Clarion’s China Assets: A Burden To Blackstone’s Sale?

Blackstone has reportedly been weighing a sale of Clarion for months now.

Speculation on the street now is that its China assets are holding it back. Clarion declined to comment but it seems fairly clear that anyone doing business in and with China during the second administration of U.S. President Donald Trump may want to rethink that strategy.

Or are investors savvier than that?

Blackstone acquired Clarion and Global Sources, which connects buyers and sellers between China and the rest of the world, separately in 2017 before merging them the following year. Business in China was disrupted by Covid-19 starting in 2020 and related prolonged restrictions in the country that made travel difficult.

More recently, Trump has entered into a tit for tat trade war with the country. The first boats carrying Chinese goods with 145% tariffs started arriving in early May with shipments cut in half, CNN reported.

Clarion’s sales process was meant to have kicked off earlier this year, but sources in the industry say concerns over tariffs and the impact on Clarion’s Chinese business. It probably hasn’t helped that the Global Sources’ biggest event just wrapped on May 5th, so prospective buyers would have likely wanted to see how it performed first. The results of that event may push Blackstone to return to the sales process, or perhaps even consider a spin-off of Global Sources to get Clarion sold.

One person familiar with the company said Global Sources is the biggest event, something like 25% of revenue and—because it’s all about sourcing goods—is very tariff related. Two people familiar with the company said that Clarion would argue that only 10% of attendees are from the U.S. and most of the focus is on Asian businesses trading in Asia, therefore exposure to tariffs is very limited. That doesn’t, however, consider where the actual buying power comes from and potential secondary sales.

They may also be waiting to see the full impact of tariffs before starting the M&A process—Trump’s top trade officials are set to meet with their Chinese counterparts this week to discuss a “de-escalation of their increasingly ugly and damaging trade war,” CNN reported, though Trump said yesterday that there’s no chance he’ll lower tariffs.

All that said, there’s agreement that even with tariff challenges, China is seen as a valuable market, with businesses likely taking a “wait and see” approach rather than taking any brash action, the people said.

We spoke with Douglas Emslie—seller of Tarsus to Informa, investor in Easyfairs and Jacobs Media—about the Clarion sales process:

Clarion is a very good asset. It’s the third biggest organizer in the world. It’s got diversity of exposure: it’s got a big U.S. business, big European business, big Asian business. People will look at it holistically. They’ll look through the risks, and given the size of the assets, there’s not that many natural buyers for that business. I wouldn’t be shocked if something happens this year with Clarion. Investors are sophisticated. They look through it. It might take longer but I think that will happen.

He did note that the only thing that U.S. Republicans and the Democrats agree on is the shift away from China.

“That’s impacted the trade shows in China. The mainstream shows, on average in China, in the four big trade show cities are probably down, on average, something like 10%. In the second tier cities, it’s down like 40% to 60% so there’s been a massive reduction of capacity in China, and that’s something that’s not really talked about,” Emslie said.

He did point out that with such disruptions come opportunities, like moving events to Europe, but also the likely bankruptcy of a lot of Chinese manufacturing companies.

Some markets will be okay, and some are more disrupted. Take the Canton Fair—it’s the biggest sourcing show in the world. The Canton Fair over the past five years has been declining. Why is that? People are sourcing less from China. And if you are a Chinese manufacturer, and you currently distribute 30% of your volumes to America, the factories are now sitting on all of that stock because the U.S. have basically said, ‘Hold, we’re not taking that.’

This is not a quick fix. This is: the bullet has gone in, and the body’s still standing and walking, and no one’s fallen down yet. There’ll be casualties, but there’ll be winners out of this as well.