Real estate enterprises trends in China A

??Real estate is the subject of real estate enterprises, accounting for China?s real estate enterprises new definitions today, 80%. Real estate development industry is a competitive business, large amount of funds required, resource consumption, and involves very sensitive social housing. Analysis of development trend of China real estate enterprises, to promote the healthy development of the real estate industry and national economy as a whole, and maintaining social stability as a whole are of important significance.

??1, an overview of research

??1.1 history of China?s real estate development

??China?s real estate industry in the era of planned economy was once disappeared, being replaced by welfare units of housing supply system. Since in the 1980 of the 20th century resurgence of the real estate industry, since the beginning of 90 ?s entering the period of rapid development, housing distribution and supply system has undergone fundamental changes, national investment in real estate development has been rapid development. According to statistics, since 1992, China real estate development investment of over $ 5 trillion, with an average annual increase by more than 20%; urban per capita living space from before 1992 8 square metres, up to now 20 square meters.

??Before the 80 ?s, no one openly as commercial real estate, nor will it as a commodity for sale. It naturally will not form. Since the third plenary session of the party, in the economic system reform, led by real estate industry, this huge commodities start starting value of 100 million and began circulation. 80 China

??Is the initial formation of the real estate industry and stage of development, is the first upsurge in real estate, housing the largest merchandise property has been explicitly. The 90 ?s, the party and Government for the development of real estate on the theory and practice developed a policy basis. In April 1991, the CPC Central Committee on formulating the ten-year plan for national economic and social development and ?85? called for in the plan of construction: ?housing construction in cities and towns to maintain a reasonable size and growth rate, the appropriate speed up the process of comprehensive development and commercialization of residential real estate?. Further deepening of economic reforms, effectively promoted the rapid development of the real estate industry. Chinese real estate industry has emerged in the commodity economy of the second peak. The important sign is that, throughout the real estate industry in the economic development of the position, function and meaning of prominently to the fore. History has entered a new century, with the acceleration of the development of West, and after China?s WTO accession investment environment and legal convergence with international practice, foreign companies and enterprises will be an even greater scale into the country, especially foreign institutions to enter, you will help improve the financing environment of real estate development, stimulate the development of the real estate industry. This means that the real estate industry development of the third climax has come.

??Situation is gratifying, but there are many problems, difficulties is very large. Real estate development has the characteristics of capital-intensive and long production period, which are trying to decide the nature of its scale of operation. However, most of China?s real estate enterprises is fragmented, decentralized management, the overall strength of weak, slow, poor competitiveness. And the situation in the enterprise is not balanced, the whole is strong in Southeast, weaker in the West. These are highly adapted to the current rapid development of economy and people?s growing material needs and requirements.

??Real estate industry in China has now formed a suitable for operating mechanism of the Socialist market economy, the industry takes on a thriving scene. To date, national real estate company has reached more than 30,000 enterprises, real estate industry in China has exceeded 10 million people, and the emergence of a large number of excellent buildings and high-quality real estate development, management and administration of personnel. In addition to real estate development industry, ten years, gradually formed the appraisal, brokerage, consulting for the content of real estate businesses, as well as to building operation and management, community-oriented property management to form a relatively complete system of China real estate industry framework. Real estate in the country to flourish, there have been many successful real estate business model, they have a successful real estate development, also had a successful intermediary broker and successful property management.

??1.2 significance of study on development trend of real estate

??Real estate industry as China?s new economic growth points and pillar industries of the national economy will face unprecedented opportunities and challenges in the new century.

??On one hand, individual consumers have become the main consumers of Chinese real estate market, real estate market supply and demand, consumer demand and changing, due to increased competition between the domestic real estate enterprises,

??So that the industry from ?sudden huge Profil age? quickly into ?meager profit time?, the profit level to value, market trend specification; on the other hand, after China joins the WTO, foreign money and developers into the real estate industry in China cost dropped considerably, will lead to overseas developers entering China real estate market, forming China real estate market competition pattern of globalization. Overseas developers operate experienced, high specialization level, management level is advanced, financial strength, with strong market competitiveness.

??As China?s accession to the WTO, foreign real estate enterprises will be substantial inroads into the domestic market, domestic real estate enterprises will bring unprecedented pressure of competition. Because of foreign companies in such areas as capital, technology and management has significant advantages, is bound to make the development of commercial housing of better quality, better quality, lower construction costs, real estate market competition pattern will be a significant change. In order to gain an edge in the fierce market competition, real estate companies have to have market risk awareness, strengthen enterprise management, and gradually form enterprise?s core competitiveness, high technology, high quality, high efficiency, low consumption, low cost, and branded real estate development, and constantly open up the market, to market, to maintain the enterprise?s survival and development.

??Therefore, the discussion on a road of sound development of China?s real estate enterprises in order to meet the global economy brought about by the high level of competition, has become the important issues facing the real estate industry.

??2, the status and problems of real estate enterprises

??2.1 status and prospect of China?s real estate market

??After more than 10 years of development, marketization of Chinese real estate market had spent the early stages, largely completed the process of marketization. Market in the supply of products and enterprises now ?type of market and consumers? products and scientific and technological progress, and so exhibit different characteristics. Specifically, for the following three characteristics:

??From products supply and Enterprise angle speaking, existing of real estate market rendering out following five a features: (a is real estate products price differences expanded, various grade of price mutual Zhijian of reference sexual reduce, low price more low, high prices more high, overall average price Chemokine drop; (II is real estate industry marginal profit level reduced, both market competition factors, also has funds cost factors, but due to its sales scale larger, thus on investment still with strong attractive (three is funds ?technology? brand ?land, industry threshold greatly improve, Urgent demand professional of professional team, especially land resources of limit, makes entered cost large increased (four is real estate project of sales speed slowed down, although market total quickly expanded, but government control Chemokine strong, and consumption impulse Chemokine reduction, sales cycle plus long (five is increasingly fierce of market competition caused marketing cost rose, customer service cost also is rose trend, marketing cost makes project profit more Chemokine reduced.

??From marketing types and consumer perspective, the property market is by living consumption-type to investment and consumption. With the real estate market supply is increasingly rich and consumer matures, demand patterns and consumer buying in the property market is undergoing profound changes, consumer demand is shifting from necessities to pursuit of enjoyment of the real estate consumer goods, housing functionality from the original value of ?value added real estate function to consumption, enjoying the extension. Due to increasingly rich product supply, consumers don?t need to worry about price fluctuations and difficult to grasp the timing of the purchase, and according to their own likes and needs to decide. But consumers in favourable market is not an absolute winner, also is to take up buyers into the market shall bear the risk and investment risks. Consumer to investment and consumption in the process of transition from survival, consumer demand for improved living and consumer real estate, consumer demand is still pulling the core power of market development, but that doesn?t mean now, not hot, real estate, for improving the living conditions of people is an ongoing, long-term process, not achieved in the short term. If the money was for the pursuit of profit and blindly into the market, people are excessive overdraft for the improvement of the living consumption, real estate investment growth and consumption faster than can fit into the real estate market of reasonable limits and can sustain a reasonable rate, will produce the real estate market) bubble.

??From product and technological advancement perspective, as technology advances, the market has basically realized the product as the theme of industrialization. In this process, as a market development trend of product homogeneity. General increase in the level of product quality and the purchased products similar, similar to the most basic living conditions, faster to housing for the replacement. Real estate construction ?construction materials industry,? technology application in the design industry, has introduced new products more attractive to consumers, show some of the electronics industry. Due to increasing competition, real estate innovation is no longer a simple application of new technologies, but to maximize the full potential of land resources, through integrated and optimized market meet consumer demand. In the product as the subject in the real estate market, real estate professional standards greatly improved, industry-wide notable progress and more rational, developers already familiar with real estate law and technology, imitation and copying have helped development of the industry, but does not guarantee project success. Real estate from the cut-throat competition in the market as a whole towards resources, industry parties to find common interests of the different advantages. Specialized consulting agency market continues to expand.

??2.2 development situation of China?s real estate enterprises

??Number of real estate enterprises, small-scale. In the mid 1990 of the 20th century late now while my real estate industry no longer as before as confusion, has begun many property companies and some strength but ?smaller, scattered, difference? feature hasn?t changed. As of 2003, China real estate enterprises with class I only 349.

??Real estate enterprise development ability, poor economies of scale. Real estate is a very typical capital-intensive enterprises, and has a high investment, high return, strong economies of scale characteristics. Most real estate enterprise in our country is small and scattered resources, low overall enterprise development ability, rather than a resource-intensive industry characteristic that does not fit. For example, the current real estate enterprise in Shanghai has more than 2000 enterprises, average registered capital of less than $ 20 million and paid-up capital of less than $ 60 million. Shanghai real estate company developed plentiful project is small and in 2003 the city of 82.6751 million square meters of construction area, the average enterprise development area of only 33,000 square meters, sales top real estate companies for a total of only about 4 per cent of market share.

??Real estate asset-liability ratio is high, business risks. For historical reasons, China?s real estate enterprises and generally there is their own problem of insufficient funding, businesses need capital mainly rely on bank loans to solve. At present, the net assets of the nation?s largest real estate enterprises scale but also billions of Yuan, compared with overseas real estate companies, billions of dollars at every turn, is a far cry from. Debt to asset ratio in China real estate enterprises in more than 70 percent, some as high as 90 percent. This excessive liabilities will certainly affect the enterprise?s credit, increasing the financial costs of its operation in real estate development projects, making it a loss in earnings decline or phenomena, or even cause a negative effect of chain reaction.

??Real estate companies poor credit, not the creation of the brand. Because margins are generally real estate enterprises over other industry profit margins of society while property development industry have lower entry barriers, from last century 90 began, a social surplus cash influx real estate development industry. The developers serious short-term behavior, neither long-term development planning, also don?t own credit and branding, space shrinking, price-gouging, poor quality, delayed the housing issues such as occurred frequently. This not only violates the lawful rights and interests of consumers, and direct impact on real estate enterprises for their own development.

??As the basic unit of the modern economy and the basic enterprises of the means of resource allocation, you must have a range of conditions, such as: the definition of property right of enterprises to clearly, businesses must have sufficient autonomy, enterprises should take individual or legal person property is solely responsible for the corporate debt or limited. These conditions which we often say basic modern enterprise system requirements. Judging from these conditions and requirements, China real estate enterprises still have a lot of problems, not necessarily a good overall, meets these requirements. However, the future development trend of China real estate enterprises to a large extent determine the future trend of Chinese real estate market and the real estate industry and development, both developers and Government Administration are required to have a certain grasp of the issues and the future development trend.

??Development project of real estate enterprise management refers to the real estate enterprises in China from selection, to after-sales service until the end of the project the development of the whole process of management. As with other enterprises, real estate business is still in an able management, institutional management experience. High qualities, capable entrepreneurs are real estate enterprise key to success it. Entrepreneur?s quality and ability to a large extent determine the success or failure of enterprise groups. Its advantage lies in: hotshots with charisma, experience, intelligence and a good trust, dedicated, through their tireless work, struggling to promote continued development of the enterprise. However, hotshots is also has limited of, first, hotshots of number limited, assumptions has 1 million home enterprise, and only 100,000 name hotshots, means with has 90% of enterprise found does not to hotshots; second, hotshots also has classification, also min professional, difficult to and various different categories of enterprise counterpart; again, hotshots also has itself limitations, as personal of randomness and modeled management of scientific Zhijian exists with deep contradictions, then of hotshots, actual will became enterprise development of resistance. Advanced management mode is the basic guarantee for long-term peace and stability, developing the enterprise. With good management, the General level of professional manager also enables enterprise functioning; there is no good management models, or genius will not place; with good management, able to leave, enterprises will be affected by vibration, but not seriously injured.

??Real estate enterprise real estate enterprises subject official figures at present is nearly 30,000, real estate enterprises 80%. Deepening of urban housing system reform in China, personal purchases replaced group buying as the market mainstream, and China?s accession to the WTO, the pace of opening up to internal and external factors, such as, to the future development of the China real estate enterprises will bring about unprecedented opportunities and challenges. Macro-overall, the current situation is not optimistic of China real estate enterprises, many of which are to be solved in concentrated form in three aspects of ownership, size, efficiency.

??2.3 problems faced in the development of real estate enterprises in China
??2.3 problems faced in the development of real estate enterprises in China

??2.3.1 on the nature of enterprise ownership

??Although domestic scholars for research in full swing and the deepening of State-owned enterprises, but few people on the system of State-owned real estate enterprise issues in-depth studies. In fact, industry problems and disadvantages real estate in the State-owned enterprises in State-owned enterprises have, such as the soft budget constraint. Agent?s internal control, incentive mechanism is reasonable, and generally there is talent to waste and inefficiency of enterprises. And, due to real estate industry itself of features and it in national economy in the increasingly important of status and on macroeconomic of growth and fluctuations caused of effect more large, as in economic growth in the real estate industry of major contribution and on macroeconomic of pull role, and in successive large of economic fluctuations in the real estate industry by up of flames of role even is decisive of damage role, are is for increasingly more of economists by attention.

??Real estate State-owned enterprises out of real estate industry than industrial State-owned enterprises at a rate of maybe even more. Late 80 early 90 ?s of the last century is the early stage of development of real estate enterprise in China, accounted for the vast majority of State-owned real estate companies; with the deepening of reform and market development, proportion of State-owned real estate companies are shrinking, 50% was not dropped from the mid 90; late 90 early real estate had fallen to 20% proportion of State-owned enterprises. However, even only account for 20%, because of their possession of land, people and society a tremendous amount of scarce resources such as capital, the State-owned real estate enterprise market impact remained the dominant actor. In addition, if plus most of collective enterprise, and part does not specification of joint-stock Enterprise?these enterprise in nature Shang actually and real estate State-owned enterprise similar, is property rights does not clear, Enterprise and Government of boundary fuzzy, in addition, its number in statistics information in the cannot clear display?so due to ownership problem to China real estate enterprise development brings of adverse effect to on China real estate industry of development of restricting effect on more significantly has.

??2.3.2 scale issues in enterprise development

??China real estate enterprises ?scattered, small, poor? feature is for everyone to see. According to statistics, national real estate company with an average net worth of less than $ 10 million, with a little more than a class I 1%, secondary qualification less than 10%, mostly small enterprises, or the project company. Large real estate enterprise group is missing, even larger development companies are also less capital, market share is small, such as Shanghai?s largest real estate development company?Lujiazui Finance trade zone development company limited, only less than US $ 1.5 billion market cap. According to statistics, national real estate development enterprises every year only 16,000 square meters, even the largest real estate companies of the market share of less than 0.5%.

??However, in theory, real estate funds needed a large amount of high investment, high return and high risk characteristics, as well as the real estate business is capital-intensive. Management technology-intensive, talent-intensive enterprises, and other characteristics, determined the barrier to entry of real estate development industry should be higher. From the perspective of international experience, General real estate enterprise or enterprise group is the protagonist of the stage the market, accounting for the greatest share of the market, such as the ?big five? developers, business assets are worth more than billions of dollars, accounting for half of Hong Kong property market. Compared with international experience, barrier to entry too low mainland real estate, real estate companies, such as the small scale of issue needs to be improved.

??2.3.3 real estate enterprise?s benefit

??Data from the China Statistical Yearbook, and ?operating income?, ?commodity House sales? compared to indicators such as steady growth, real estate development industry ?operating profit? and ?average profit rate? indicators such as volatile is not optimistic. We simple to with ?business profit? divided by ?operating total revenue? get real estate ?industry average margins?, can obvious to see, 1992, and 1993, and 1994 is China real estate industry development of peak, performance in industry margins Shang is 12% around; and from 1994 began real estate enterprise operating profit and industry average margins are quickly fell, 1996 industry average profit rate only for 0.91%, 1997, and 1998, and 19,993 years more is appears ?full industry losses ?, In 1999 China?s real estate industry average profit rate is-1.16%; until 2000? turnarounds ?is 1.62%.

??In addition, the early development of the enterprises for solving multiple economic sectors coexisting conditions, non-public officers to buy housing an essential complementary role. And that real estate developers are facing at this time from welfare housing distribution of such a powerful competitor, its profit levels confined to a certain extent, also did not cause much harm to society. Cancel the welfare housing distribution from the second half of 1998, the implementation of new housing, combined with the housing consumption loan policy relaxation, real estate development and management industry has entered a period of rapid growth. Can be said that the development enterprise in eliminating competitors face the huge demand for housing market (including market driven directly by a developer removal), and will be free to priced and not bound by any conditions, ushered in the development industry has been the best of the ?golden age?, developer of many into the forefront of China?s rich list. At present, how easily obtained from a profit perspective, already reserves a large block of real estate developers, was using the Central macroeconomic regulation and control policy, local government land auctions or ?triggered?, developers and Government of the special relationship, Chinese and foreign qingchaochudong of real attack, consumer and other factors have contributed to its ?fare?, gets under the prices out of the super profits. So the industry?s ?estate golden age had come to? point of view for developers is right, but to the General House of the consumer is definitely not a good news. Because a hardly doing any substance of labor, value added services industry, or at best do the creative planning of real estate and housing sales industry, but was far better than the real estate finance, construction, real estate services sector as a whole, the whole industrial chain add up to much justified, into society as a whole had to pay a heavy cost.

??According to our research, in developed market economy countries such as Britain and the United States, does not exist in the real estate industry in China that are basically not doing physical labor and value added services of real estate development enterprises. Real estate industry is made up of two types of enterprise, one is the production and construction of real estate enterprises, which is building in the international sense production enterprises. Such enterprises as a second industry as in industrial enterprises in China have excellent raw material purchase of real estate, construction and sales functions, is the real producers and real estate developer. Another type of real estate services, by the real estate mortgage bank, the housing trust and investment companies, real estate, houses renting, housing investment fund brokerage creative planning, housing development, real estate valuation, property agents, property management, IT service industries constitute a system of real estate services. These real estate services sector depending on the service object and can be divided into services real estate services for consumers and real estate services to serve the House producer categories. In the US and UK in developed countries, real estate companies are building enterprise, the construction industry because of its fast-rising production rates, characteristics such as high income elasticity, strong industry relevance, becoming one of the most important pillar of the national economy. This is Comrade DENG Xiaoping in the late 70 to Europe and see when accessing phenomenon, he later raised a pillar industry in the construction industry as China?s national economy and promote the commercialization of residential concept.

??Visible, China real estate enterprises at present stage is not a reasonable business model, some departments or place to position the tertiary industry sector as the pillar industries of national economy more dependent errors. Because, what this leather bag company there is no rise in productivity, income elasticity and industry-related, technical and economic characteristics, nor does it have any real sense of innovation. But in reality we see, it makes no material body of the Department of labor, in turn, the supply of housing, while the real building construction enterprises in the development of the company?s value chain but became a passive, an inconspicuous chain. This is like in the area of durable goods, cars, if we were ever made ?automotive developers? of such a business model, as long as the car developers try to thaw to a sum of money, you can delegate the external way car design, car manufacturers, become the sole provider of consumers get car, auto manufacturers lost opportunities to directly face the automotive consumer. Real estate is a value greater than car, more difficult to judge the quality of consumer durables, if a broker is ultimately responsible for the housing rights of consumers, but the real house producer in whole to the middlemen, consumers and developers on the system lacks a reasonable tension between countermeasures. Housing presale controversy as an example, as a form of trade credit, advance sales for the industry of funds circulation plays an important role in promoting. However, the housing presale this link should give real estate developers, rather than the real producers of housing? In our country, the real estate developers for housing construction ?Developer? and ?General contractors?, belonging to the House producers upstream, consumers have little reason to advance to the upper reaches of the in house producer ?Developer?? And from a real sense, the consumer is the real ?landlord? and the person who commissioned the manufacture of housing, developers just proxy consumers, developed by the service provider, what right has to go beyond the producer obtained directly for the construction of housing presale of housing, and take the profit? Consumers to advance to the developers, developers after the land transfer payment in the payment of the delayed delivery, the rest of the money only need to come up with a very small part paid to construction enterprise, the remaining part became their justified and less developer paid to engineering cost in construction enterprises, are available on the more justified. So rational solution is to remove the pre to the advance sale system of real estate developers, establish development sales housing presale system builders, and institutional and legal responsibility of the producers of commercial housing quality guarantee housing construction.

Source: http://chinawestproducts.com/09/05/real-estate-enterprises-trends-in-china-a/

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