show in cooperation
with the North
47
J"
4
I. Targets- Number
of Japanese Exhibitors
& Groups
The number of Japanese companies that ESP-NA targets to bring to North America is: Months after ESP-NA Launch 12 24 36 48 60 Japanese Firms Coming 192 (16 group 312 (26 group 432 (36 group 600 (50 group 792 (66 group through ESP-NA exhibits) exhibits) exhibits) exhibits) exhibits)
The average Japanese company exhibits at 4 trade shows per year (an average of all industries). As an example, this means that the 9,641 exhibits at Japan's 31 medicalESP-NA aims related shows are done by about 2,410 Japanese companies. Of these 2,410 companies, we can assume that 67% export or want to (about 1,615 companies). to introduce these 1,615 show-savvy, export-ready
exhibitors to the 35 North trade promotion bureaus have greater
American organizers who produce the 460 North American shows in the medical categories. As trade associations and governmental relevance in Japan than in most North American industries, the above targets would be composed of groups of firms exhibiting at pavilions in the North American shows. Using 12 companies as a typical group pavilion for Japan, this requires Intro to organize approximately J. Economics & Outsourcing Virtually all of the services to be provided to the exhibiting Japanese groups will be outsourced by Intro. Extreme care in selection and monitoring of these outsourced partners is key to ESP-NA's success. Intro will derive its ESP-NA revenues from: - fees charged to North American organizer who desire an office presence in Japan; -commissions paid by North American organizers for space sales; services; -oversight fees charged to Japanese exhibitors on outsourced 194 pavilions over the 60 months projected.
-commissions paid by miscellaneous vendors providing exhibitor services. For figures, please refer to the Projections portion of this PLAN.
48
VII. Supplemental Product for North America: Product Testing & Evaluation Services (PETS)
A. Background In 1998, EUSAFEC (Department of Agriculture's Eastern U.S. Federal Export Council) for a program that would also asked Intro to create a turnkey entry program for food producers. Based on earlier Department of Commerce work, Intro saw opportunity benefit manufacturers. down its then-current Research and design began in fall, 1998. In 1999, Intro wound pilot programs to concentrate on the design and testing of ESP
(detailed earlier) and "Market Entry Program" (MEP) detailed next. Product Evaluation & Testing Services (PETS) is a bridge product between ESP and MEP in which evaluation and testing phases of MEP are packaged into a testing service. PETS' duration is 120 days and culminates in reports to the client and liaisons concerning results and indications for the products tested. B. Market & Needs Appendix Table 11 indicated strong interest (75.3% of firms surveyed) to participate in export promotion programs among medium and small North American companies. Within this 75.3%, some had deep concerns about regulatory matters or felt that trade shows were not the optimum introduction and testing method for their particular product. PETS addresses these concerns while delivering an affordable, real-world evaluation appropriate for most consumer goods. An additional market for PETS are North American firms who participate in Intro's ESP programs and desire additional C. Product Description Like ESP, PETS is comprised of activity groupings called Phases. Products submitted by clients will be intensively evaluated for the Japanese market on several levels, including: (i) Legality & Importability During the Evaluation and Preparation phases, a client's products are first checked and if problems are detected, to ensure they conform to Japanese import standards, market testing.
the simplest method for correction. Trademark, trade name and other product identifications are also screened for permissibility of use in Japan. (ii) Market Comparables Clients' products are checked against comparable products already in the market on numerous criteria including: market size, market share, costs, distribution price mechanisms, patterns, and synergy with other products. Major players, distributors
and end-users in the market are identified. The survey includes on-line sources.
49
J
(iii) Focus Group: Utilizing
Wholesale
Buyers invited groups of buyers are asked to inspect
Intro's showroom,
and comment (iv) Initial Market
on the clients' products. Testing are markettested at pre-registered, Evaluation, market pre-screened multiple
Consumer locations selection retailers (v) Reporting Correlating client which
products under
a Pilot Shop program. conditions
tests, and product of participating
use real-market and wholesalers.
with the cooperation
the results indicates
of the above phases, the potential
Intro produces
a report
to the If warranted,
and challenges
for his products.
initial market
entry techniques
are strategized.
D. Revenue
Sources
& Pricing by the client or, in the case of a group, in determining by their trade potential sources
PETS is paid for directly association. of financial
As with ESP, Intro will offer assistance assistance among government at sponsorship PETS program
and non-government beyond trade association
sources.
Unlike
ESP, there is no attempt involvement. service-provider A typical
or government or
sold to a manufacturer,
producer
will cost $12,000.000.
E. Existing
Competition
for PETS exists for PETS. The United Commercial States Department "Product of Commerce which
No direct competition itself, through consists largely
the Foreign
Service, produces statistics
Reports"
of database-drawn however
for approximately results. research studied.
$5,300.00 per product. Focus groups and advertising
These reports (at wholesale agencies
do not approach
PETS' real-world by numerous
level) in Japan are conducted
and generally
start at $30,000.00 per product
F. Sales
Channels with ESP through the same trade association, on the credibility PETS minimal. and
PETS will be sold simultaneously government, show organizer
and other contacts.
Capitalizing
reach of these strategic Intro will accept and will promote
partners
will keep the costs of marketing
direct clients for PETS (firms not associated PETS to particularly successful
with an ESP group) as a logical
ESP participants
next step for them to take in Japan.
50
f"
I
VIII. Subsequent Product for North Market Entry Program (MEP)
America:
The investor
Note: Intro's Market Entry Program, is a product in development. is provided with the below description for reference. A. Background MEP began as a project undertaken Eastern U.S. Federal entry. capable Export Council) when EUSAFEC (Department
of Agriculture's entry program
asked Intro to create a turnkey program designed
for market companies who receive Market
MEP is a long-term
for North American market, most likely those
of larger commitments results
to the Japanese
favorable Programs
from first participating testing,
in an ESP or PETS program. preparation and sales, and can
Entry
(MEP), coordinate
be customized consistent B. Market As detailed exporting largest
for almost any client desiring to clients and liaisons,
to enter Japan.
MEP produces progress.
reports
enabling
them to monitor
in the discussion or wanting
of ESP, the number
of North
American
firms States'
to export trading
to Japan is huge. Japan is the United and purchased
non-NAFTA
partner
over $182.2 billion of
American-made C. Needs
products
in the year 1998-99.
of the Exporter obstacles which face would-be power. exporters Intro's to Japan are their lack of both. At all on to
The two largest market phases
knowledge during
and lack of staying activities
MEP addresses
an MEP, Intro's for constant
are clearly and frequently participation exporter,
reported
the client, allowing
communication, length"
and adjustment. with the
The MEP client is thus not an "arm's knowledge challenges means primary successful of market procedures
but is equipped
and players
to empower
him to overcome market.
and exploit the opportunities to the market
of the Japanese in order
Staying power conduct to
the ability to commit and secondary conclusion.
to adjust to it properly, with the right partners and financial
sales efforts, and negotiate In Japan, this requires ways. Certain patience
commitment.
MEP addresses (trade shows, feasible.
this in several
portions
of MEP are high-publicity MEPs are in and
etc.), so sponsorships,
particularly
in the case of group
As with ESP and PETS, Intro will, when needed, potential sources of financial assistance
offer assistance
determining
among government
non-government
sources.
51
D. Early- Stage Partnering In cases where exceptional through means, the early phases of an MEP show that a product or where the product during has already line has in Japan
promise,
been validated
an outstanding
response
an ESP, a PETS program, to arrange
or by other in or line
Intro will act on behalf of the client company MEP between This mutual customers the manufacturer
co-investment importers
the product's distributors. of Japanese
and likely Japan-side
investment
in an MEP by the maker and his primary relationships which
can serve as the basis for long-term rapid introduction
bind the two and facilitate
of later products.
E. MEP Product
Description of phases designed "entry" to further services research a client's progress in Japan.
Like ESP, MEP consists Unlike competing exhibition including extensive America.
single-channel
(such as Internet
only; trade show
only; advertising product marketing MEP draws adaptation,
only; market testing,
only), MEP is comprehensive, penetration. Along with in North techniques. of MEP,
and initial market export
and sales work in Japan, upon Intro's
education utilizing
is provided the winning
1995-1999 testing,
Some ESP phases procedures multiple marketing successfully reinforce (i) Testingunder market
also appear
in MEP, but, due to the intensive
sales nature
and costs differ. MEP is designed trade shows, in-store promotions,
to last 12-16 months contests, publicity
and includes and other
drives,
and promotional completing their market market
activities.
It is intended
that some clients, after exhibiting include: multiple selection locations use realto
MEP, will be converted position. MEP's additions
to ESP for periodic to ESP's phases pre-screened tests, and product retailers
testing is done at pre-registered, Evaluation, market
a Pilot Shop program. conditions
with the cooperation
of participating
and wholesalers.
(ii) Market includes
Planning-conducted alterations
after the testing phases, and strategic assistance sales activities. guides
MEP's planning
product
(iii) Import/Distribution-export Japanese as needed, buyers.
the client to direct dealing
with
In MEP, Intro itself places an initial stocking distributor to ensure rapid
order, supplemented placement. marketing
and acts as a bridge includes
market
(iv) Sales-MEP efforts targeting media;
follow-up
on sales leads and extends
to aggressive
high visibility
sales in mail order; e-commerce with major distributors
sites and malls; prize and retailers.
and through
co-op advertising
52
(v) Enhanced Communication-changes
in specifications, availability,
and pricing
are publicized through MEP's updating system and through the Intro Importer's Club. The Club provides Japanese buyers with rebates, trips, priority invitations to events, product and market news (using both monthly newsletter and fax newsflash formats) and builds a close network vital for new-to-market exporters. Extensive reporting to the client, liaisons and funders allows them to properly evaluate results. (vi) Commitment-multiple product appearances in media, stores, and at shows
are designed to increase buyer acceptance as they see the exporter is serious about Japan, thus overcoming the reputation many foreign firms have as "quick-shot" suppliers. (vii) Direction-MEP positions clients to continue to profit well after the program ends. Our reporting is a road map for sales expansion and reinforcement. It also
provides a summary of the entire MEP for liaisons and sponsors. F. Completion Requirements
This PLAN will enable Intro to conduct two dry-run MEPs in order to: a) Reconfirm cost suppositions b) Identify and survey of: (i) advertising sponsors associations liaisons (ii) funders including all levels of government (iii) trade and professional (iv) government and quasi-government for each completed phase of MEP
These dry runs will fine tune the products and gauge response. Initial projections of client sources, revenues, and costs are included in this PLAN.
53
IX. Subsequent Organizer
Product for Japan: Internationalization
Programs
(OIP)
Note: OIP increases North American attendance and exhibitors at shows in Japan, and is launched during contacts for ESP. Feedback from organizers will aid in refinement. A. Background As seen 1995-2000, a range of interest in obtaining foreign exhibitors, from highly motivated to apathetic, exists among Japanese organizers. Interest is affected by type of entity; show popularity; B. Market Sample A survey of 22 organizers, running 110 shows, quantified interest levels. 68%, who produce 88% of the shows, would provide a combination of commissions (10%-30%), free space (25-35% of total), or financial support for marketing in North America, indicating that strategic alliances are feasible. Here's a summary of survey results: Cooperation Cooperation Cooperation Cooperation Cooperation Cooperation Cooperation Organizer Code Number 020 078 032 033 075 139 137 208 203 210 193 204 229 199 240 230 244 212 109 207 195 202 Mode Mode Mode Mode Mode Mode Mode A: Financial contribution marketing in North America B: Free booth space C: Discounts on booth spaces purchased D: Commission paid on booth spaces reserved E: Assigning of priority locations of booths reserved F: Provide sales materials/do additional PR in Japan G: Not Interested in Cooperating Possible Modes of Cooperation B C D E F and the industries served by them.
No. of Shows run 1 2 1 2 2 3 2 2 2 28 4 1 1 8 24 7 4 2 2 1 9 2
A
G X X X X X X X
Mode A B C D E F G
X X X X X X X X X X X X X X X X X X
X X X X X
X X X X X X
X X X X X X X X X X X X X X X
X X X X X X X X X X X X X
Favorable Responses 3 5 8 13 15 13 7
% 14 23 36 59 68 59 32
Shows Run 54 14 51 88 97 94 13
54
4 ¸
C. Product Descriptions a) Retention Basis
for OIP Program services for Japanese organizers include:
Organizer Internationalization
Tailored to retain North American exhibitors, these include acting as the organizer's North American office and contacting current and past exhibitors through the various Intro newsletters, seminar invitations, etc. b) Expansion Basis direct marketing: or signing deadline) or signing deadline) Expansion services would use the most effective of the following: (i) North American-side Paid advertising Publicity releases (at show announcement (at show announcement
Direct mailings (to targeted SIC coded exhibitor-candidates) Telemarketing (to targeted SIC coded exhibitor-candidates) Internet solicitation (to targeted SIC coded exhibitor-candidates) Virtual show extension (ii) North American-side cooperative marketing:
Exhibitor and buyer exchanges with North American organizers Marketing at North American trade shows Export education seminars Government cooperation Trade associational marketing Pavilion design and organizing D. Targeted Clients & Sales Channel: presence at their shows. Through its unique
The clients for OIP are Japanese organizers who seek additional revenues and prestige by having a substantial international position and connections within the Japanese trade show industry, Intro is positioned to approach all 220 organizers in Japan with this product, regardless of what type of entity the organizer may be (private, associational, government be introduced into the Intro-organizer agency, etc.) In Japan, OIP will vendor-client relationships create channels for informal product introduction.
ESP discussions, allowing attention to be directed
toward features that the organizers respond to most positively. Just as the initial target group of North American organizers to be contacted for ESP-NA will be coordinated with Intro's needs for ESP recruitment, so the Japanese organizers to be contacted first for OIP will be the organizers with whom ESP arrangements "internationalize are needed. Organizers with whom no immediate ESPs are planned will be contacted next, through your show" seminars for organizers to be held in conjunction with the industry trade group, the Japan Association for Creative Exhibits (]ACE). 55
It is projected that Intro (USA) will be responsible for delivering 20% of the space sales made by Intro Japan under OIP. The remaining 80% will come from direct sales made by Intro Japan to organizations E. Market Goal for OIP Our target is to sign agreements with 149 of the 220 active organizers within the period described in this PLAN. This number is based upon our study of their relative motivations to expand internationally F. Notes on OIP i) Timing Because OIP enhances the profitability of ESP, OIP can be co-marketed ESP, then refined as the market indicates. ESP financial goals can be accelerated as OIP is accepted by show organizers. ii) Strategic Consideration of OIP with and our own survey results. in third nations and made through subagents in third nations.
OIP also holds secondary revenue possibilities (such as providing services to North American exhibitors already exhibiting directly at any of the shows) and, when viewed in context with Intro's other products, is part of a Trojan horse strategy toward becoming a dominant force the market.
56
X.
Subsequent Product for Japan: Websites & Virtual Shows for Trade Show Organizers
A. BackgroundInternet & Trade Shows in North America community, of the Internet and trade show media both afford information, communication, and one-stop shopping. Both facilitate commerce. The "killer application"
Internet (efficient speed) can complement that of trade shows (personal interaction). The Internet is used to sell and supplement shows in North America and Europe. Though "virtual trade shows" were considered a threat by the industry when they began in the U.S. in 1996, this has given way to dual use of the Internet by the organizers both to promote events and to extend their shows as a value-added Use of the Internet was cited as the second most important service to exhibitors.
industry trend (after
consolidation) in surveys of 182 organizers conducted by Trade Show Week (9/00). 90% stated that virtual events and online services are important to the future of their organizations. downloadable U.S. Internet promotion includes websites with exhibit descriptions applications, Tscentral.com; etc.) Generally limited to basic info (dates, and coupled with a strong presence in search sites (e.g. exhibitor-
net.com; expoguide.com;
venue, visitor and exhibitor totals), these sites require the prospective exhibitor to e-mail or telephone for a brochure to "see" the show; view past exhibitor listings; and review floor plan, display, and travel options. Revenues include ads from display and freight firms, and other related services. When asked about needed components of an Internet site, the organizers picked the following as either most or second most important: Site Feature Event information & schedule Registration Virtual exhibit space Session content information Sponsorship opportunities Most Important 90% 71% 36% 43% 14% Second Most Important 83% 82% 78% 79% 80%
Trade show extension (virtual shows) is newer. The current sites include an exhibit floor plan (to locate company exhibits) and feature a search engine to find information and product releases before the "real" show. Some are temporary and carry exhibitors' information for a duration prior to and after the event. Others are permanent, Exhibitors are charged fees for virtual shows and consider it a way to grab the attention of the time-pressed buyer; remind the "be-back buyer" of what he saw; and enable those who cannot attend the show to see it. offering exhibitors a continuing presence, links to the exhibitor's sites, breaking news, etc.
57
B. Uses of the Internet by Trade Show Organizers in North America In the above survey, 84% of North American organizers responded information, entertainment/restaurants, Use of Internet by Organizers: To register exhibitors & visitors To show event highlights As sales brochures for the show To show exhibit options To educate users (trade associations) As virtual shows C. Prices for Virtual Shows in North America The average price charged to exhibitors for inclusion in a virtual show is $311.00, usually charged as an option when they apply for the actual show. Where presence on the virtual show is required, the organizers charge a slightly lower $199.00 average. Those offering the virtual show as an option report that in the first year, 50% of exhibitors selected the option, and by the third year, over 90%. Generally, the organizer gets 69% of the fee, with the application service provider getting 31%. The typical length of time for a virtual show is 60 days. Organizers who hold semiannual shows charge exhibitors the same fee for each event. An average North American show (411 exhibitors), offering an optional virtual show listing (90% compliance) can thus expect about $80,000.00 per event, prior to any sponsorship D. Japanese revenues. Market on the Internet in Japan lags behind North America. 39% of organizers that they are using the Internet. Besides registration services, the well-designed show website links to city and hotels to encourage attendance. Uses include: Percent now Doing 82% 78% 73% 64% 44% 31%
Show development
surveyed have websites, of which the majority are virtual brochures and application processors. Providing basic information on internet sites is becoming more common, but the virtual show is rare, with only about 4% of all shows having a virtual counterpart. One firm, Virtual Convention Center (www.vcc.ne.jp), which had initially begun trying to stage virtual shows without an actual show tie-in, is now experimenting package service to show organizers as a "real show" supplement. with offering a Their initial service
package charges a base fee of about $19,000.00 for three months, after which a monthly fee ranging between $4,000 to $9,000 (depending upon the number of listed exhibitors and banners) must be added. By approaching industry, accentuating the market first as a competitor to the itself as an arm's-length service provider, creation of stand-alone virtual shows, this company has alienated
many of the show organizers. Now, repositioning
this company does not have the good will nor contacts to crack the organizer market.
58
Three other attempts Sail Up Japan, government's Softbank companies
at virtual shows
without
"actual" trade show (www.ciw.co.jp);
tie-in are being made.
K.K.'s "Internet
Convention"
the Tokyo Metropolitan and a charge than cooperating listings of charges starting
"Tokyo Digital Showroom" "Vertical Net Japan" on-line
(www.tokyo-trade-center.or.jp); (www.veritcalnet-japan.com) and are competing, provides Internet rather
joint venture
to exhibit their products show industry.
with the trade companies its virtual
Tokyo Digital Showroom $100.00 pei: month.
categorized Convention charges
located exhibitors
in Tokyo for about a membership
of $1,000.00, followed
by monthly
at $100.00 and increasing Vertical Net charges
with the size and complexity
of the exhibitor's which
pages. increases virtual with show
a base fee $10,000.00 per year for exhibitors of "booth spaces"
size, complexity
and the number
taken. One true parallel Manufacturers' show. Exhibitors
is run by the Japan Electric Measuring group, and is coordinated booth
Instruments trade
Association,
a trade
with the JEMIMA
pay $1,000.00 for
their virtual
(additional
to the $4,000.00 per booth with complexity.
space cost of the trade show)
and this also gets more expensive
E. Market
Need economy becomes presence, increasingly particularly electronic, the trade show organizers profits and reduction organizers
As the rest of Japan's
also feel the need for Internet of costs is made clear.
when additional
As use of the Internet
by North American market
trade show
rose from zero to practically in the number
90% in four years, Japan's
has room to grow- both standard.
of sites and in their uses beyond
the current
tombstone
F. Product Intro's
Description organizer websites and virtual show products are designed to be sold to organizers, (TMS) relationship basic requirements exhibits
regardless
of whether
an internationalization
(OIP) or management
exits with Intro. The Intro-arranged multilingually by the organizer between (thus affording
site will fulfill all of the organizer's inquiries)
more foreign
and allow for sales of virtual
to his exhibitors.
To facilitate
this product,
Intro serves as the middleman with the Japan Organizer first mover status and
the organizer and Japan
and the service provider. Association signed for Creative
Intro will partner Exhibits
Association
to solidify as possible.
get as many of the organizers where an organizer
or linked as quickly
Except in cases between the
has a TMS or OIP relationship concerning
with Intro, all dealings would
organizer
and his exhibitors
their websites
be left to them to work out. marriages comes from These revenues
Intro's revenues Intro's
from arranging
these organizer-service
provider
sale of banner
and other advertising
on the sites of the organizers.
are shared
with the organizers.
59
L
J"
Intro (through compensated
advertising agencies) provides revenue-producing
advertisers
and positions these products as just two of many being offered to the organizers. Our range of organizer-focused interloper, out of the market. G. Market & Financial Goals for Organizer Websites Benefits to Intro include the positioning of the Company as a "cut-above" show manager and the increased favorable contact with organizers that the product facilitates. This contact sets Intro up for the introduction and launch of the All- Japan Trade Show Website, discussed later in this PLAN. It should be noted that website construction costs will be arranged directly between the organizers and Intro's outsourced application service provider partner. Intro's goals for organizer home pages and virtual show sites are included in the Projections for this PLAN. services provides access and familiarity which will freeze companies such as Virtual Convention Center, seen by the organizers as an
6O
L
XI. Subsequent Product for Japan: Trade Show Management Services
A. Background Some Japanese trade associations retain the "organizer" operation to management
(TMS)
title but leave promotion and
companies. Although only about 25 shows (4.4%) outsource "manager", most outsource to multiple vendors, acting
all functions to one designated
as general contractor for their events. Appendix Table 18 shows that although the number of shows increased 19% in 1996-2000, not all organizer types have expanded evenly. Increases by trade associations, the Japanese government, and foreign organizers, coupled with declines by show companies, non-trade show companies and foreign governments. These changes are due largely to the number of shows launched; with the 76 shows discontinued 1996-2000 being more than offset by 168 new shows. The survival for
new shows is promising with all of the shows launched in 1998-1999 and 98.6% of those launched in 1997 shows being held in 2000: Share by # of shows .......... Trade Associations Trade Assoc. w/Mn8mt Co. Trade show Co's. Co's.-not trade show Government(Japanese) Foreign, non-governmental Foreigngovemmental Totals B. Market for TMS Of the 568 major shows held in 2000 (or off schedule due to frequency), 162 (28.5%) 1996 29.8 % 3.6 1.6 36.0 18.5 9.0 1.5 100.0 2000 Change Disc. 31.0 o_ +1.2 % 9 o_ o_ _ _ _ _ _ +0.8 -0.3 -1.0 -2.7 +2.4 -0.4 --% % % % % % 0 6 33 19 6 3 76 New 43 8 4 63 21 28 1 168 + / +34 +8 -2 +30 +2 +22 -2 +92
% 4.4 % 1.3 % 35.0 % 15.8 % 11.4 % I.I % I00.0
were run by single event producers. In 1996, 25.6% of shows (122 of 476) were run by single-show organizers. (Appendix Tables 19 & 20). This 3% increase for the single-show organizers is well below the 19% overall market growth. Due to their hold on exhibitors, economy of scale was not a concern for many organizers as shows were largely social events for swapping stories, entertaining clients and spying new products. Purchase orders were rarely written and firms exhibited more due to pressure than marketing needs. Associations could be confident of the number of exhibitors, regardless of buyer quality or headcount, as reflected by an almost total absence of independent corporations attendance auditing in Japan. The recent economic downturn forced even previously "untouchable" to dig in, and accelerated a conceptual change of what a show should be. obligatory exhibitors and, constrained by their These organizers are no longer guaranteed to the exhibitors' marketing needs. 61
limits as a single-event producers, are searching for ways to deliver a show more suited
C. Product
Description primarily As in North creating to single-show America organizers, centers on coordinated event
TMS, offered scheduling. concurrently,
and Europe,
tangentially-related
shows can be held shows (generally
leverage
to lower costs. Coordinating but in Japan, schedules)
concurrent
called "markets") (who advise
is an old practice,
it is left to the expo site management or to economic demands. Concurrent
organizers
of each other's
shows held in Japan now consist of different and divided by areas of specific TMS would interest.
"sub-shows" stressing
all run by the same organizer reduced costs for the organizer show
Initially
and his exhibitors, quality. Beyond cheaper
then switch to cost containment in site fees (renting
while improving
savings
to be realized
an entire expo center being there are other advantages
per square
meter than 20% or 40% of the expo center), including:
TMS offers the organizer, -Synergy-buyers expositions rather
are more likely to visit when they can cover several than a single, small show;
related
-cross-registration-a the shows being
single registration held, thus boosting
database
allows buyers
to visit all
the traffic at all parts of the show;
-unified
promotional
activities-merging and targeted
of databases
for exhibitors
and visitors
allows
for both widespread
approaches
to boost numbers
and media mentions;
-technology designing
upgrades-use for exhibitors;
of barcode
registration
at exhibitors'
booths,
CAD
and show extension among a larger number
via Internet
are all more viable
when costs are spread
of exhibitors;
-internationalization-the exhibit and visit. Emphasis recruitment
larger the show,
(or "market") on recruiting through
the more foreigners North Americans
will with
would be placed
from other nations being handled
agents;
-traffic builders-such feasible
as guest speakers, when
seminars draw
and workshops is larger; and
are all more
and cost effective
the potential
-travel
accommodations-a
100 booth show expecting expecting
20,000 visitors
does not have
the clout of a 1,000 booth market for participants. TMS would
200,000 to negotiate power.
travel arrangements
pool purchasing
62
i
•
D. Sales Channels Part of the organizer contacts for TMS are incorporated into the organizer contact Japan to garner
already scheduled for ESP and OIP. Additional marketing includes direct contact with the decision makers of the major exposition sites throughout as outsourced E. Revenue partners. referrals and contact of major show service providers to enlist and evaluate them
Streams
TMS produces income for Intro through a sharing of increases to pre-TMS profits between Intro and the organizers. This provides the organizer with a carved-out comfort level and sets Intro apart from other "percent of gross" management The organizers have nothing to lose. F. Market & Financial Goals for TMS Our target is to sign TMS agreements with 25 of the 162 single-show organizers within the period described in this PLAN. Additionally, Intro will secure 25 TMS agreements with trade associations for whom Intro has created new trade shows under our Trade Show Creation program discussed later in this PLAN. This number is based upon our study of the organizers and their motivation to reduce costs while increasing attendance. G. Notes on TMS i) Timing To avoid organizer confusion and facilitate smooth product introduction, will be introduced TMS to Japanese organizers after the conclusion of initial sales firms.
contacts for ESP and OIP. This allows the organizers to properly digest the range of Intro's products being offered to them: --as vendors to Intro's Exhibition Services Programs (ESP) --as cooperators in Intro's North American Exhibition Services Programs (ESP-NA) Programs (OIP) --as clients using Intro's Organizer Internationalization --as clients of Intro's Website Programs --as clients of Intro's Trade Show Management ii) Strategic Consideration of TMS Services (TMS)
TMS also sets the stage for Intro's Trade Show Creation Services discussed later. The access to organizers' internal operations gained through TMS relationships will also greatly facilitate planned acquisitions of shows discussed later.
63
XII. Subsequent Product for Japan: All- Japan Trade Show Website
A. Background International appropriate & Need for Information exhibitors face a lack of accurate information about the available and shows in Japan. English-language search sites such as tscentral.com;
tsnn.com; expobase.com;
and jetc.com list only 50 to 180 shows, each categorized by nature of the Japanese shows makes this single Mexican and The sites of the Canadian, American,
a single industry. The comprehensive classification system inadequate. Japanese governments such as www. nittenkyo.ne.jp
offer little more immediate information on the shows. Some sites, (Japan Organizer Association); bizevent.nikkeibp.co.jp
(Nikkei BP Network); njp.co.jp (Nippon Jitsumu Shuppan-a magazine publisher); and eventnavi.ne.jp (a display constructor); offer more, but since most of the information is
in Japanese, the potential international exhibitor is at a loss. The high costs of exhibiting in Japan requires due diligence from the prospective exhibitor and, at present, there is no media- Internet or otherwise, which provides the information needed in English. B. Product Description: All-Japan Trade Show Site an All-Japan show site will
Using Intro's highly developed database as a foundation, translation.
feature all shows held in Japan, in Japanese and English, with potential for additional Our database is the search engine for the site, allowing for industry, location, size, booth cost and other searching. It also provides a wealth of information needed by exhibitors and visitors covering every show held in Japan. The field research reports produced by Intro on each show visited or participated in would also be available for review by the users. The site would combine the best features of sites surveyed, including: -industry reports -Japan market trend reports by industry -Japan societal trends and news items -export assistance reports and links -links to organizer, trade association, and virtual show sites. In cases where information about an organizer or his shows are not as yet available on the Internet in English, this site would allow for several pages on his shows (floor plan, photos, exhibitor listings, etc.) with downloadable applications. A more standard listing for a show would essentially be a virtual brochure, allowing the user to absorb basic information before deciding whether to proceed.
64
C. Partnerships To facilitate this product, Intro will again partner for Creative with the Japan Organizer their information www. Association
and Japan Association some of the formatting site). As North
Exhibits to utilize
(especially nittenkyo.ne.jp and then to
done by JOA for their Japanese-language tend to first look for shows (such as Japan or Germany), information provider
Americans nation
"internationally", strong
focus on a particular with TSCentral.com, would provider also be made. to construct
efforts to partner in North America,
a leading
to exhibitors
Finally, Intro will utilize a pre-selected and monitor the site.
application
service
D. Market Intro's
& Financial
Goals
for All-Japan include
Website the Japanese trade show market more
goals for this product to potential interest
making
accessible North
ESP, ESP-NA, in the market
and MEP clients. to the organizers
A second
goal is to demonstrate our
American
in Japan, thus increasing Intro's
potential Research database
OIP, TMS, and Virtual Department and research
Show clients.
A third goal is to convert
into a profit center. The basis for the site is our own show reports. These reports as events are the products are held. knowledge of the for this of Intro's five years
of show field visits and are updated With adaptations organizers , due to market
differences
and our intimate model
and associations estimates
in Japan,
our economic
in the Projections
PLAN includes
for construction Then it follows directory
of the site and conversion that of TSCentral.com-
of data into
the initial search engine. comprehensive -organizer -banner North listings advertising
one of the more
American (ranging
sites. The model allows for sale of:
from basic to deluxe and hyperlinked);
-sponsorships - advertising
by industrial in a monthly supplier"
categories e-newsletter (to organizers or to exhibitors)
-sales of "featured -streaming
pages and links of events.
video and webcasting
65
i_
•
XIII. Acquisition
A. Background:
of Trade
Shows
Held
in Japan
Trends in North America underway in the North American trade show industry reveals that DMG are B2B media firms such as Advanstar Communications,
The consolidation the consolidators
World Media, Penton Media, Reed Elsevier, and VNU; and equity investors such as Veronis Suhler (Hanley Wood) and Warburg Pincus (Imark Communications). Alliances are also present, as in the case of Commerce Connect Media and Abry Partners. A survey of U.S. show producers conducted by the Jordan Edmiston Group and Trade Show Week indicated that 46% are actively seeking acquisition targets, and the only constraints properties they felt were their own corporate priorities (43%), and lack of attractive for sale (35%). 1999's top three show acquisitions Advanstar's (Veronis Suhler's purchase purchase of the Larkin Group; and Penton Media's exceeded $475 million. This was dwarfed by
of Hanley-Wood;
purchase of New Hope Communications)
2000's top three deals (DLJ's purchase of Advanstar; VNU's purchase of Miller Freeman with Reed Elsevier's purchase of Miller Freeman Europe; and Commerce Connect's purchase of Cygnus) which exceeded $2.4 billion. Consolidation in North America has given birth to another trend: the purchase of non-profit trade association shows by for-profit producers. Recent examples include Reed Elsevier's purchase of Interbev (International Beverage Show) from the National Soft Drink Association; Veronis Suhler/Hanley Wood's purchase of the Surfaces Show from the Communications' World Floor Covering Association; and Warburg Pincus/Imark
purchase of the GigNet Conference and Exposition from the Technology Transfer Institute. 1999-2000 sales prices in the top 10 deals in North America generally involved shows making around 30% in pre_tax profits and calculated as follows: Mean- 12.2X Mean- 3.5X for Intro shows future and promise for acquisition in Japan. Though Median- 2.9X Median- 10.2X I
I Sales Price/EBITDA Sales Price/Revenue B. First Mover Opportunity
North American consolidation this consolidation
most business trends which originate in North America eventually find their way to Japan, trend, begun in 1999 in North America, has not yet hit. By assembling services a solid portfolio of shows in Japan, and providing innovative, comprehensive the premier international
to organizers and exhibitors in North American and Japan, Intro will be positioned as organizer active in the country. This will make Intro a very attractive candidate for acquisition as the North Americans begin to look internationally to satisfy their acquisition- fueled growth demands.
66
C. Players in Japan Informal research for acquisitions will be included in the organizer contacts Intro will be making for its other products. The protocol for merger or acquisition (ideas still new in Japan, where some companies are centuries old) requires development of ties with the if any principals of the would-be takeover. While the 35.5% of shows organized by trade associations are viable targets for TMS, further contact is required to determine shows are targets for our show creation product discussed later in this PLAN. Acquisition targets do exist among shows run by the Japanese government by pure play and integrated media corporations other foreigners (12 organizations-71 other than trade associations is" (90 shows); should or can be purchased outright. Note that associations not currently organizing
(36 companies-207 shows); and by
shows). The breakdown of shows by entities
Organized by: Japanese trade show Co's. (1) Japanese Co's.-not trade show (2) Foreign, non-gov. (3) Subtotal: Japanese government (4) Foreign governments (5) Subtotal: Totals
Shows in Year 2000 6 201 65 272 90 5 96 368
Share by # of shows 1.1% 35.2% 11.4% 47.7% 15.8% 1% 16.8% 64.5%
No. of firms or agencies 4 32 10 46 30 2 32 78
(1) Firms that self-describe as being trade show companies. (2) Firms from other core industries with a department Publishing (22); Consulting or subsidiary running shows:
(6); Media (2); Utility (1); Design (1).
(3) Associations or companies from G.F.R. (1 company); U.S. (3 trade associations, 6 companies); and U.K./Holland (3 companies).
(4) Acquisition of government opportunity
shows depends on both economics and politics. attempts to reduce its employees by 25% rather
Privatization in areas such as trade shows is imminent, creating a unique as the government than the 20% already passed into law (from "Strategies for Reviving Japan's Economy" 3/17/99 (5) Foreign governmental by the Prime Minister). agencies are from the U.S. and G.F.R. only.
67
D. Acceptance of Foreign Organizers
in Japan
Foreign organizers in Japan date to the early 1980's. Excluding trade associations and government shows, foreign for-_profit organizers come from the German Federal Republic (Mesago); the United Kingdom (Mack-Brooks Exhibitions); Holland (Reed Expositions, VNU); and the United States (EJ Krause; IDG World Expositions, Meridian Pacific, and Myers-Smith, Ziff Davis). Other foreigners are active in Japan, including U.S. NPOs and agencies of the U.S. and German governments. their shows continue to expand in number and size commensurate Collectively, with the overall entities.
market, indicating acceptance of foreign organizers by both exhibitors and attendees. In 2001, 12.5% of all shows in Japan will be organized by non-Japanese E. Overall Market for Trade Shows in Japan i) Market Size and Parameters: The Ministry of International Trade and Industry's 1997 survey of 420 shows found
that 96% had 500 exhibitors or less. This agrees with a 1997 study of 696 shows published by the industry group Japan Association for Promotion of Creative Exhibits 0ACE) with per show averages of 470 exhibitors and 58,600 visitors. The JACE report, goes on to calculate the 1997 market in Japan as $4.68 billion as per Appendix Table 21. Inflation in Japan has been negligible since 1997, so adjustments needed to the model concern the increase in the number of shows (19%) and exchange rate in order to get a picture of the market in 2000. As per Appendix Table 22, it is about $6.3 billion dollars; of which the organizer's share of revenues (from commissions, space and entrance fees) comes to about $1.57 billion. (Appendix Table 23). Using an even-income split a billion dollar pie as follows: Share No. of by # of firms or shows: agencies 1.1% 4 35.2% 32 11.4% 10 47.7% 46 15.8% 30 1.1% 2 16.8% 32 64.5% 78 in U.S. $ millions Average Revenue Average per by organizer type: firm/agency 20.47 5.12 551.05 17.22 179.57 17.96 751.09 248.69 8.29 17.32 8.66 266.01 1,017.10 split and excluding the 35.5% of the market occupied by trade associations, the remaining players
Types of Organizers: Japanese trade show Co's. Japanese Co's.-not trade show Foreign, non-gov. Subtotal ................................... Japanese Government Foreign governments Subtotal ................................... Totals
68
ii) Existing Financial
Models: models
Average
& Middle-Sized
Show Comparisons Japanese trade shows are offered by
of the underperforming and author
Michio Izawa,
Intro consultant
of How To Run A Successful
Exhibit
(1999 -POP Shuppan (as are 63% of Japanese $2.966 million annual,
Press, Tokyo) shows)
demonstrating
that a single event held in Tokyo and visitor averages, shows grosses
in 2000 using exhibitor
and nets the organizer of customers about show
$593,200 (20%). As many (311 exhibiting companies, income
are semi-
this small group
using the year for the organizer. 22%) for the
2000 average) A middle-sized organizer.
can produce semi-annual
$1,186.000 in pre-tax can produce greater
$3,346,322
(about
Economies
of scale permit
profits if shows grow or are grouped as detailed Intro's in this PLAN, improvement company will to the or detailed
(as per our TMS). New methods further bottom outright increase profits
and technologies,
of both small and large shows. models,
line of both small and middle-sized purchaser, would center on applying shows to:
as management
the technologies
and methods
in this PLAN to the existing -increase -increase both attendance revenue
and number though
of exhibitors additional
through services
internationalization (virtual shows, at the shows and etc.)
per exhibitor through
-create new revenues -reduce -reduce expenses operating
sales of corporate
sponsorships power,
through expenses
the pooling through
of purchasing introducing
bar-code
and other technologies.
F. Priority i) Private
of Acquisition producers
Targets
Opportunities
exist among
the 46 private
organizers,
both in the purchase
of entire
firms (in cases where or subsidiaries ii) Government-run The 30 government several directly
core business
is shows)
and in the purchase
of portfolios
from the firms which shows organizers
do not consider
shows their core business.
are at national,
prefectural exposition
and city levels, with sites (e.g. Tokyo Big Sight, Japan National Railways, a the
related to government-owned previous privatizations
Osaka Intex). Japan's Japan Airlines, government authorities privatization iii) Trade
(Japan Tobacco,
NTT) have been bulk offers rather financial
than piecemeal
sales. Purchasing of pitching
entity is not an entirely on TMS is a more feasible purchasing.
proposition,
so a strategy
first step than immediately
proposing
associations organized to determine by associations are viable targets for TMS, outright.
While the 35.4% of shows further contact is required
if any can or should
be purchased
69
£
L
G. Contact Channels Our experience and contacts have pinpointed certain shows run by companies with succession issues, and others whose corporate parent may want to sell in order to focus on their own core businesses. Estimates from Price Waterhouse Coopers (Tokyo) to conduct research and partial due diligence required to survey, locate and qualify acquisition targets among the organizers and potential show creation targets among Japanese trade associations are included in the Projections. Additionally, own contacts will locate targets for financial review by Coopers. H. Market & Financial Requirements i) Initial Requirements This PLAN's initial acquisition requirement is to formalize an implementation study of the adaptability and promotional show sponsorship of European and North American management techniques to Japanese shows and of the potential for by Japanese trade associations. and Goals for Acquisition Intro's
ii) Strategic Requirements As any purchase price will be a function of income multiples and other considerations leveraged against the show/company/division to be acquired, our target is to models and make strategic acquire shows which both meet our revenue/expense
sense for Intro, preferably shows whose profit margin can be raised to 40-45% within a reasonable time and whose purchase price would not exceed 5 times EBITDA. Shows which can attract large numbers of international exhibitors are
the most attractive, followed by shows which can, in the aggregate, combine to make an attractive future acquisition portfolio for North American-based organizers.
7O
XIV. Creation
A. Background:
of New
Association,
Trade
Shows
in Japan
is Critical
Government,
and Media Support
In Japan, support from trade associations and government mount a new show but ignores these vital supporters
bureaus is a requirement
for success when creating a new show. A pure-play show organizer who attempts to will not succeed. Recent examples
of such failure are provided by Montgomery Exhibitions (UK) and Show Management International both of whom tried to "go it alone" in Japan with disastrous results. Firms such as Reed Elsevier and Nihon Kogyo Shimbum, both of whom are divisions of integrated B2B media houses and capable of mounting trade shows on the strength of their own promotional apparatus, still endeavor to get and keep as many trade as possible for each of their shows.
association and government endorsements
The presence of an association as an endorser or "co-sponsor" lends credibility to the show and greatly facilitates recruitment of exhibitors and attendees- even for first-time shows. Interviews with trade association officials indicate that the flow of input into the running of these shows is one-way: the organizers solicit the associations' endorsement but do not take into account the association's concerns; basically borrowing the associations' prestige. Successful show organizers also endeavor to get endorsements from other show organizers to validate their events. A result of such cross-endorsement between organizers is that very little head-to-head B. Underserved Industriescompetition between shows exists.
Real and Artificial Reasons
Our surveys and constant monitoring of shows have identified industries which are underserved by the current selection of trade shows in Japan. Many of the reasons for are hold-overs from the days when Japan was a closed market and are such underserving
being hammered out of existence. One example is the category of beauty and cosmetics for which there is just one show held per year. In North America, this industry supported 37 shows in 2000, 10 of which are semiannual, cosmetic events. Considering the comparative for a total of 47 trade-level beauty and demographics and CDPs of North America
and Japan, this 37:1 ratio is way off. Logically, Japan should be able to support between 20-25 such shows per year, however, in the beauty and cosmetic industry, excessive government regulation (particularly on imports) and overwhelming market dominance by one firm (Shiseido) combine to limit competition, and thus keep the number of shows at which new players can enter the market to an absolute minimum.
?l
Another
reason some industries shows.
are underserved to gather
is the allegedly as many exhibitors
comprehensive and visitors
nature
of
the existing Japanese show promoters
In order
as possible,
cast their shows as being comprehensive, the interests of the trade associations
meaning,
in real terms, unfocused To use an earlier distilling or
and not serving example, brewing exhibitor through
being represented. packagers, related
at a beverage equipment, shows
show, exhibits will include services,
beverages,
delivery
and all other tangentially the organizer
firms. If just one to his show and, his colleagues
bottling
equipment, agreement"
adds that category pressures
the "gentlemen's
of cross-endorsement, bottling equipment.
not to support
any other show featuring
C. Changes Japanese
in the Market exhibitors are now viewing trade shows as marketing rather than social
events and this change in attitude underserved industries. Exhibitor
opens the door for new shows in the currently frustration with the self-serving of exhibitors' manner in which It is (2000)
shows are run by producers estimated that 145 Japanese
is evidenced trade
by surveys
opinions. shows
associations
run over 200 trade to the associations. associations,
which bring home about should be contrasted
$553 million collectively
These figures and officials
with the 3,500 Japanese
trade
both national
local, which
do not yet run their own shows. an association-backed memberships).
In a survey
of trade association
taken in 1999, mounting second priority
trade show
came up as the officials'
(after increasing
D.
Market Trade
Needs as well as exhibitors the show producers are demanding and the trade new shows. associations. There is a disconnect set
associations
in Japan between their own priorities parent's overall
The producers
for how they will run shows,
often as part of their corporate within those industries bottom-up as
strategies,
and view the trade associations There is little interest whose industries
mere endorsers
of these shows.
in cooperative
planning
of shows with the associations targeted by these producers.
are not within the scope of those could approach the
In the past, such associations
government
to assist in mounting
a show. This was accomplished
on the national with site-related economic
level with agencies agencies climate,
such as Jetro or JMA and on a local level by working
such as the Tokyo or Osaka Trade Fair Commissions. this governmental intention cooperation is no longer
In the current
feasible for several reasons. is to reduce shows. its own size,
Firstly, the stated thus triggering
of the national privatization
government of its existing
the possible
72
Second, for which
the government, industries
like the trade show producers,
has long set the priorities
they will support
and which they will leave to the marketplace. has not been long-term and many of its by the next "hot were established to
Third, the government's shows topic" are sponsored industrial
past involvement
for one or two cycles, only to be replaced fair commissions, to the overbuilding which
show. The local trade sites, as a reaction
fill up the exposition under pressure
of exhibit centers, running with solid partner
are also
to get out of the show business property managers.
and revert to merely associations
the sites
as publicly-charged memberships Exhibitors
Thus, trade
who want to hold trade who are demanding show with which with the status
shows are left without are usually voicing
a viable
to do so.
new shows
a desire for an alternative for this
to an existing dissatisfaction methods
they are dissatisfied. quo is the unprofessional
Often the reason and self-serving
of the organizers
as cited above.
E. Filling
the Market
Need who want to hold shows system and our exclusive membership, affiliates, on several levels. Using
Intro will assist trade associations our proprietary we first survey to gauge show modeling an association's
expert trade show consultants, government agencies
and relevant
levels of support.
A feasibility
study then ensues component
to see if a show
is possible,
and at what level. during promote, feasibility.
The possible
international
of a show is also considered to schedule,
If found feasible, Intro works
with the association
and run the show.
F. Synergy Key to our analyzing fits with Intro's of the "markets" Shows which programs. the feasibility of a show is consideration small shows of how well the show can be inserted into one
other programs. developed
For example,
for other organizers
as part of Intro's interest can benefit
TMS programs. from Intro's OIP
can count on heavy international
This synergy
will hold costs to reasonable trade association
levels and achieve the biggest and for Intro.
bang for the buck for the organizing
73
J"
"l
G. Role of Intro Like most businesses, be recouped brand-new trade shows have loading costs which Intro's can only Trade by Intro report costs,
over a number avoids
of years or by sale of the property.
Show Creation
these costs. The trade association the necessary research,
will be charged
on a fee basis for conducting and, if warranted,
creating
the feasibility
the show plan. The costs of the show, inclusive itself, with Intro playing Intro would a supporting
of start-up
will be borne by the association association decides
role. If the (as per
to move forward, If the association
act as show manager
our TMS product). may purchase interested
desires to subsequently program.
sell the show, Intro between the
it under our acquisition
The initial agreement Intro with exclusive the show.
associations
and Intro will provide and/or
rights or rights
of first refusal
to act as manager
purchase
H. Revenue
Model that about studies studies 10-15% of the trade associations contacted will move forward approximately per them of
Intro expects with feasibility 430 feasibility study
over the course of this PLAN. This represents to be conducted at a projected consult
fee of $30,000.00
and report.
These revenues
as well as Intro's
direct costs for performing are included
and direct costs of soliciting this PLAN. with actually covered A conservative mounting
the 3,500 associations projection
in the Projections will move
as to how many about
associations 25 new shows
forward
a show is 6%, yielding
over the period in the
by this PLAN. Of these, Intro expects for TMS) and to eventually acquire
to manage
all 25 (as included
Projections
5 (as reflected
in the Projections
for acquisition).
74
• Financial
A. Notes 1. to Income Notes eneral
Pro ections
Pro ections
a Revenue start assumes sales operations b Significant
from the 5th month after initial funding.
events are provided for and budgeted for within the income projections: Significant Event
Months after Funding 1-4 5-16
17-28 29-40
41-52
Preparation period-both NY and Yokohama, Japan Initiation of sales for ESP, ESP-NA, PETS, OIP, Show Creation, Organizer Websites/Virtual Shows, MEP Purchase of 1 trade show Increase of size of New York Office Initiation of sales for TMS, All--Japan Tradeshow Website Purchase of 3 trade shows Increase of size of NY & Yokohama (Japan) facilities Purchase of 5 trade shows Opening of branch operations office in Osaka, Japan Opening of field sales offices in Washington, DC & California Purchase of 7 trade shows Opening of field sales office in Chicago, Illinois Increase of size of Yokohama (Japan) facility between
c Income Allocation - all revenues and income are projected here as consolidated after transfer pricing analysis and consideration d Provision for corporate of most favorable tax treatments.
Intro and its wholly- owned subsidiary, Intro Japan. Actual allocation will be constructed
income taxes- in order to project post-tax dividends
and
more faithful statements of cash flows, provision for corporate income taxes has been included. Please note taxes are projected at maximum rate (as if all income was United States-derived, within New York State and City); Intro's pre-PLAN net operating is utilized in the projections to reduce taxes.
loss carryforward
2.
etails of Revenue a Exhibition
and Income Program
Pro ections ESP
by Product
Services
(i) As of 12/31/00, Amortization marketing. (ii) As of 12/31/00, Amortization marketing.
Intro has capitalized
$152,289.02 in development
costs for ESP.
on a straight 10 year schedule commences with the beginning of Intro has capitalized $98,048.24 in ESP database development.
on a straight 15 year schedule commences with the beginning of
75
(iii) The breakdown Details:
of revenues Mo. 5-16
projected
for ESP is: Mo. 53-64 28 1,430 520 Mo. 53-64 75,925,200 41,758,900 34,166,300 45%
Months After Funding Mo. 17-28 Mo. 29-40 Mo. 41-52 6 200 100 Mo. 17-28 12,629,600 7,830,400 4,799,200 38% 9 440 180 Mo. 29-40 23,240,100 14,408,800 8,831,300 38% 15 790 290 Mo. 41-52 41,832,000 25,099,200 16,732,800 40%
# of Programs sold # of client companies # of sponsors Projections: Revenues: Costs of Programs: Gross Profits: GP as % of Revenue:
3 110 50 Mo. 5-16 6,932,400 4,363,100 2,569,300 37.1%
(iv) Months (v) Annual Currently,
29-64 include average
some private
shows
with 80-100 clients per show. in 12 ESPs (50 exhibitors per ESP/IOS).
is 594 exhibitors
participating
over 2,000 companies
from North
America
exhibit in Japan annually. to $19,136 for "do-it-yourself" package. $141,000 each; media.
(vi) ESP's average exhibiting
cost per exhibitor
is $5,400. compared
and $47,000 quoted
by competitors
for a less complete
(vii) ESP's average 1/12th
is 228 sponsors required
per year (4 per ESP) at about
of the amount
to get the same reach in other trade-level
b Exhibition (i)
Services
Program-
North
America
ESP-NA
se of Proceeds:
1 0,000.00 of capital used for ESP-NA on a straight will be capitalized as Research and
$30,000.00 Development
of the $180,000.00 and amortized $100,000.00
10 year schedule
commencing
with the beginning of the projections will be
of marketing.
will be used for marketing $50,0000.00
over the months
and are reflected utilized consisting
in the G&A. construction
of the $180,000.00
for this product
for database primarily
and establishment. organizers
The costs of this database, and service vendors, will be amortized
of North American
on a straight
15- year schedule
with the beginning
of marketing.
(ii) Revenue Four revenue organizers;
Pro ections sources assistance
for ESP-NA commissions to Japanese organizers and on booth sales from North American exhibitors; for Japan-side roupscommissions representation. targets to bring to America from vendors;
are projected: fees charged
and fees paid by North American a Pro ection North under America of apanese
Exhibitors
ESP-NA
the samenumber
of companies
as went to Japan from North will be in groups of 12.
ESP in each previous
year. These companies
76
b Revenues
from apanese Exhibitors for Oversight- Intro will charge each
exhibitor $2,000.00 for assistance in arranging of their exhibits. This will later increase to $2,400: Months 5-16 17-28 29-40 41-52 53-64 Total No. of Groups 16 26 36 50 66 194 No. of Companies 192 312 432 600 792 2,328 Oversight Revenues 384,000 624,000 864,000 1,200,000 1,900,800 $4,972,800
c Revenues from endors to Exhibitors- An average of $500.00 per exhibitor. This will later increase to $600 Months 5-16 17-28 29-40 41-52 53-65 Total d ommissions No. of Companies 192 312 432 600 792 2,328 Revenues from Vendors 96,000 156,000 216,000 300,000 475,200 $1,243,200
from North American Trade Show Organizers- average 15% for
space sold. Based on minimum of one booth @ $2,000.00 being sold per exhibitor: Months 5-16 17-28 29-40 41-52 53-64 Total No. of Companies 192 312 432 600 792 2,328 Booth Purchases 384,000 624,000 864,000 1,200,000 1,584,000 $4,656,000 Intro Commission 57,600 93,600 129,600 180,000 237,600 $698,400 representationA
e Fees paid by North American organizers for apan-side
minimum of $1,000.00 monthly will be charged to each organizer for representation. Costs anticipated are communication with existing Japanese exhibitors on behalf of the organizers and are included in the G&A portion of the projections. In the fifth year, this will increase to $1200.00. Projections of the number of organizers requesting this service: Month 5-16 17-28 29-40 41-52 53-64 Total: Organizers Represented 0 8 16 24 36 .... Payments from Organizers 0 96,000 192,000 288,000 518,400 $1,094,400
77
c
Product
Evaluation
and Testing
Services
PETS costs for
i As of 12/31/00, PETS. Amortization
Intro hascapitalized
$27,375.99 in development
on a straight 10- year schedule commences upon the
beginning of marketing of PETS. ii se of Proceeds: 100,000.00 of capital
$30,000.00 of the $100,000.00 used for this product will be capitalized as Research and Development and will be amortized on a straight 10- year schedule commencing $30,000.00 upon the beginning of marketing. $70,000.00 of the $100,000.00 for this product will be used for marketing: over the first 16 months of the projections and the remaining $40,000.00 over months 17-64. These marketing costs are reflected in the G&A of the projections. iii osts of Program- The estimated cost for a PETS program is $5,400.00, discounted
to $5,000 in later projected years. iv Sales Price of PETS- The selling price of $12,000.00 is based upon market surveys of other competing market testing services. v Revenue Pro ections
The projections for PETS are based upon a conservative estimate of the number of clients that can be expected by co-marketing PETS with ESP and MEP. It is also estimated that the number of PETS clients will increase as ESP proceeds, with ESP clients converting to PETS in later years: Projections of Product Testing & Evaluation Services (PETS) Projected Projected Revenue @ Costs of Gross ESP clients: PETS clients: $12,000.00 PETS Profits from PETS 110 48 576,000 259,200 316,800 200 80 960,000 432,000 528,000 440 120 1,440,000 600,000 840,000 790 200 2,400,000 1,000,000 1,400,000 1,430 316 3,792,000 1,580,000 2,212,000 2,970 764 $9,168,000 $3,871,200 $5,296,800
Plan Month 5-16 17-28 29-40 41-52 53-64 Total
78
d Market
Entry Programs
MEP $188,449.52 in MEP development costs.
i As of 12/31/00, Amortization ii
Intro has capitalized
on a straight 10- year schedule starts at the beginning of marketing. 435,000.00 of capital
se of Proceeds:
$200,000.00 of the $435,000.00 used for this product will be used to conduct compressed MEP programs run-throughs and be capitalized as Research and Development to be amortized on a straight 10- year schedule commencing upon the beginning of marketing. $235,000.00 of the $435,000.00 for this product will be used for marketing the product over months 6-64 of the projections. These marketing costs are reflected in the G&A. iii ostsofMEP under PETS, the estimated
(a) If a client's products have already been marketed-tested cost for an MEP program is $89,000.00. (b) If a client's products have not been marketed-tested for an MEP program iv Sales Price of MEP is $96,000.00.
under PETS, the estimated cost
The selling prices of $140,000 for post-PETS clients and $150,000 for others is based on market surveys of competing market entry services. v Revenue Pro ections The projections for MEP are based upon a conservative estimate of the number of clients that can be expected by co-marketing MEP with ESP and PETS. It should be noted that the initial sale: PETS or ESP is expected in the year before the client's participation MEP. These figures account for all of the MEP sales projections in months 17- 64: Plan Month 5-16 17-28 29-40 41-52 41-52 Total Proj. Proj. ESP PETS clients clients 110 48 200 80 440 120 790 200 1,430 316 2,970 764 MEP Clients: From From Total ESP PETS 14 10 24 24 16 40 36 24 60 60 40 lO0 90 60 150 224 150 374 MEP Sales, Costs, Gross Profits: Sales Costs Gross Profit 3,500,000 5,840,000 8,760,000 14,600,000 21,900,000 $54,600,000 2,234,000 3,728,000 5,592,000 9,320,000 13,980,000 $34,854,000 1,266,000 2,112,000 3,168,000 5,280,000 7,920,000 $19,746,000 in
79
i
'w
e Organizer i
Internationalization
Program
OIP
se of Proceeds:
120,000.00 of capital as Research
$40,000.00 of the $120,000.00 for this product will be capitalized and Development
and amortized on a straight 10- year schedule with the
beginning of marketing. $80,000.00 of the $120,000.00 for this product will be used for marketing the product over the course of the projections. ii Revenue Pro ections for OIP
Two sources of revenue are projected: commissions paid by Japanese organizers for the sale of booths and fees paid by them for North American-side a ommissions for sales of booth space. representation.
It is estimated that 20% of the sales of booth space made under this program will originate from Intro (USA) and the remaining 80% will come from Intro Japan's sales of booth spaces to organizations through subagents. in third nations directly and For these projections, this entire 80% is assumed to come
through subagents and be split 60/40 in favor of the subagent. The projected revenues for OIP are: a-i Mont h 5-16 17-28 "29-40 41-52 53-64 Total: ross Revenue Potential Multiplied by 1.5 booths each @ $4000.00 each 269,694,000 290,424,000 352,836,000 352,398,000 431,922,000 $1,697,274,000 of OIP: Multiplied by Gross Revenue Potential Intro Organizer Multiplied by Average of Goal as Survey Commission (10-30%) & % Favorable 88% Free Space (25-35%) 237,330,720 59,332,680 4.97% 255,573,120 63,893,280 5.96% 310,495,680 77,623,920 5.5% 310,110,240 77,527,560 6.8% 380,091,360 95,022,840 7.95% $1,493,601,120 $373,400,280 Av 6.23%
Foreign Exhibitors Permitted 44,949 48,404 56,806 58,733 71,987 280,879
a - ii Rounded Sales Month
oals in Pavilions
lients: Commission @ $1500.00per client 2,949,000 3,810,000 4,275,000 5,287,500 7,560,000 $23,881,500
5-16 17-28 29-40 41-52 53-64 Total:
Numbers of Exhibitors Required (Pavilion = 15 companies minimum) # of Pavilions # of Companies 131 1,966 169 2,540 190 2,850 235 3,525 336 5,040 1,061 15,921
80
l*
l
a - iii Sources of Sales Month Sales Goalfrom (a)-(ii) From Sub-agents & Intro Japan Direct Sales 2,359,200 3,048,000 3,420,000 4,230,000 6,048,000 $19,052,000
Ad ustment Pay to Subagents Adjusted Sales Sales From Intro (USA) Intro Total
5-16 2,949,000 17-28 3,810,000 29-40 4,275,000 41-52 5,287,500 53-64 7,560,000 Total: $23,881,500
1,415,520 1,828,800 2,052,000 2,538,000 3,628,800 $11,463,120
943,680 1,219,200 1,368,000 1,692,000 2,419,200 $7,642,080
589,800 762,000 855,000 1,057,500 1,512,000 $4,776,300
1,533,480 1,981,200 2,223,000 2,749,500 3,931,200 $12,418,380
b Fees paid by apanese organizers for North American-side
representation.
A minimal fee of $200.00 per month will be charged to each Japanese organizer who requests that Intro act as their North American office. Communication costs with existing North American exhibitors on behalf of the organizers are included in the G&A portion of the projections. Projections of the number of organizers requesting this service begins at 5% of the initial target group of 149 and rises to 60 of the 220 organizers to be contacted: (b)- (i) Estimate of Revenues for North American office re )resentation Month 5-16 17-28 29-40 41-52 53-64 Total: No. of Organizers contracted 7 15 20 40 60 ..... Payments from Organizers 16,800 36,000 48,000 96,000 144,000 $340,800
81
j-
_i ¸
f Organizer i
ebsites
irtual Shows 100,00O.00 of capital and be
se of Proceeds:
$50,0000.00 for this product will be utilized for model website construction
amortized on a straight 10- year schedule with the beginning of marketing. The remaining $50,000.00 for this product will be used for marketing over the projections. (ii) Prices tilized
The prices for links and ads are based on 75% those currently charged by Tradeshowcentral.com in the United StatesComparison of similar, but less comprehensive sites confirmed Tradeshowcentral.com as the most economical. Further refinement of sales prices based upon cost per impression estimates will be done during preparation iii Revenue Pro ections Three revenue streams are projected: sale of advertisements sale of advertisements a Sale of advertisements multilingual on organizer websites with period.
on organizer websites;
on virtual show websites; and listing fees for Virtual Shows. 200 of the 220 organizers in Japan will sign on for
It is estimated that eventually
organizer websites, allowing for 5 sponsor advertisements
hyperlinks per organizer site) at a flat price of $2,200.00 per year until month 53-64, when it is reaised to $2,500.00 and expanded 60/40 with the organizer, (a)- (i) Number Month 5-16 17-28 29-40 41-52 53-64 Total: Organizers starting Intro sites 50 32 50 50 18 .......... in favor of Intro: sites, ads aots, revenues Ad Spots (all sites) 250 410 660 910 1400 .... Revenue (All sites) 550,000 902,000 1,452,000 2,002,000 3,500,000 $8,406,000 and agency ad ustment: Less Agency 18% 99,000 162,360 261,360 360,360 630,000 $1,513,080 Adjusted Revenue 451,000 739,640 1,190,640 1,641,640 2,870,000 $6,892,920 to 7 sponsors. Assuming an advertising agency commission of 18%, the adjusted net revenues are split
of organizers, Cumulative Organizers w/Intro sites 50 82 132 182 200 200
(a)- (ii) Split of Ad usted Revenues: Month 5-16 17-28 29-40 41-52 53-64 Total: Adjusted Revenue 451,00 739,640 1,190,640 1,641,640 2,870,000 $6,892,920
Organizer Organizer Share 180,400 295,856 476,256 656,656 1,148,000 $2,757,168
and Intro Intro Share 270,600 443,784 714,384 984,984 1,722,000 $4,135,752
82
i
,
b Sale of advertisements
on virtual show websites
It is estimated that these 200 organizers in Japan will eventually order virtual websites for 450 shows, allowing for 10 sponsor advertisements with hyperlinks per virtual show site (4,500 total) at a fiat price of $500.00 per show. In the fifth year, this is increased to 12 sponsors at $600.00. Assuming an advertising agency commission of 18%, the adjusted net revenues are split 60/40 with the organizer, in favor of Intro: (b)- (i) Initial advertising revenues from Month New Virtual Shows 100 65 100 160 115 540 Cumulative Virtual Shows 100 165 265 425 540 540 Ad Spots (all shows) 1,000 1,650 2,650 4,250 6,480 6,480 irtual ebsites Less Agency 18% 90,000 148,500 238,500 382,500 699,840 $1,559,340 Adjusted Revenue 410,000 676,500 1,086,500 1,742,500 3,188,160 $7,103,660 and Intro
Revenue (All shows) 500,000 825,000 1,325,000 2,125,000 3,888,000 $8,663,000
5-16 17-28 29-40 41-52 53-64 Total:
(b)- (ii) Split of Ad usted Month 5-16 17-28 29-40 41-52 53-64 Total: c
irtual Show Ad Revenues: Organizer Organizer Share 164,000 270,600 434,600 697,000 1,275,264 $2,841,464 Intro Share 246,000 405,900 651,900 1,045,500 1,912,896 $4,262,196
Adjusted Revenue 410,000 676,500 1,086,500 1,742,500 3,188,160 $7,103,660
isting Fees for
irtual Shows
Added revenue from the virtual sites for listing fees charged by the organizer to his show exhibitors is projected using the North American pricing/breakdown and using a Japanese annual average-sized show (311 exhibitors. Note that all such revenue is retained by the organizer to compensate for their payment of site construction and maintenance fees. Here is an estimate for reference:
c - i Organizer revenues from listings from one virtual show: Exhibitors: Basic listing Deluxe listing All Exhibitors Est. 31 280 311 Rates $199.00 $311.00 --Extension 6,169.00 87,080.00 $93,249.00 ISP share 31% 1,912.39 26,994.80 $28,907.19 Organizer Share (69%) 4,256.61 60,085.20 $64,341.81
83
f
"Q
g Trade Show i
Management
Services
TMS
se of Proceeds:
1 0,000.00 of capital
$80,000.00 of the $180,000.00 for this product will purchase computer and other equipment required for TMS. It will be depreciated as per Japanese accounting practice (6 years straight line with 10%residual value) as reflected in these projections. The remaining $100,000.00 will be utilized for marketing TMS, inclusive of visits and contacts with site managers throughout Japan. ii Revenue Pro ections for TMS TMS revenues will be derived from contracts for managing 25 existing trade shows and from management of 25 trade shows Intro will create in cooperation with associations. Intro will share in profits in excess of pre-TMS levels. a Revenue Potential of TMS The 162 single-show organizers expect gross revenues from booths and admissions of $2,734,545,910 in 2001-2005. As below, using current standard 15% commissions for managing companies, this represents a revenue potential in management fees of $410,181,887 (excluding ancillary income and profit-sharing arrangements): Single-Show Organizer Projected Revenues (162 shows) & TMS Potential Gross Revenues Year Projected x Average space Projected x Average Exhibitors of 1.5 booths @ Visitors Admission Fee of at 162 shows $4000.00 each at 162 shows (US $9.90) 2001 49,192 295,152,000 14,171,899 140,301,800 2002 55,711 334,266,000 13,696,967 135,599,973 2003 62,562 375,372,000 17,765,068 175,874,173 2004 67,271 403,626,000 16,052,927 158,923,977 2005 81,777 490,662,000 22,703,837 224,767,986 TL 316,513 $1,899,078,000 $84,390,698 $835,467,910 x 15% Mgmt. Fee $284,861,700 x 15% Mgmt. Fee $125,320,187 Combined Total $410,181,887 b Model Average Show Revenues and Assumptions tilized
Projections for TMS use the average-sized Japanese show based on this model: Assumptions in Models: Booth Fee Booth Size Number of Exhibitors Number of Booths Average Booths per Exhibitor Discounts on Additional Booths Visitor Entrance Fee Number of Visitors Free Visitors (VIP/Media) Average Show $3,960.00 3m x 3m 311 467 (1.5 per exhibitor) 1.5 per exhibitor 10% on second $9.90 82,415 10% 84
Revenues
Expense Model: 1,849,320 61,776 1,787,544 815,909 81,591 734,318 700,528 56,042 3,405,450 170,273 217,821 2,9 5,99 716,176 389,000 389,000 417,640 310,982 150,000 2,3 2, 9 593,200
Sales of booth spaces Less discounts Adjusted sales of booth space Entrance fees Less admitted free Visitor show spending x Royalty of 10% on 80% Exhibitor spending x Royalty of 10% on 50% Advertising sales (directory) Ad usted ross Revenues Costs & Expenses: Site rental Show construction Show operations PR/Advertising Seminars/receptions/printing Other & reserve Total osts Expenses: Profit Per Single Event:
c TMS Income from Profit Increase Sharing with Organizers Intro's approach sets it apart from the "commission off gross" system offered by other management companies. The organizers and Intro will split profits 70/30 in favor of Intro. Calculation of profits provides the organizers with a carve-out of pre-Intro profit with annual increase. The increase below is based on model year's profits plus 5% added per year: c - i Pro ected Profit Improvement Months Model 17-28 29-40 41-52 53-64 Average Show Revenues 2,965,998.00 3,114,297.90 3,270,012.79 3,597,014.07 $3,956,715.48 of Model Average Show under TMS: TMS Profit Amount Target Profit 20% 593,200 30% 934,289.37 35% 1,144,504.48 42% 1,510,745.91 45% $1,780,521.97
Increase over Previous .... 5% * 5% 10% 10%
(*) 5% over model.
85
c - ii
arve-Out
Profit Split of Model Average Show under TMS Organizer Carve-out 622,900 652,600 682,300 $712,000 A_usted Profit 311,400 491,900 828,400 $1,068,500 Organizer30% 93,400 147,600 248,500 $320,500 Intro70% 218,000 344,300 579,900 $748,000
Months Profit Amount 17-28 29-40 41-52 53-64 934,289.37 1,144,504.48 1,510,745.91 $1,780,521.97
c - iii Extrapolation Months 17-28 29-40 41-52 53-64 Totals Intro-Created Shows 0 5 8 12 25
of TMS Revenues and Number of Shows: ExistingShows Taken Over 5 3 7 10 25 Total Shows under TMS 5 13 28 50 50 Intro Share (70% a_ercarve-out) 1,090,000 4,475,900 16,237,200 37,400,000 $59,203,100
c - iv Net Ad usted after costs: Months 17-28 29-40 41-52 53-64 Totals Intro Share (70% after carve-out) 1,090,000 4,475,900 16,237,200 37,400,000 $59,203,100 Intro Direct Costs 218,000 895,200 3,247,400 7,480,000 $11,840,600 Intro A_usted Profit 872,000 3,580,700 12,989,800 29,920,000 $47,362,500
86
f
h
Alli
apan
Trade
Show
ebsite of capital website construction and for the
se of Proceeds:
200,000.00
$200,0000.00 conversion
will be utilized
for extensive
of data and databases
developed
by Intro. These will be capitalized of marketing.
as an asset and amortized
over ten years, starting from the beginning
ii
osts of the
ebsite include provided fees charged for maintenance, updating,
Estimates ongoing Because Japan,
of the cost of the website linking and other services a key feature
by the outsourced ongoing reports
service provider. on the shows media held in
of the site will be Intro's to producing
all costs related
these updates
including Trade
and field visits, projected 53- 64.
are also merged to average
into the monthy
estimate
of All-Japan
Show Website
$20,000.00 per month
for months
17- 52 with an increase
in months
iii Prices
tilized links, advertisement, sponsorship, charged and E-mail newsletter in the sites
The prices for listings, advertising United
are based on those currently
by Tradeshowcentral.com of similar,
States, discounted
by 75%. Comparison
but less comprehensive Further refinement of
confirmed estimates
Tradeshowcentral.com to be based upon
as the most economical. estimates
cost per impression
will be performed.
iv Revenue Seven revenue -organizer -trade show -banner
Pro ections streams are projected: from basic to deluxe and hyperlinked); from basic to deluxe and hyperlinked);
listings
(ranging
listings(ranging
advertising by industrial supplier" categories of shows
-sponsorships
-sales of "featured - advertising - advertising
pages and links e-newsletter e-newsletter stream, (to organizers or to exhibitors) users) video and webcasting for months 17- 28 of
in a monthly in a monthly
(to exhibitors/site fees for streaming Projections
The eighth intended events, is not included
revenue
in these projections.
have been lowered
to allow for roll out.
87
a Organizer Although
isting
Revenues of organizers to be listed, some may refuse to
it is in the best interests
pay for the service. comprehensive, Japan initially
It is in the best interests
of Intro to have this site be to all organizers active organizers active in (40%) will organizers
so a basic free listing will be offered that 88 of the 220 currently of this. It is estimated listing package
and it is estimated take advantage
that 75% of the remaining
(100 firms) will take a standard remaining
for $500.00 per year and the inclusive of several pages more
25% (32 firms) will take a more deluxe listing,
and hyperlink known,
to their own sites at $1,200.00 per year. As the site becomes will remain on the free listing arrangements. in months
we project that 40 organizers
basis, 130 will Prices will
take the standard increase
listing and 50 will opt for the deluxe and $1500.00 for months (deluxe)
to $600.00 (standard) Revenues
53-64:
(a)- (i) Annualized Listing Type Basic Standard Deluxe Total (a)- (ii) Annualized Listing Type Basic Standard Deluxe Total
17-40 Annual Revenue 0. 50,000. 38,400. $88,400.
No.of Organizers 88 100 32 220 Revenues
Cost per year 0.00 500.00 1200.00 .... 41-52
for months
No.of Organizers 40 130 50 220
Cost per year 0.00 500.00 1200.00 ....
Annual Revenue 0. 65,000. 60,000. $125,000.
(a)- (iii) Annualized
Revenues
for months
53- 64
Listing Type Basic Standard Deluxe Total
No.of Organizers ! Cost per year 40 0.00 130 600.00 50 1500.00 220 ....
Annual Revenue 0 78,000 75,000 $153,000
b Trade Show Although refuse
istings of organizers to list their shows, some may
it is in the best interests
to pay for the service.
It is in the best interests
of Intro to have this site for all shows held 240 shows)
be comprehensive, in Japan
so a basic free show listing will be offered that 40% of the shows
and it is estimated
(approximately
88
will be so listed.
It is estimated
that 75% of the remaining
shows
(270 shows)
will be listed by their organizers year and the remaining with more deluxe sites. It is projected 50 for months The number 150 in months
with a basic listing package (90 shows)
for $1,000.00 per their organizers to their own 41-52 and to to the organizers. 41-52 and
25% of shows
will be listedby
listing, inclusive
of several pages and hyperlink
that free listings will drop to 100 by months becomes apparent
53-64 as the site's effectiveness of "deluxe" shows will increase
to 140 in months
53-64. The standard
listings will increase
to 360 in months 53-64.
41-52 and 400 in months Revenue is projected
53- 64. Prices are increased
for months
as thus: Revenues for months 17-40 Annual Revenue 0. 270,000. 216,000. $486,000.
(b)- (i) Annualized Listing Type Basic Standard Deluxe Total (b)- (ii) Annualized Listing Type Basic Standard Deluxe Total
No.of Shows 240 270 90 600 Revenues No.of Shows 100 360 140 600
Cost per year 0.00 1000.00 2400.00 ..... for months 41-52
Cost per year 0.00 1000.00 2400.00 .....
Annual Revenue 0. 360,000 336,000 $696,000
(b)- (iii) Annualized Listing Type Basic Standard Deluxe Total
Revenues No.of Shows 50 400 150 600
for months
53-64 Annual Revenue 0. 480,000 420,000 $900,000
Cost per year 0.00 1200 2800 .....
c Industrial
Sponsor
Advertisement, on the site grouped
Banner
Ads and Featured sponsorships feature
Suppliers for each
As shows will appear industry groupings group
by industry, will initially
are feasible. The Website estimated
10 industrial
with sponsorship banner
at a flat $500.00 per month. each at $2,000.00 flat per month. Supplier
Four site-wide Suppliers pages
ads will appear, show industry
to the trade
can be listed on the Featured in months
for $1,000.00
per year. Prices will be raised
53- 64: 89
J
"l
(c)- (i) Annualized Revenues for months 17-52 Type Industry sponsor Site-wide banner Featured supplier Total No. 10 4 100 .......... Cost per year 6,000.00 24,000.00 1,000.00 Annual Revenue 60,000.00 96,000.00 100,000.00 $256,000.00
(c)- (ii) Annualized Revenues for months 53-64 Type Industry sponsor Site-wide banner Featured supplier Total d Advertising No. 10 4 100 .......... Cost per year 7,200.00 28,000.00 1,200.00 Annual Revenue 72,000 112,000 120,000 $304,000
In E-mail Newsletters 2,000) users (approximately 50,000) will
Two newsletters, one aimed at organizers and suppliers (approximately and one aimed at potential exhibitors/site be transmitted
monthly. Initially, two sponsors will be featured in each at $.15 newsletter and $.06 for the exhibitor/
per exposure for the organizer/supplier
site user newsletter. This is increased to 4 sponsors in months 41-52 and a price increase is added in months 53-64:
(d)- (i)
Annualized
Revenues for months 17- 40 Cost per Exposures exposure .15 2,000 .06 50,000 ........ Sponsors & Annualized Monthly Revenue: 2 x $300 = $600 7,200 2 x $3000=$6,000 72,000 4 sponsors/ $6,600 $79,200
Newsletter Type Organizer/supplier Exhibitor/site user Total (d)- (ii) Annualized Newsletter Type Organizer/supplier Exhibitor/site user Total
Revenues for months 41- 52 Cost per Exposures exposure .15 2,000 .06 50,000 ........ Sponsors & Monthly Revenue: 4x $300 = $1,200 4 x $3000=$12,000 4 sponsors/ $13,200 Annualized 14,400 144,000 $158,400
(d)- (iii) Annualized Revenues for months 53- 64 Newsletter Type Organizer/supplier Exhibitor/siteuser Total Cost per exposure .20 .08 ........ Exposures 2,000 50,000 Sponsors & Monthly Revenue: 4x $400 = $1,600 4 x $4000=$16,000 4 sponsors/$17,600 Annualized 19,200 192,000 $211,200
90
i Trade Show Ac-uisitions i se of Proceeds: 235,000.00 of apital techniques fees
$135,0000.00 will be used to conduct research to determine the best methods to adapt certain European and North American trade show management
to Japan. An additional portion of these funds will be used for professional targets. Bothof these will be capitalized as Research and Development
associated with an initial survey and due diligence concerning some initial acquisition and amortized on a 10- year straight-line schedule beginning in month 11. The remaining $100,000.00 for acquisition will be used to market Intro to show organizers and government agencies to generate deal flow. This will amortized from months 6- 64 of the projections. These marketing costs are reflected in the G&A. ii Trade Shows Earnings All figures concerning purchases of trade shows in the Projections are based on the below models of Average Sized and Middle -Sized Trade Shows: ii - a Assumptions of Average and Middle-Sized Show Models Middle-Sized Show $3,960.00 3m x 3m 1,075 1,290 1.2 per exhibitor 10% on second $9.90 123,000 5% $10,950.00 $8.50 10% on 50% 10% on 80%
Assumptions in Models: Booth Fee Booth Size Number of Exhibitors Number of Booths Average Booths per Exhibitor Discounts on Additional Booths Visitor Entrance Fee Number of Visitors Free Visitors (VIP/Media) Spending per exhibitor (net of space costs) Spending per visitor(net of entrance fee) Royalty on Exhibitor spending Royalty on Visitor spending ii - b Revenues Items: Sales of booth spaces Less discounts Adjusted sales of booths Entrance fees Less admitted free Visitor show spending x Royalty of 10% on 80% Exhibitor spending x Royalty of 10% on 50% Advertising sales (directory) Ad usted ross Revenues
Average Show $3,960.00 3m x 3m 311 467 1.5 per exhibitor 10% on second $9.90 82,415 10% $10,950.00 $8.50 10% on 50% 10% on 80%
of Average and Middle-Sized Average-Sized 1,849,320 61,776 1,787,544 815,909 81,591 734,318 700,528 56,042 3,405,450 170,273 217,821 2,9 5,99
Show Models Middle-Sized 5,108,400 85,140 5,023,260 1,217,700 60,885 1,156,815 1,045,500 83,640 11,771,250 588,563 753,000 , 05,2 91
ii - c
osts, Expenses Show Models
Pre-tax
Profits of Average
and Middle-Sized
Items: Site rental Show construction Show operations PR/Advertising Seminarsreceptionsprinting Other & reserve Total osts per Event Profit per Single Event: Pretax as of ross
Average-Sized 716,176 389,000 389,000 417,640 310,982 150,000 2,3 2, 9
Show
Middle-Sized 1,870,448 1,074,539 1,244,615 951,142 441,373 350,000 $5,932,117
Show
593,200 20
1,
3,1 1 22
iii Trade Show All shows purchased payments acquired
Purchase
Events use a purchase price of 5 times EBITDA and are Debt Service with balloon is based payment on 10 years of
in the projections
with 20% cash down using a 20-year
and 80% leveraged. schedule
self-amortizing
at 121st month. is
Note that the EBITDA for semi-annual taken in the Projections partial iii - a principal etails for the purchase are provided
shows must consider
2 events. No amortization Interest expense and
prices of these assets. for within
repayment of Purchase
the projections.
of Model Shows
from above Middle-Sized Show $1,673,161 1 1,673,161 8,366,000 1,673,200 $6,692,800
Items: Earnings per event Events per year EBITDA: Purchase Price • 5X Cash Payment (20%) Leveraged (80%)
IAverage-Sized Show $593,200 2 1,186,400 5, 932,000 1,186,400 $4,745,600
iv Target Ac-uisition Without any additional Average Shows 1 3 4 4 12
Schedule ca _italizations, Middle Shows 0 0 1 3 4 the schedule Total Purchases 5,932,000 17,796,000 32,094,000 48,826,000 $104,648,000 for Intro to acquire shows is :
Months 5-16 17-28 29-40 41-52 Total
92
v
ash and debt re-uirements
for Ac-uisitions 10% purchase price
Based on paying 10% of purchase price at contract; additional and debt requirements are: Needed at Month: 10 16 22 28 34 40 46 52 Subtotals: [ Cash Requirements New Contract Contracts Closings 593,200 593,200 1,779,600 1,779,600 3,209,400 3,209,400 4,882,600 4,882,600 $10,464,800 $10,464,800
at closing; and leveraging 80% of purchase price, commencing at closing, the cash
Debt Requirements At Closings 4,745,600 14,236,800 25,675,200 39,060,800 $83,718,400 $104,648,000 I
Grand Total ................................. Shows
vi Operation of Ac-uired
Based on the above acquisition schedules, and assuming all average-sized semi-annual, Months 17-28 29-40 41-52 53-64 2 events per year) the show operations schedule is: Average- Sized Shows Shows I Events 1 2 4 8 8 16 12 24 Middle- Sized Shows Shows Events 0 0 0 0 1 1 4 4
shows to be
Total Events 2 8 17 28
vii Pro ected Profit Improvement vii - a Improvement Months Model 17-28 29-40 41-52 53-64 (*) over model
under Intro: Show Target Profit 20% 30% 35% 42% 45% Profit Amount 593,200 934,290 1,144,500 1,510,740 $1,780,515
of Average-Sized Increase over Previous .... 5%* 5% 10% 10%
Average Revenues per Event 2,965,998 3,114,300 3,270,000 3,597,000 $3,956,700
93
vii - b Improvement Months Model 41-52 53-64
of Middle-Sized
Show Target Profit 22% 30% 35% Profit Amount 1,673,161 2,396,000 $2,935,000
Average Show Increase Revenues per Even1 over Previous 7,605,278 .... 7,985,500 5%* $8,384,800 5%
(*)increase over model viii - (a) Pro ected Revenues Months 17-28 29-40 41-52 53-64 Total Events Run 2 8 17 28 65 and ross Profit from Ac-uired Costs 4,359,600 17,330,800 39,955,900 73,534,100 $135,180,400 Trade Shows
Revenues 6,228,600 25,225,800 59,713,900 112,911,100 $204,407,940
Gross Profit 1,869,000 7,895,000 19,758,000 39,377,000 $68,899,000
viii - (b) Pro ected Ad usted Income from Ac-uired Months 17-28 29-40 41-52 53-64 Total Cross Profit 1,869,000 7,895,000 19,758,000 39,377,000 $68,899,000 Less Interest on Purchases 471,000 1,875,900 4,390,500 8,185,700 $14,923,100
Trade Shows
Profit After Interest 1,398,000 6,019,100 15,367,500 31,191,300 $53,975,900
94
Trade
Show
reation
i
se of Proceeds:
150,000.00
of capital will be used for database of Japanese trade associations commencing
$75,0000.00 construction.
of the $1501000.00 for this product This database, agencies, consisting primarily
and government
will be amortized
on a straight
15 year schedule
upon the beginning $150,000.00
of marketing
of Trade Show Creation.
$75,000.00 of the over months
for this product
will be used for marketing
the product
6-64 of the projections.
These marketing
costs are reflected
in the G&A.
ii Pricing and The pricing market-based and surveys
osts of Trade studies
Show
reation
Studies is a blend partners of cost-based and
for feasibility pricing. of similar
and show models from outsourced studies
Quotations event-related
for research
services the
place our $30,000.00 toward cost per study partners. is based
lower end of the spectrum. data correlation
The $15,000.00
on costs of
and fees charged
by outsource
iii
Revenue
Pro ections
for Trade Show
reation are consulting agencies fees charged to
The source of revenue Japanese studies
for Trade Show Creation and local government reports.
trade associations and show planning
to conduct of interest,
feasibility it is to be contacted
Based on initial surveys
estimated
that approximately
10-15% of the 3,500 trade studies
associations
will move forward This represents from managing TMS estimates.
with feasibility
over the course of this PLAN. studies. Potential secondary revenues
approximately
430 feasibility
any shows which arise from these reports Potential secondary are included is illustrated: revenues
are included
in our
from acquiring
any shows which The projected
arise from these reports delivery of these report
in our Acquisition
estimates.
Months 5-16 17-28 29-40 41-52 53- 64 Total
No. of Studies 25 40 65 110 190 430
Fees Charged 750,000 1,200,000 1,950,000 3,300,000 5,700,000 $12,900,000
Costs: 375,000 600,000 975,000 1,650,000 2,850,000 $6,450,000
Gross Profit 375,000 600,000 975,000 1,650,000 2,850,000 $6,450,000
95
f
"o
B. Income
Statement For the period of:
IOperating Sales Cost Total Staff of Sales Profit from Sales Gross & Activities 553,977,900.00 308,891,300.00 245,086,600.00 12,409,200.00 1,053,200.00 25,980,000.00 Expenses 39,442,400.00 205,644,200.00 14,923,100.00 190,721,100.00 Taxes * 98,965,800.00 91,755,300.00 20,289,500.00 71,465,800.00 17.9% 16.6% 3.7% 12.9%
Month 1 -
4 Total
% 100.0% 55.8% 44.2% 2.2% 0.2% 4.7% 7.1% 37.1% 2.7% 34.4%
Operating
Expenses
Staff Expenses Depreciation Total Income I Staff from & Amortization & Operating Activities Other Operating Expenses Operation
Non-Operating
Interest Expenses Income Before Taxes Corporation Corporation Income Income Income Tax Dividend
Before
Dividend Based on 22% share Income After Dividend
*
Tax - estimate
based
on maximum & expense
rate of 52% after use of NOL please refer to
* * For detailed income Appendix Table 24
breakdown,
9
B. Income
Statement
2 For the period
Orsceratin g ales ost of Total Staff
of:
Month 1 - 4
% 0.00 0.00 -------
Month
5 -I
% 100.0% 57.3% 42.7%
Month
1 -2
%* 100.0% 58.0% 42.0%
Activities Sales Profit from Sales
16,311,800.00 9,341,500.00 6,970,300.00
34,945,600.001 20,256,200.00 14,689,400.00
Gross &
0.00
Operating
Expenses 239,400.00 17,500.00 212,300.00 Expenses I 469,200.00 -469,200.00 0.00 -469,200.00 Taxes * 0.00 -469,200.001 ------I 0.00 -469,200.00 ----768,300.00 2,723,900.00 4.7% 16.7% 1,163,000.00 4,123,200.00 3.3*/0 11.8% 1,691,500.00 3,492,200.00 10.4% 21.4%1 5,597,700.00J 5,286,200.00 16.0% 15.1% --------------1,034,700.00 155,400.00 596,500.00 1,786,600.00 5,183,700.00 0.00 5,183,700.00 6.3% 1.0% 3.7% 11.0% 31.8% 0.0% 31.6% 1,462,700.00 189,400.00 1,682,400.00 3,334,500.00 11,354,900.00 471,000.00 4.2% 0.5% 4.8% 9.5% 32.5% 1.3% 31.1%
Staff Expenses Depreciation & Amortization Expenses Operating
Other Operating Total Income Interest Income Corporation _-orporation Income Dividend Staff from &
Operation Activities Taxes
Non-Operating Before
Expenses
10,883,9oo.001
Income Before
Income Tax Dividend
I Based on 22% share Income After Dividend
3 For the period of:
O_C Serating ales ost Staff of & Activities Sales Operating Expenses from Sales
Month 29 - 40
74,503,000.00 43,867,400.00 10%0% 58.9%
Month 41 - 52
150,797,000.00 85,732,200.00 65,064,800.00
Month 53 - 4
[ 100.0%! 277,420,500.00 % 56.9% 149,694,000.00 43.1% 100.0% % 54.0%
Total Staff Gross ExpensesProfit D_preciation
30,635,600.00 2,780,700.00 221,900.00 3,179,500.00
i 41.1% 3.7% 0.3_ / 4.3% I 8.3%J 32.8%
3,268,200.00 __ 226,900.00[ 7,287,600.001 10,782,700.00 54,282,100.00
2.2% 127,726,500.0046.0% 3,623,500.00 0.2%1 4.8% 242,100.00 13,021,700.00
1.3% 0.1% 4.7% 6.1% 40.0°/0
& Amortization Expenses
Other Operating Expenses J Total Staff & Operating Income from Non-Operating I Operation Activities
6,182,100.00 24,453,500.00
7.2% 16,887,300.00i 36.0%1 110,839,200.001
Interest Expenses Income Before Taxes
1,875,900.00 ______
2.5'/01
o,
4,390,500.001 49,891,600.O01_
2.9%
8_ 102,653,500.001
37.0%
L _C-orporation Income Tax ICorporation Income Taxes
*
22,577 11,819,400.001 600.00
15.9% 30.3%j
26,118,200.00
17.3%J 53,739,000.00
19.4%
IncomeDividendBefore Dividend Based on 22% share Income After Dividend
10,758,200.00 2,366,800.00 8,391,400.00
14.4% 3.2% 11.3'/0 o,
23,773,400.00__ 5,230,200.00 18,543,200.001 E
15.8%1 48,914,500.00 3.50 12.3% 10,761,200.00 38,153,300.001
_17"6% 13.8%
* Tax - estimate based on maximum rate of 52% after use of NOL ** For detailed income & expense breakdown, please refer to Appendix Table 24
II
•
• Notes
to Balance
Sheet Pro ections
Statements
of
ash Flow
1. Intangible
Non-Amortizing
Assets when placed
R&D, databases, and certain other intangible assets begin amortization
in service. As no provision is made for utilizing the below- listed intangible asset in these Projections, it appears on the balance sheets but does not amortize: Conduit Organization Research: $29,628.00 placed on books 12/31/98.
2. Net Operating
oss
arry-forward
The Company and subsidiary will have an estimated net operating loss carryforward of approximately $1,420,000.00 as of June 30, 2001. Subject to the terms
of investment, this NOL may be applicable to offset profits projected herein. These projections assume that NOL will be used to offset income. 3. Taxes After Tax istributions and return on investment projections are
The estimated taxes, post-tax dividends,
included for illustrative purposes only and should not be considered as a guarantee of returns.
98
• Balance
Sheet
• For detailed breakdown, please refer to Appendix'[able •. Assumes pa_nents of dividends
4th Month 16th Month 28th Month 4Oth Month 52nd Month 64th Month
25
Assets Current
Assets Receivable 3,400.00 43,200.00 588,500.00 2,700.00 637,800.00 49,400.00 110,500.00 -95,400.00 10,300.00 1,377,500.00 24,700.00 -97,800.00 0.00 1,379,200.00 15,500.00 Japan). 86,200.00 100.0(] 101,800.00' 2,1_ 4th Month 0.00 14,600.00 23,300.00 0.00 37,900.00 0.00 0.00 37,900.00 _ 1_ 43,200.00 3,888,900.00 1,600.00 5,732,100.00 77,400.00 218,500.00 -129,100.00 10,300.00 2,497,500.00 24,700.00 -219,600.00 5,932,000.00 _ _ _ _ 101,800.001 14,245,600.00j_ 16th Month 3,716,200.00 43,200.00 7,178,600.00 0.00 10,938,000.00 105,900.00 247,000.00 -174,300.00 10,300.00 2,497,500.00 24,700.00 -363,700.00 23,728,000.00 26,075,400.00 15,500.00 86,200_00 100.00 101,800.00 37,115,200.00 28th Month 7,492,800.00 43,200.00 12,591,000.00 0.00 20,127,000.00 113,400.00 472,000.00 -252,100.00 10,300.00 2,497,500.00 24,700.00 -507,900.00 55,822,000.00 58,179,900.00 15,500.00 86,200.00 100.00 101,800.00 78,408,700.00 4Oth Month 14,741,200.00 43,200.00 30,290,000.00 0.00 45,074,400.00 127,400.00 501,000.00 -334,800.00 10,300.00 2,497,500.00 24,700.00 -652,100.00 104,648,000.00 106,822,000.00 15,500.00 26,601,400.00 43,200.00 86,513,400.00 0.00 113,158,000.00 190,900.00 564,500.00 -432,700.00 10,300.00 2,497,500.00 24,700.00 -796,300.00 104,648,000.00 106,706,900.00 15,500.00
Total Current Assets Non-Current Assets Furniture & Fixture _ment Accumulated _reciation Organization Cost Other Intan ible Assets _enses Prior to Incorporation Accumulated Amortization _uired Trade Show
Total Non-Current Assets Other Assets D_ op_ _ry_(Intro Total Other Assets Total Assets LI_ & Stockholders Current Liability _able _ccrued _enses Cor Tax Pa able Total Current Liability Non-Current Liability_ _Loan Pa_able-Bank Total Non-Current Liability_ Total Liability Stockholders _
86,_ 86,200.00 I00.00[ 100.00 101,800.00 / 101,800.00 151,998,200.00L219,966,700-00r 52nd Month 64th Month
608,800.00 24,400.00 20,500.00 1,691,500.00 2,345,200.00 4,745,600.00 4,745,600.00 7,090,800.00
1,232,100.00 25,600.00 77,900.00 5,597,700.00 6,933,300.00 18,903,900.00 18,903,900.00 25,837,200.00
2,470,000.00 44,200.00 149,000.00 11,819,400.00 t4,482,600.001 44,256,700.00 44,256,700.00 58,739,300.00
f 4,659,600.00 F 51,400.00[ 419,800.001 26,118,200.001 31,249,000.00 82,536,600.00 82,536,600.00 113,785,600.00
7,978,800.00 48,700.00 806,800.00 53,739,000.00 62,573,300.00 81,027,500.00 81,027,500.00 143,600,800.00
9s _Year) _j Current: ustments Issued Total Stockholders E_ Total Liability&Stockholders Equity_
-1,889,500.00 -469,200.00 3,991,200.00 -20,800.00 2,080,900.00 2,118,800.00
834,400.00 2,723,900.00 6,341,200.00 -20,800.00 7,154,800.00 14,245,600.00
4,957,600.00 4,123,200.00 6,341,200.00 -20,800.00 11,278,000.00 37,115,200.00
13,349,000.00 8,391,400.00 6,341,200.00 -20,800.00 19,669,400.00 78,408,700.00
31,892,200.00 18,543,200.00 6,341,200.00 -20,800.00 38,212,600.00 151,998,200.00
70,045,500.00 38,153,300.00 6,341,200.00 -20,800.00 76,365,900.00 219,966,700.00
99
E. Statement
of ash Flow • For detailed breakdown,please refer to Appendix Table26 •. Assumespaymentsof dividends
Month Cash flows income from operating activities -469,200.00 2,723,900.00 4,123,200.00 1-4 Month 8-16 Month 17-28
Adjustments to reconcile net income to net cash provided by operating activities Accum. depreciation Accumulated amortization Account receivable Inventory Advanced payment Prepaid expenses Deposit Account payable Temporary received Staff Leasing Accrued Accrued expenses Corp tax payable Total Adjustment Net cash Cash provided from by operations investing activities -16,500.00 -16,600,00 -500,600.00 0.00 -533,700.00 -28,000.00 -108,000.00 -1,120,000.00 -5,932,000.00 -7,188,000.00 -28,500.00 -28,500.00 0.00 -17,796,000.00 -17,853,000.00 flows 7,300.00 10,200.00 -1,700.00 -4,000.00 -1,120,500,00 2,400.00 -1,300.00 0.00 1,118,200.00 9,900.00 -84,100.00 -2,800.00 -66,400.00 -535,600.00 33,700.00 121,800.00 -1,795,000.00 0.00 0.00 1,100.00 0.00 608,800.00 0.00 9,800.00 -2,800.00 1,691,500.00 668,900.00 3,392,800.00 45,200.00 144,100.00 -1,917,800.00 0.00 0.00 1,600.00 0.00 623,300.00 0.00 t,200.00 57,400.00 3,906,200.00 2,861,200.00 6,984,400.00
Furniture & Fixture Office equipment Other intangible Assets Acqu red Trade Show Net cash flows from investing Cash flows from financing activities Short term loan payable-Shareholder Short term loan payable-Other Long erm loan payabe-Bank [_Commonstock - Issued Net cash flows from financing in cash Net increase (decrease).
-282,000.00 -965,100.00 -245,100.00 3,150,000.00 1,657,800.00 588,500.00
0.00 0.00 4,745,600.00 2,350,000.00 7,095,600.00 3,300,400.00
0.00 0.00 14,158,300.00 0.00 14,158,300.00 3,289,700.00
Cash balance at end of period _Cash balance at beginning of period Net increase (decrease) in cash I
588,500.00 0.00 588,500.00
3,888,900.00 588,500.00 3,300,400.00
7,178,600.00 3,888,900.00 3,289,700.00
Month Cash flows income from operating activities
29-40
Month
41-52
Month
53-64
8,391,400.00
18,543,200.00
38,153,300.00
Adjustments to reconcile net income to net cash provided by operating activities Accum. depreciation Accumulated amortization Account receivable Inventory Advanced payment Prepaid expenses Deposit Account payable Temporary ,received Staff Leasing Accrued Accrued expenses Corp tax payable Total Cash AdLustment provided from b o eratlons activities flows investing Net cash 77,800.00 144,200.00 -3,776,600.00 0.00 0.00 0.00 0.00 1,237,900.00 0.00 18,600.00 71,100.00 6,221,700.00 3,994,700.00 12,386,100.00 82,700.00 144,200.00 -7,248,400.00 0.00 0.00 0.00 0.00 2,189,600.00 0.00 7,200.00 270,800.00 14,298,800.00 9,744,900.00 28,288,100.00 97,900.00 144,200.00 -t 1,860,200.00 0.00 0.00 0.00 0.00 3,319,200.00 0.00 -2,700.00 387,000.00 27,620,800.00 19,706,200.00 57,859,500.00
Office equipment Other Intangible Assets A_cFUrniture Fixture uired Trade Show & Net cash flows from Investing Cash flows from financing activities
-225,000.00 0.00 -32,094,000.00 -7,500.00 -32,326,500.00
-29,000.00 0.00 -48,826,000.00 -14,000.00 -48,869,000.00
-63,500.00 0.00 -63,500.00 0.00 -127,000.00
Short term loan payable-Shareholder Short term loan payable-Other Long term loan payable-Bank Common stock - Issued Net cash flows from financing in cash Net increase (decrease) 25,352,800.00
0.00 0.00 38,279,900.00 0.00 25,352,800.00 5,412,400.00 38,279,900.00 17,699,000.00
0.00 0.00 -1,509,100.00 0.00 -1,509,100.00 56,223,400.00
0.00 0.00 0.00
ICash balance at end of pedod I_Cash balance at beginningof period Net increase (decrease) in cash I
12,591,000.00 7,178,600.00 8,412,400.00
30,290,000.00 12,591,000.00 17,699,000.00
86,513,400.00 30,290,000.00 56,223,400.00
100