Pepsi in China Sponsors U.S. Shanghai Expo Pavilion

Posted by: Frederik Balfour on July 01, 2009

PepsiCo (PEP) announced today it is spending $5 million in China to sponsor the U.S. pavilion at the 2010 Shanghai Expo, joining 3M (MMM) and General Electric (GE) Pepsi chairman and CEO Indra Nooyi signed the deal during her marathon 12-day stay in China, a sure sign of how important the mainland China market is to the soft drink and snacks giant. It also helps raise the profile of the Shanghai Expo, which has only a handful of international corporate sponsors with their own pavilions, including Siemens and Coca-Cola, (KO).

There is however, one small problem: The U.S. pavilion may never see the light of day. So far organizers have only raised less than one-third the roughly $61 million needed to build and fit-out the pavilion for the Shanghai Expo which opens on May 1 next year. The money must come entirely from the private sector because of a 1991 bill passed by Congress that prevents the U.S. government from funding national pavilions. Meanwhile 191 other countries have already confirmed their participation in Shanghai 2010.

[Thanks to my alert colleague Dexter Roberts, I have learned today, July 2, that Hillary Clinton has REITERATED her support for the USA Pavilion in Shanghai and has named Jose Villareal as the Commissioner General to Shanghai Expo. ]

The fact that the U.S. is one of the few countries which has not made a firm commitment to the fair is proving to be a major embarrassment for the U.S. business community in China, especially in Shanghai. The Shanghai American Chamber of Commerce is on a charm offensive to raise money from other U.S. corporations, but the going is tough, people close to the effort have told me. Unlike the Beijing Olympics, which proved to be a marketing bonanza for sponsors, the Shanghai Expo just doesn’t have the same cachet. “The Olympics took all the oxygen out of the room, it was so successful and the sponsors are still reveling in it, marketing off it. There is a half life there,” one of the U.S. pavilion’s fund raisers told me a month ago. The second hurdle, the fund raiser said, was the economic turmoil which has put everyone into survival mode.

That may be true, but you’ve got to think more U.S. companies will follow Pepsi’s lead. Sure it’s tough to put a price on goodwill anywhere in the world, but in China, the intangible benefits of giving the Chinese “face” are huge. “The Chinese government has made it clear that supporting the U.S. pavilion is regarded as supporting the Chinese expo,” says Geoff Li, spokesman at GE China.

I’m frankly surprised that Disney hasn’t signed on to help pay for the U.S. pavilion. More than 60 million Chinese are expected to visit next year’s fair, and any mainland family affluent enough to make the trip to Shanghai would seem to be Disney’s target market. A partnership with Disney, which could cost as little as $1 million, would seem like a smart investment, especially since Disney (DIS) is waiting for Beijing to give the green light on a mammoth Disneyland, slated for Shanghai in 2014.

For more on this check out this entry on Adam Minter’s blog Shanghai Scrap “Why can’t the US find $61 million for an Expo 2010 pavilion?” Hat tip to commentor Bob Jacobson [Bluefire] for alerting me to this blogpost by Minter.

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Reader Comments

Bob Jacobson

July 1, 2009 07:46 AM

An interesting story with one crucial incorrect detail: US law doesn't prohibit federal funding of US participation in Expos. The 1991 law cited simply directs the State Department that it may use Congressional appropriations for this purpose, but not expend additional monies. So far, no Congressional appropriation has been forthcoming.

The untruth regarding a funding prohibition was invented and used as cover by the Bush Administration which, in 2006, decided not to fund US participation in the Expo. It has been propagated since by the State Department and the group authorized to develop the Expo, to no discernible advantage. The authorized group, strapped for cash and without public funding, resigned in October 2008. It was resurrected by the US Consulate with allegedly foreign funding.

But no prohibition exists to prevent a Congressional appropriation, nor could one that the current Congress couldn't overturn.

This suggests a more profound problem: that the current pavilion as planned is not compelling enough to attract sufficient funding from public or private sources. The project is already more than a year behind schedule, annoying Chinese and now US political leaders and seriously threatening the quality of the finished product.

In fact, the whole US Expo process has been ill managed, starting with the 2006 decision and up to today and begs investigation.

For readers who seek the complete story, The Atlantic's Adam Minter, based in Shanghai, has provided a thorough history of the situation on his blog, Shanghai Scrap, "Why can't the US find $61 million for an Expo 2010 pavilion?" at http://shanghaiscrap.com/?p=2976/.

Frederik Balfour

July 1, 2009 07:55 AM

Thanks Bluefire for the clarification. I had based my blog on the information on the USA Pavilion website. To wit:
Restriction on USG Funding: The USG is prohibited by statute from spending appropriated funds to support a national pavilion. Therefore, in conformity with law and prior practice, a non-governmental entity was formed to design the pavilion and raise 100% of the funding from the private sector.

Yuan Chen

July 1, 2009 11:00 AM

My friend who is working in the ministry of trade told me privately that the government is unofficially making the list of those corporations that support and not support the World Expo. Don't know what will happen to those who don't support the World Expo though. Maybe tough to enter Chinese market.

jim

July 1, 2009 01:10 PM

It is so sad for United States that we cannot come up with 61 million dollars to promote trade and communication with other nations, yet we are spending at least 3 trillion dollars (directly and indirectly) on Iraq. Where is our priority?

No disney for India?

July 1, 2009 09:58 PM

Disney is missing out. Disney should build a theme park in India. 1 billion customers.

Ronald

July 2, 2009 06:44 AM

If Disney build a theme park in India, they have to deal with thousands of monkey gods, rat gods, and cow gods running around unchecked. Nobody in their right mind would take on that task.

peace4all1

July 2, 2009 09:15 AM

Will future historians mark the absence of United States from 2010 Shaighan World Expo as the beginning of declination of America Empire? The cost of $61 millions is much less than a drop in the bucket of U.S. annual budget. This very penny –wise, short sighted decision can only be conceived by the incompetent past White House administration. We might need to spend $600 millions more to fix consequences caused by the wrong impression to be perceived by hundred millions of visitors to Shaighan in the coming year.

Steven

July 2, 2009 03:18 PM

This is a very good indicator for US's future.For the No. 1 country in the world, it even could not afford 61 million $ for its future. The scale of the Expo cannot be less than the Olympics and will be nicely presented to the world. But very bad, US companies and gov are now in dismal situation. The absence of US will be a huge embarrassment for this country. The Expo is not a Chinese Expo, it is a WORLD Expo. I bet it will be a huge success again with or without US. I'd like to see some swallowing-sour-grape people here next year.

Bad timing

July 2, 2009 07:36 PM

What is the point of the World Expo anyway? And who is expected to attend? Sounds to me like it's mainly a marketing event for countries to promote tour, trade and tourism, attended by mostly native Chinese people?

I think the United States is one country that does not need any further promotion. The world already knows all about us thanks to internet access to our gazillion national and local media outlets detailing every move of our government/President/economy, our multinationals and Hollywood produced music, TV shows and movies.

However, I can see multinationals interested in promoting their brand, and even maybe some lesser known local state/city governments interested in promoting trade and tourism to the world. Unfortunately most MNCs and state governments have their hands full with the recession at the moment. $61M is a lot of money to spend for a summer festival, especially in this economy.

joe

July 3, 2009 11:18 PM

Bad timing: For 61 million dollars, it is extremely cheap to advertise to the whole world for a whole summer, in case you don't know, our annual defense budget is one trillion dollars, http://www.independent.org/newsroom/article.asp?id=1941

US should show some goodwill!

July 5, 2009 02:06 PM

I am a Canadian citizen. Vancouver World Expo 1986 brought us a lot of lasting goodwill benefits: a boom in tourism and countless trade opportunities. Canada was able to showcase Fuel Cell Technology, Software capabilities, oil and gas exploration equipments, and other green environmental technology to the world.

Since China invested in 25% of all outstanding US government bonds and corporate debt instruments, I think the Obama Adminstration should quickly fixed the problem.

frederik balfour

July 7, 2009 06:59 AM

More good coverage by Adam Minter on his Shanghaiscrap blog on the uncertainty hanging over fate of US pavilion in Shanghai Expohttp://shanghaiscrap.com/?p=3267

Jack Levi Architects

September 1, 2009 03:11 AM

Kaleidocity - the Israeli pavilion at Shanghai expo 2010 competition finalist, Jack Levi Architects, Eli Baradon exhibition designer.

http://www.youtube.com/watch?v=yGqRTHeJs4o

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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