Background

Academic papers
The Peoples Republic of China (PRC) is
Challenge and geographically the world’s third largest coun-
opportunity: facility try and the largest by population. China’s
population in 1995 was 1,211 million. By the
management in year 2000 the population is forecast to be
1,269 million increasing to 1,371 million by
Shanghai the year 2010. China is currently changing
from a command economy to a market-based
John D. Gilleard and one and from a rural, agricultural society to
Pan Yiqun an industrial, urban one. Since 1978 econom-
ic reforms have advanced China’s integration
with the world economy. China is currently
the fastest growing economy in the world.
Official statistics indicate that per capita GDP
grew 8 per cent a year (in real terms) between
1978-1995. The 1998 GDP forecast is also 8
The authors
per cent, although the current Asian econom-
John D. Gilleard is at the The Hong Kong Polytechnic
ic crisis may impact the final figure.
University, Hong Kong Special Administrative Region, The
China’s economic growth has been driven
People’s Republic of China.
by four factors (World Bank, 1997):
Pan Yiqun is at the Tongji University, Shanghai, The
(1) A high savings rate, which has supported
People’s Republic of China.
vigorous rates of investment and capital
accumulation.
Keywords
(2) Structural change, which has been both a
Facilities management, Property management
cause and an effect for growth, e.g. the
shift in agriculture’s share of GDP from
Abstract
71 per cent in 1978 to about 50 per cent
China is currently the fastest growing economy in the
in 1995.
world. This paper discusses the current state of property
(3) Pragmatic and incremental reforms
management in Shanghai and reviews the challenges and
resulting in a move from a planned econo-
opportunities for facility management in this city. In
my in 1978 to post-1993 a “socialist
particular, it focuses on the embryonic role of FM resulting
market economy with Chinese character-
from the changes that are taking place in attitudes, both at
istics”.
the corporate and government level. It considers issues
(4) Economic conditions, e.g. the “advan-
arising from personal observation of, and visits to, compa-
tages of backwardness” whereby poor
nies in Shanghai, and discussions with professionals in the
countries grow more quickly than rich
property management sector in China. It describes typical
ones.
property management provision in Shanghai and the
growth in the importance of training for property manage- Shanghai, China’s largest city, has been desig-
ment as part of the growing recognition of the significance nated the future financial centre for the Peo-
of facility management in China. However, it concludes ple’s Republic of China (PRC). Foreign
that until the property management industry fully matures investors typically see Shanghai as a base for
it is unlikely that facility management will be widely expansion into one of China’s fastest-growing
practised for some time. regions, the Yangsze Delta. Shanghai’s econo-
my has grown by an average 12.9 per cent per
annum over the period 1991-97. Known
colloquially as “dragon head”, the city is
characterised in the famous waterfront street
the Bund. Here former government offices are
undergoing renovation as corporate head-
quarters for foreign and local companies
(Plate 1). Nearby, in the Puxi district, hotels,
offices, apartments and shopping centres
Facilities
Volume 17 · Number 3/4 · March/April 1999 · pp. 105–111 tower over former Buddhist temples and low
© MCB University Press · ISSN 0263-2772 rise residential quarters. To the east, across
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Plate 1 The former Hong Kong and Shanghai Bank now home to the Pudong Development Bank on the Bund

the Huangpo River, lies Pudong, a commer- could impact the expansion of FM under-
cial and banking sector which has in recent standing and services in China.
years attracted almost US$20 billion of for-
eign investment (Plate 2). However, “Shang-
Data collection
hai’s emerging property market is already
some way into its first major cyclical down- Most details presented in this paper are the
turn due to the large oversupply of property result of personal observation of, and visits to,
expected to 2000. The (Shanghai’s) Mayor companies in Shanghai. Additional insight
recently announced a moratorium on further has also been gained by one-to-one discus-
land sales and construction approvals to sions with property developers and academics
restrict the excess supply” (Jones Lang Woot- interested in the discipline, and by working
ton, 1998). It is these circumstances that form closely within the discipline in the Hong Kong
the background to the emergence of facility Special Administrative Region (HKSAR) and
management in Shanghai. China. One of the authors has established
Asia’s first MSc programme in FM and
Gilleard (1994; 1998a; 1998b) has first hand
Objectives
knowledge of FM in Hong Kong. Here the
This paper therefore seeks to explore the discipline has grown significantly in the last
current state of property management in few years – certainly considerable more than
Shanghai, as this city is at the forefront of in China proper. The other author, Pan
property development changes in mainland Yiqun has researched property development
China. (Beijing being the capital of govern- in Shanghai. Both have been in unique posi-
ment and much further removed from free tions to observe the current growth and tenta-
enterprise tendencies, despite the loosening of tive emergence of facility management as a
communist ideology, is in a more controlled professional discipline within the region.
and less turbulent position.) Nevertheless the role of FM in China still
In particular, analysis focuses on the lags behind Europe and the USA both in
embryonic role of facility management (FM) impact and import. In Shanghai, FM is a
resulting from the changes that are taking relatively new idea but awareness is emerging.
place in attitudes, both at the corporate and In June 1998, a meeting was held between
government level. The purpose of the review academics and practitioners within the disci-
is to highlight potential implications that pline from Hong Kong, Europe and Shanghai.
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Plate 2 Pudong, east of the Huangpo River

The pertinence of the questions and com- characteristics, i.e. “late starting, fast devel-
ments from mainland professionals and acad- opment and high quality” (Yue, 1997). How-
emics indicated a heightening appreciation to ever, vacancy rates for prime Grade “A” office
the issues of FM; their contributions have space are currently 40 per cent in the Puxi
been synthesised within this paper. district and 70 per cent in the Pudong district.
Shanghai’s property management compa-
nies typically provide security and janitorial
Property management in Shanghai
services as well as simple operations and
Pre-1949 there was less than 30 high-rise maintenance. Their work has traditionally
buildings in Shanghai. (High-rise > ten been blue-collar intensive with limited train-
storeys.) By the beginning of 1999 it is esti- ing available for operatives. In addition, most
mated that > 2,000 properties in Shanghai companies manage a limited range and num-
will be classified as high-rise. These buildings ber of properties related to their core employ-
are managed by Shanghai’s embryonic prop- er. Hence, with the drive towards more com-
erty management sector. During the 1990s plex and sophisticated built assets an align-
approximately 2,000 property companies ment within the property management sector
registered in Shanghai. Many of these compa- has come about. For example, among Shang-
nies (approximately 600) are owned by “local hai’s property management companies
governments” with the other 1,400 divided approximately 300 are members of the Shang-
between limited (approximately 650), public hai Property Management Association
(non-listed) (approximately 320), or listed (SPMA). The SPMA was founded in 1994 to
public companies (85), and the remainder organise training and technical workshops for
between Shanghai, Hong Kong or foreign co- its members. Many of these 300 companies
operatives, as shown in Table I (Pan, 1998). have either been established by joint venture
Many of these property management (local government and overseas partners) or
companies share common development directly from key sectors in the industry.

Table I Shanghai property management companies

Nature of Collective Joint

company State owned ownership Private Listed Limited venture Overseas
Total 634 330 11 91 911 147 37
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Examples of the latter are the Jinjiang, Huat- Intervention and training
ing, Xinya, and Hengsham and Donghu
The Chinese Government recognises that the
companies with their hotel industry back-
management of complex and modern proper-
ground. It is from these companies that
ties requires specialist skills. They also under-
Shanghai’s fledgling outsourcing providers are
stand that a unified approach to property
beginning to emerge.
management is essential. Hence, from 1
To date the majority of property manage-
January 1999, the Ministry of Construction
ment functions are dependent on an adminis-
trative unit such as a housing management has mandated that the position of “property
office or a capital construction department for manager” should be formally established. It
their work. But joint venture property man- has been recognised that training for property
agement companies are also active in Shang- management personnel is a new development
hai, such as in the JinMao Building (Plate 3), in China, “requiring great difficulty and heavy
a joint venture between the China Shanghai responsibility on behalf of a province, self-
Foreign Trade Center Co. Ltd and Hong administrative zones and government depart-
Kong’s First Pacific Davies Group (FPD). In ments” (Ministry of Construction, 1996). In
this case FPD provides technical backup for order to achieve this, rules and regulations
security, engineering, landscaping and clean- concerning the necessary skills of a property
ing. Another company, the Shanghai Yinghai manager have been set. (Prior to this date the
Sanxing Property Management company – a term “property manager” could be used by
joint Sino-Japanese venture – has adopted the anyone irrespective of his or her skill base.)
operating standards and procedures estab- Thereafter all property managers will need to
lished by the Japanese Building Maintenance be formally trained and in possession of a
Association. In this way Japanese “know- “certificate of competency” for the post.
how” and expertise are linked to local experi- Training for the certificate is based on a com-
ence to provide property management bination of in-house training and attendance
services to a range of office buildings, banks at educational establishments. In addition, the
and commercial centres. Ministry also aims to establish a unified fee
structure for property management in order
to foster the growth and development of
Plate 3 The JinMao Building, scheduled for completion in property owners’ committees for public resi-
1999 dential buildings, as well as to establish prop-
erty maintenance standards.
The Ministry of Construction has identi-
fied the core knowledge required by property
management personnel as:
• A basic knowledge of building structures,
building facilities, and gardening
(grounds).
• An understanding of real estate develop-
ment, operation and management.
• A knowledge of company, contract, taxa-
tion and civil law.
• A knowledge of computer applications in
property management.
• Familiarisation with life safety manage-
ment.
• An awareness of national and local proper-
ty management policy in terms of practice
and implementation.
• A working knowledge of organisational
theory, operation and management.
In order to acquire these skills it is anticipated
that as well as attending in-post training each
property manager would need to receive
formal training by attending seven essential
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training courses. Three of these would be also exacerbated by Eastern cultural tradi-
assessed by formal examinations, Table II. tions of paying more attention to tangible
The aim of this formal training is to ensure assets – property and equipment, rather than
a basic competency in property management people (Gilleard, 1998b).
skills among professionals charged with main- Chinese property managers have historical-
taining and operating modern buildings. It is ly taken on the role of “housekeeper”, respon-
anticipated that not only will the property sible only to the owner. Consequently, suc-
manager be in a better position to deal with cessful property management simply relates
routine management issues after training, but to the timely collection of rents and an ability
also possess a wider ability for decision mak- to minimise tenant complaints. The idea of
ing in areas such as public relations, negotia- managing the property for the benefit of
tion and other more complex business con- tenants has been missing. In general, building
cerns. owners appear unwilling to invest in new
services and equipment that only benefit the
tenant. For example, office tenants typically
Facility management
share the cost of energy consumption on a pro
In China the term facility management when rata space occupancy basis. Therefore, own-
translated typically includes the characters for ers only indirectly benefit from introducing
property management. As yet the distinction energy efficiency into their development
between the disciplines is not totally appreci- projects. When interviewed one property
ated, although changes are beginning to take manager equated energy efficiency with “not
place. Whereas property management ser- using energy” and as a result turned off eleva-
vices are usually restricted to the common tors during on-peak electricity periods. In
areas of a building such as the building’s another instance a property manager set the
fabric and envelope, grounds and gardens, lift summer temperature at 27°C before the AC
lobbies and vestibules, as well as common kicked-in. In other words owners and their
services such as cleaning and security, FM is property managers still believe there is little to
also concerned with the management of the be gained from applying IT in the manage-
tenant space. FM may be said to radiate both ment of their properties.
inwards and outwards from the workplace of Hence integrated building management
the building occupants. Hence a focus on systems (IBMS) are rarely used or, if adopt-
property management reduces the scope to ed, rarely applied in a rigorous manner.
primarily the built asset whereas FM is more Short lease terms – typically two to three
user-oriented. However, in Asia the terms years – exacerbate this situation, as does
property management and facility manage- restricting landlord repairs to common
ment are still being debated. “Certainly there areas, with all other repairs normally being
is a distinction between facility management undertaken by the tenant. However, the
as it is practised in North America and recently established undergraduate degree in
Europe, and the Asian model of property facility engineering at Shanghai’s Tongji
management. (Property Management) is University will hopefully begin to change
centred on management of the common areas these kinds of entrenched attitudes. In addi-
of a building … such services may or may not tion, other continuing professional develop-
extend beyond the front door of the tenant” ment programmes focussing on strategic
(Longworth, 1997). The current debate is developments in FM may also be offered in

Table II Training plan for property management personnel

Title Contact hour Remark

1 Basic concepts of property management 80 Examination
2 Law related to property management 30 Examination
3 Building construction and design 30
4 Building facilities 30
5 Real estate development and operation 30 Examination
6 Real estate policy 30
7 Computer applications 30
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the near future in Shanghai, jointly by Tongji increasingly calling on the facility manager to
University and the Hong Kong Polytechnic conduct customer satisfaction surveys, to
University. determine suitable performance measure-
ment criteria for facility manager surveys, and
to examine global best practices. In China
Implications
there is now an emerging recognition that no
Emerging trends are starting to encourage matter how good an organisation’s property
real estate and facility management profes- portfolio, people are the key to quality FM.
sionals to “monitor their performance, ques- This issue is an important one where the
tion existing operations and promote changes underlying culture mitigates against those
without specific directives from their senior who do not form part of one’s immediate
management” (Adams, 1996). But more group. Hopefully it will gradually encourage
needs to be done if the property manager is property managers to change their mindset
not to be overwhelmed by the growing from being focussed on built assets towards
demands of tenants for improved services and those who occupy their buildings.
facilities to meet expectations of an increas- In Shanghai embryonic developments are
ingly global and sophisticated tenant market. beginning to take place. Property manage-
The overall picture is considerably brighter ment service providers are now recognising
than just a year ago however. Understanding the benefits that could be gained by continu-
of the benefits of providing services that ously offering training programmes and
respond to the tenants as well as the building refresher courses to their employees. The
is definitely growing in China. emerging trend for demanding continuous
This trend for continual company improve- upgrading of company services is also
ment in its managerial services is echoed in echoed in the demand of individuals for
the demand by individuals for more focused more focussed FM training. One result of
training, and the support for this by profes- this is the recent introduction of the four
sional associations. And although formal year undergraduate facility engineering
training of FM professionals in mainland degree at Tongji University and the proposed
China is at an early stage, training links with collaborative FM CPD programme between
overseas groups are moving ahead very quick- Tongji University and the Hong Kong Poly-
ly. The main consideration is how to ensure technic University.
that expertise is disseminated in a suitable Nevertheless FM in Mainland China is
form that is culturally acceptable within an still in an early learning cycle. In Hong Kong
Asian context. As yet cultural sensitivity is not FM is at a much more advanced stage, albeit
really an issue that has impacted the spread of somewhat behind Europe and the USA.
FM ideas to China. However, there are many experienced FM
Nevertheless, the adoption of a FM per- professionals within the HKSAR, and an
spective among Shanghai property managers increasing awareness of the discipline evi-
will better service the increasing number of denced by the success of the graduate pro-
mergers and consolidation taking place in the gramme at the PolyU. China will inevitably
property management sector there. But this begin to draw upon this skill base in the
has another aspect. A demanding global development of its own FM industry. Indeed,
business community not only wants but needs there are businesses already offering FM
the kind of customer service found in the services from Hong Kong to clients in the
West. For without this, owners run the risk of mainland.
loosing tenants in an ever growing competitive The practice of FM has a global dimension
market place, and tenants risk loosing busi- and this is starting to impact on the way prop-
ness if the daily functioning of their offices erty owners and managers now undertake the
does not match their demands for a more servicing of their buildings in China. The
effective (and responsive) workplace. increasing presence of many overseas compa-
nies operating in China will also be influen-
tial. However, until the property management
Conclusion
industry fully matures it is unlikely that facili-
Mindful of the need to please and retain ty management will be widely practised for
customers, client organisations are some time.
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