The FM Market in China is just getting hotter, with international companies vying to claim their share, the real size and sophistication of the market is being called into question.These topics will be discussed in detail at the Greater China FM Conference to be held 13 April, Harbour Grand Hotel, Hong Kong. Visit www.greaterchinafm.com to reserve your seat.
A few weeks ago we at RFP posted the question online: just how big is the China FM Market? We asked the question in terms of square feel under management. Based on a poll of different service providers stated areas we extimated anywhere between 100 mil sqm to 10 times that amount. It brought up a raft of other questions - perennial FM questions. Questions that people have been asking since the term FM was first coined. On a basic level people are asking what FM is.
Deja vu. Roll back almost six years when Expo Real was trying its luck in the China Market. I was Chairing a panel of experts to discuss FM. The experts were all English speakers, and the session was simultaneously translated. We were warned by organisers that as a first time they didn’t know what to expect of the session.
It was well attended, and after 30 minutes of panel discussion that covered the basics of FM, its development in Asia and China and what could be expected in the future, the first question coming from the audience through the translator to us was: “So what is FM?”
Now with increasing local and international companies offering “FM” and with still more queuing round the block to get access to the market, has the situation changed? To assess this we need a definition of FM and how it differs, if at all from property management. For some companies the former is just a sophisticated version of the latter, it may involve more software. For others FM is seen as a strategic offering covering not just hard-services that make the building work on a technical level but also the soft-services that cater more to the human side of the machine.
At a more sophisticated level, some view FM as a strategic offering, an operational function that forms part of an overall business vision and shares the same goals in terms of revenue, branding and positioning as every other core-or non core department. This definition of FM lends itself more to commercial properties than residential and overlaps heavily with corporate real estate and asset management. This last definition is probably that by which many offering FM in greater China right now aspire to accross their portfolio.
It is not, however, how most people in the market define what they or their competitors offer. Even the top players are reduced to the pigeon holes of their companies’ origins. Some are “cleaning companies with a few additional services” while others are technical providers whose “FM” comes as a result of service contracts on hardware they have supplied, and then there are the real estate companies often maligned for offering FM as a means to retain clients between deals or as a more expensive version of property management.
Local vs international
Joshua Zheng Xin Wei, Vice General Manager at Beijing Austouch Investment Co., Ltd. says local companies that have even heard of FM tend to class it as “equipment management” and so “there may not be a competition to the international service providers from the local firms in China.” He puts forward only one local company - JFS - who he recognises as offering professional level FM services in China.
Zheng is not alone in seeing the problem as a question of market maturity, where customer demand and profitability proscribe companies ability to deliver the full suite of services. “Even when I talk with the international service providers, some messages are not very positive. Some of them only provide soft services and treat it as a method to tie them to the client for other business.” However he says the market offers plenty of opportunities for FM services, “if the true integrated FM can be provided.”
Who’s to blame companies wanting to stick with safe markets that provide revenue while the full service FM market comes of age? China is notoriously difficult to manage even for the big players. However it is a market whose size is hugely appealing so that whether companies are offering the services now or whether they are working up to it over the longer term no one wants to miss out. Though agreeing that the definition of what is “under management” is difficult to determine, Dr. Madhu Aman Sharma of Regus believes the market size is a very attractive “30 times” the 100 mil figure estimated above.
In some instances there is a difference between large international companies’ offerings compared to the locally grown competition. In terms of perception, says Michael Cole, Head of Research for Colliers in Shanghai, having an international property or facility management company managing a commercial building will be a “big plus” when it comes to securing the ideal tenants.
Talent war
What differentiates international companies and what they fight for are the people who are able to deliver the international level of service. Zheng says ”I don’t see technical problems as being unresolvable but the technical communications” provides a challenge. He continues that companies need the “right person to lead with the multiple skill sets” and this includes not only technical knowledge but English language ability and financial understanding. It could be said that skills are limiting the size of the market.
Bruno Lhopiteau who heads up maintenance firm Siveco in China agrees that the size of the market question comes down to how you define “under management” and specifically do you include properties maintained by a subsidiary of the owner or developer? He sees the FM market as highly fragmented and most players only view parts of it. For example international players mostly know and thus believe they are competing with each other. He says “Frankly I have met major players who have no clue about who they are competing with.”
He says that the 100 millions sqm may account for multinational FM companies business but that one of his local clients alone - the ChangCheng Property Group (CCPG) head quartered out of Shenzhen has over 30 millions sqm of property, mostly residential, under management. As such he puts the total figure “certainly closer” to one bil sqm.
Jay Brand of the Ideation group keynoted at an IFMA event in Beijing in 2006 attended by 200-odd people. He recognised the potential size of the market to be huge and the challenges in the growth market to be “absolutely amazing”. He too was struck by the immaturity not just of the market but of the people involved in the field, with many of the facilities and real estate managers present in their 20’s and 30’s - young by international standards and this was reflected in “several less-than-technical questions” from participants.
So what will happen when we bring together top international firms such as DTZ, JLL, CBRE, Savills, Colliers, C&W plus the FM businesses in ISS, Aramark, Aden and Johnson Controls at the Greater China FM Conference in Hong Kong on 13 April? What happens when we invite large local companies to have their say? We expect to see lively debate covering what FM is, who is doing it and that 44,000 question: How big is the market? Visit www.greaterchinafm.com for more information.
