(President Tao Ming of Evering Consulting conducted a series of trainings for China Real Estate Club in early 2019.The following is the content of one of the topics. )
Today, I'll share some of my observations and understandings about planning industry. Because we are all engaged in real estate-related business, I think, if you know what types of service providers there are in the industry, what characteristics they have, how to choose the right company to serve your company, this may be some help for everyone.
The main service providers in our industry can be divided into five types:
(1) Planning and design companies: they include those leading large planning and design institutes in China, such as the Chinese Academy of Planning and Design, Shanghai Tongji Planning and Design Institute and so on as well as some foreign companies such as Atkins, AECOM. These foreign companies generally do not have domestic engineering qualifications and can only engage in conceptual planning tasks.
(2) Management Consulting companies: these companies have long been involved in urban and regional development strategy consulting businesses. Typical players are McKinsey and Roland Berger, both of which are the world's leading management consulting firms. McKinsey's representative projects include strategic planning of Shanghai's Nanjing East Road Commercial Street, Kunshan Huaqiao Business District, and many others. Roland Berger (RB) has been involved in economic planning and industrial park development strategy consulting in many places. Shanghai Xu-jia-hui Commercial Circle upgrading strategy is a recent example of RB.
(3) Real estate agencies: such as Colliers, DTZ, E-House. These companies were originally active in the real estate transactions, and then stretching to the upstream of the industry chain to provide consulting services.
(4) Operation companies: In recent years, some industrial park operators gradually grew up. Dalian Yida Group is a typical. Yida in early years successfully invested and operated the Dalian Software Park and became the industry benchmark. They then developed light-asset operation business by providing advisory and operational services to local governments and business park developers. In the past two years, some former Yida executives have come out to start their own businesses, setting up dedicated industrial park asset management companies to provide a chain of services from strategic planning to asset management. Similar situations are increasing in the commercial real estate, and tourism real estate sectors, such as Yingshi Group, which provides one-stop service from consulting and planning to operation management.
(5) Other: In addition to the above four major service providers, many small companies are also unneglectable players the market. Most of them were former senior executives of the above four types of companies. Their business models and services being more flexible, they are a complement to the market.
Each of the above five types of service providers has its own distinct characteristics. Obviously, planning and design companies are good at spatial and engineering aspects, but not as good in economic and business aspects. However, a few large groups are the exceptions, such as Atkins, AECOM and other leading international companies. They have in-house multidisciplinary teams dedicated to providing customers with integrated solutions, but they are never involved in the project operation.
Management consulting firms have naturally advantages in developing planning services for cities and regions in the sense that they have a good grasp of the methodology and analytical tools of strategic consulting, and they are normally more rigorous and solid in economy study, market analysis and feasibility study. Moreover, these companies are familiar with a wide range of industries and are in good position to provide value-added services such as business procurement for local government clients or bringing in business partners to private sector clients. The consulting firm's short board is also obvious, that is, they are not familiar with spatial planning, and consequently their strategy proposals are often difficult to seamlessly interface with physical planning. Once I saw silly mistakes made by a team of world-renowned management consulting firm. The team worked on planning job of a business park, and in order to boost financial return the team decided to maximize the plot ratio, and as a result, even public green spaces are covered with commercial properties in their plan and financial model, which is certainly not acceptable.
The advantages of real estate agencies are ly in that they are able to integrate planning solutions with transactions, especially in the relatively small spatial scale projects whereas socio-economic issues are relatively not very complicated, such as large residential communities, commercial complex projects. These companies make a lot more money from transactions than consulting services.
Industrial park or business park operators tend to focus on a particular industry. They are very practical. Yida Group, for example, is well established in software park or science & technology park sector. In this field whereby they have proven track record, they have a relatively high degree of credibility in the face of their clients. They use performance and investment resources to speak. Sometimes it is not necessary for them to focus on marketing their consulting capabilities to their clients.
Those entrepreneurial small consulting companies also have their unique advantages. Normally the founders had worked in large companies and have accumulated sufficient project experience. They are competent for project tasks, and can provide more flexible services. The key is that the cost of services is much lower than those well-known large companies. These small companies increasingly rely on cooperative networks in market competition.
Above I introduced to you the service market engaged in strategic planning business. I believe that when you understand their respective strong and week points, you can better choose the right service providers for you or your company. The most important point is to choose the most suitable for your own project needs. Out of my experience, I find that many local governments and investors often have some misperceptions when choosing consultants. They often pay not enough attention to implementation side and feasibility issues, which in the end will result in a great waste of social resources. I sincerely hope that in the future, people can choose consulting and planning service providers more cautiously, paying more attention to the professionalism and rigor of the consulting service process, as well as the operability of the proposed strategies and action plans.
