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China eager for SZ property management style
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Song Yingwen
TO the people living within the compound of the PLA General Logistics Department in Beijing, there is something special in their living area this spring: no matter how messy the capital gets, no matter how powerful and choking the sandstorms become, their compound is always calm, clean and pleasant. No garbage bags or leaves whirl in the dusty wind, no worries about the availability of fresh fruit and vegetables in the dining hall, and no worries of power failures or water cut-offs that only make miserable weather so much more unbearable.
Things were not the same two years ago. "No one would have imagined someone sweeping up in bad weather. It's just beyond imagination," a resident who had been living in the compound for years explained.
But then the Vanke Property Management Company, a Shenzhen-based property management company, took over the management of the compound by outbidding dozens of competitors from around the country a year ago, and everything changed.
Residents say the changes were dramatic. Garbage, which used to be found scattered around in corners, was gone, as there are now cleaners patrolling the area. Together with the vanished garbage in public places were all the odds and ends that used to block the corridors. Walls were repainted and broken lamps were fixed. The dilapidated old buildings were spruced up in no time. Vanke won praise from the day it took over.
But what impressed the residents most was Vanke's thoughtful attention to detail. On snowy mornings, ice and snow is shoveled before people leave for work, rugs are laid at entrances to avoid slippery floors, and friendly signs appear to warn people to take care in bad weather. "No wonder these property management firms are so famous. Vanke really made a difference to our lives," another resident in the compound cheerfully remarked.
Though the compound residents marvelled, Shenzheners have become quite accustomed to this level of service, for over 95 per cent of all the properties in the city are taken care of by property management companies. But it was not until recent years that people living in other cities could enjoy the same high service standards.
With their rich experience and well-developed market-oriented operating style, Shenzhen's property management firms have won legions of fans across China, despite the fact that many cities already had property management companies.
"Shenzhen companies brought us gratifying changes in life as well as shocks in management concepts," Cao, a deputy director of the administration department of the No 1 Medical College of the Chinese People's Liberation Army in Beijing, another unit in which property management was taken over by a Shenzhen property management firm, once told a Shenzhen reporter.
Incomplete studies suggest that Shenzhen-based property management companies have expanded to all of the cities in the Chinese mainland except those in Tibet, and they are regarded by real estate agencies as an asset that can add value to their products. Property management has become a proud product of the young city.
History and background
Insiders attribute the success of the city's property management to two things: a spirit of initiative and innovation, plus the early establishment of a competitive system that responds to customer.
Shenzhen's property management industry dates back to 1980, when the first property management company, the Shenzhen Property Management Company, was established in the East Lake Beautiful Court, the first-ever commercial residential buildings targeting foreigners in Shenzhen.
By that time, Hong Kong had already established an efficient property management system. But to Shenzheners, property management was a new idea. In those days Shenzheners still relied on bicycles to get around; they had to ride long distances to pay their electricity bills. When there was a power failure or their water stopped running, they could do nothing but wait until the staff of the electricity and water bureaus showed up to fix the problem. Complaints were useless because in most cases no one would listen to them.
But in Hong Kong things were far more efficient and responsive, and eventually the city's tried and true methods migrated over to Shenzhen.
After Shenzhen's first attempt to create a management company in Shenzhen following the Hong Kong mode of managing properties was approved, owners in the East Lake Beautiful Court became the first people in China to receive paid service for security, sanitation and the maintenance of buildings and public facilities.
This practice is of great importance in the property management history of Shenzhen because it broke the firmly rooted method of managing properties, in which government took responsibility for providing services without charging management fees, a fact which resulted in poor service due to chronic shortages of fund. Under the old system, residents were constantly frustrated by the miserable service, even though the government was shelling out mountains of money each year to pay for it.
The free market approach proved a successful one, and eventually the practice was expanded to areas like office buildings and industrial areas. And today property management has become an essential part of people's daily life as its services have continued to expand into hospitals, banks, airports, parks and hotels, and its content extended to household services, corporate image design and the organizing of community cultural activities.
Characteristics
Shenzhen now boasts of over 1,100 registered property management companies. Among them there are nationally famous brand-enterprises like Vanke, Kingdi and Zhonghai. Though different enterprises have their own unique characteristics in service, all seem to agree that their success is due to the healthy property market.
If the introduction of the property management system in 1980 was the first turning point of the industry, the second one was reached in 1988 when all the residential property management divisions under the Shenzhen Housing Bureau, institutions that acted the role of property managers under the old system, were transformed into property management companies with the nature of enterprises. These changes threw the property management companies into the often severe competition of the market economy.
To win over market share, quality service was the only key. Ever since the reform in 1988, regulators have put the quality of services as the first priority. Following the establishment of the quality management system, operating qualification and charging rates of the management companies were linked to the quality of their services. And the system that required working certificates for all management employees helped build a professional managing team in Shenzhen over a surprisingly short period of time. To stand out from the competition, training classes were set up and cross-country business exchanges were organized in different companies. Over the past 20 years, more than 30,000 people have received professional training in property management and these people have made remarkable contributions to the development of the management industry across the country.
But the most distinctive feature of Shenzhen's property management industry has been the building of an open and transparent competition mechanism. It started with the opening bid for the property management contract of the Ludancun Housing Estate held by the Shenzhen Housing Bureau in 1996, and is now still the most common way of selecting property management companies in Shenzhen.
The importance of this openness has been tremendous. From it the tenders learned about the cruelty of market economics while at the same time property owners became aware of their rights.
"Before that owners were passive receivers of our service. But as the bidding system was introduced, our roles changed: owners now spell out their requirements and property management companies do all they can to meet these requirements. This is not a change in operating concept, but a result of the industry's need to meet market demands," Li Lixin, general manager of the Zhonghai Property Management Company, commented.
The real frontier of this industry has yet to be fully explored. For outside Shenzhen is the rest of China, with countless millions of people eager to dive into a lifestyle that Shenzheners now take for granted.
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