In recent years, a new generation of young, dynamic and driven Chinese companies such as Tencent, Huawei, CICC and Lenovo have been in a constant race for market share both globally and in China. Now, as they look to further improve their on-going competitive advantage, more of these companies turn to their real estate portfolio, investing in facilities management (FM).
At the root of this is a change in perception of FM. In particular the more forward–thinking companies indicate they now look at FM as more of a strategic function from which they can gain a competitive edge against peers that are struggling with challenges such as accommodating headcount growth, attracting and retaining talent, boosting international credibility, and improving quality management and risk mitigation.
A maturing economy will drive the evolution of the IFM industry
It is evident that the implementation of Integrated Facilities Management (IFM), whether this is done in-house or outsourced, is picking up fast across China. In particular, Chinese multinationals are evolving rapidly, shifting toward IFM to improve operating efficiency, workplace utility, safety, employee comfort and overall experience.
However, at present, companies that implement IFM still account for just a small part of the market, with most Chinese (state-owned or formerly state-owned) enterprises deploying simple in-house and out-tasking models. As seen in mature markets globally, outsourcing practices are likely to drive evolution. However, in the short term, IFM consultancy is expected to be a more attractive concept for most Chinese companies as a reduction in staff numbers often remains very unattractive.
A developing industry, with some growing pains
There are also some considerable complications for companies seeking to operate their facilities according to international best practice standards. Mainly, the quality and consistency of services is affected by the shortage of qualified staff and high quality service providers, vendors and suppliers. For example, a major IT firm recently experienced issues at a chip manufacturing site. Specialists from Singapore had to be brought in to help run the maintenance of the clean room and wider facility equipment due to the lack of qualified vendors able to deliver locally. These and other hurdles will pose difficulties for Chinese companies and new market entrants alike
Nevertheless, the market conditions in China seem ripe for fostering the evolution of the IFM industry in China. There are many challenges and potential pitfalls ahead for those unfamiliar with the delivery of IFM services or the nuances of managing real estate in China. Those companies that take the time to understand both sides of the equation will be best placed to gain competitive advantage over their peers.
Read other findings in Jones Lang LaSalle’s report Integrated Facilities Management in the Middle Kingdom, which will be launched at the Shanghai IFM conference on 4 September.
About the author
Alex Colpaert is the Senior Research Manager for Jones Lang LaSalle’s Corporate Research team, based in Singapore.