No Property Bubble in China – Developer

Recently Vincent Lo the chairman of Shui On Group (developer of Xintandi) came out and stated that there is no property bubble and bascially there isn’t enough land on which to build in China. I don’t know if he was taking about land in general, available green/brown fields or cities that have land that is able to be developed profitably. He also said that developers where feeling the squeeze with government moves to curb rise housing prices and inflation. The other interest piece of information he gave was that 1/3 of buyers pay in cash for property – I knew that the figure was pretty big but 1/3 is huge when you think about the number of development properties changing hands on a yearly basis.

I think developers will push to become more involved as lenders to property buyers however, I can see the government pushing back as you quite easily under up with a sub-prime size situation with largest developers hitting the wall in a property market correction. Developers will continue on as there are so many development markets either untapped or under-invested in China such as tourism, retail, retirement, time-share, ski resorts, and so on but these will grow faster when then mainstream property developers profit margin drops as residential developments make and easy 35-55% profit (anecdotal).

Cities as Brands in China

Cities are like brands – they need to have a plan, market, grow, and innovate. Cities can’t just plan and grow and expect investment, residents and tourists to appear. Just getting by can work for some cities such as Paris, Rome or Venice or other world-renown tourist cities – if that is the one of the main industries and it keeps the city going it might work. But for other cities around the world, where the competition internally within the country and externally, where other global cities are growing and innovating it becomes very important for the city to understand their competition and plan, market, grow and innovate.  I am purely talking from an economic and investment point of view. I understand that cities aren’t just economic centres that generate wealth. A City is where people live, where art is created, where sport is played, where people fall in love, where people visit, where trees breathe and where life ceases these are all important elements of a city but for this post I am particularly talking about a city as economic and business brand – not a tourist or lifestyle brand.
Currently, the east coast of China has been developing at a extraordinarily rate since the early 1980’s and some are reaching a stage where its time to review what has occurred what have they learned what has worked in there city and where has the competition beat them. Many cities are starting to compete for the same talent, the same investment dollars and new businesses. In particular its becoming a fight between the Pearl River Delta(PRD), Yangtze River Delta(YRD) and Bohai Economic Rim(BER). The PRD has manufacturing and some services, YRD is the transiting to services (financial, law, business development & tech) and the BER is the government, and tech. These regions and cities require management talent – something that is developing in China but is often the reason that some business sectors don’t perform as expected because the talent pool is very shallow. So the main cities in these regions – PRD – Shenzhen, Hong Kong, Guangzhou; YRD – Shanghai, Suzhou, Hangzhou and BER – Beijing and Tianjin are often fighting for the same money and the same talent.  So like brands they need to put forward the best image and remain competitive and the only way to do that is to be a brand. Branding and Marketing is often overlooked in China as it just accepted that local and overseas people know what the city is about.
In terms of previous branding exercises Beijing used the Olympics, Shanghai the Expo and Guangzhou the Asian Games as a way to reinvigorate the city and create a brand – some brands where more successful than others but now that these events are over and written in the history books the cities need to once again think like a brand. Who can plan, market, grow and innovate in the next 30 years to become the best mega-city or region. Its also the 12th 5-year plan (125)  for many developed cities in China, so many new proposals and ideas have been formulated for the next 5 years.
Currently, the lines are being drawn on what cities will be in the future. It seems that Beijing is announcing that its brand will be “Beijing Service” with industrial competitiveness in ‘human capital, knowledge and technology-intensive service industries’ creating a Silicon Valley environment with “Two Cities, Two Zone”. Shanghai is going after Financial services (New York) by creating a more friendly investment environment and also creating several new CBD/CAD areas that can house commercial development(similar to Canary Wharf) – although the existing towers of Lujiazui will be always be the ‘financial hub’. Guangzhou/Shenzhen is moving forward with manufacturing but moving more towards cleaner and greener technologies. Although the Tianjin and Guangzhou/Shenzhen will be fighting for the same green/cleantech dollars and talent. All the East Coast cities are also important shipping ports, however a shipping port as the sole city brand will not work as China transitions away from manufacturing.
Each city or mega-region needs to generate a brand that saids  Tech, Financial or Manufacturing  and they need to be marketed correctly to the get the  right talent and increase innovation so they can gain the overseas and local capital for the next 30 years. Of course, other city brands will rise as Western China develops but currently the East Coast cities are in a period of consolidating and maturing and need to create that quintessential brand that said Financial Shanghai, High Tech Beijing,  Green Tech Shenzhen and Eco-tech Tianjin.

Cities in China need to think like brands

Cities are like brands – they need to have a plan, market, grow, and innovate. Cities can’t just plan and grow and expect investment, residents and tourists to appear. Just getting by can work for some cities such as Paris, Rome or Venice or other world-renown tourist cities – if that is the one of the main industries and it keeps the city going it might work. But for other cities around the world, where the competition internally within the country and externally, where other global cities are growing and innovating it becomes very important for the city to understand their competition and plan, market, grow and innovate.  I am purely talking from an economic and investment point of view. I understand that cities aren’t just economic centres that generate wealth. A City is where people live, where art is created, where sport is played, where people fall in love, where people visit, where trees breathe and where life ceases these are all important elements of a city but for this post I am particularly talking about a city as economic and business brand – not a tourist or lifestyle brand.

Currently, the east coast of China has been developing at a extraordinarily rate since the early 1980’s and some are reaching a stage where its time to review what has occurred what have they learned what has worked in there city and where has the competition beat them. Many cities are starting to compete for the same talent, the same investment dollars and new businesses. In particular its becoming a fight between the Pearl River Delta(PRD), Yangtze River Delta(YRD) and Bohai Economic Rim(BER). The PRD has manufacturing and some services, YRD is the transiting to services (financial, law, business development & tech) and the BER is the government, and tech. These regions and cities require management talent – something that is developing in China but is often the reason that some business sectors don’t perform as expected because the talent pool is very shallow. So the main cities in these regions – PRD – Shenzhen, Hong Kong, Guangzhou; YRD – Shanghai, Suzhou, Hangzhou and BER – Beijing and Tianjin are often fighting for the same money and the same talent.  So like brands they need to put forward the best image and remain competitive and the only way to do that is to be a brand. Branding and Marketing is often overlooked in China as it just accepted that local and overseas people know what the city is about.

In terms of previous branding exercises Beijing used the Olympics, Shanghai the Expo and Guangzhou the Asian Games as a way to reinvigorate the city and create a brand – some brands where more successful than others but now that these events are over and written in the history books the cities need to once again think like a brand. Who can plan, market, grow and innovate in the next 30 years to become the best mega-city or region. Its also the 12th 5-year plan (125)  for many developed cities in China, so many new proposals and ideas have been formulated for the next 5 years.

Currently, the lines are being drawn on what cities will be in the future. It seems that Beijing is announcing that its brand will be “Beijing Service” with industrial competitiveness in ‘human capital, knowledge and technology-intensive service industries’ creating a Silicon Valley environment with “Two Cities, Two Zone”. Shanghai is going after Financial services (New York) by creating a more friendly investment environment and also creating several new CBD/CAD areas that can house commercial development(similar to Canary Wharf) – although the existing towers of Lujiazui will be always be the ‘financial hub’. Guangzhou/Shenzhen is moving forward with manufacturing but moving more towards cleaner and greener technologies. Although the Tianjin and Guangzhou/Shenzhen will be fighting for the same green/cleantech dollars and talent. All the East Coast cities are also important shipping ports, however a shipping port as the sole city brand will not work as China transitions away from manufacturing.

Each city or mega-region needs to generate a brand that saids  Tech, Financial or Manufacturing  and they need to be marketed correctly to the get the  right talent and increase innovation so they can gain the overseas and local capital for the next 30 years. Of course, other city brands will rise as Western China develops but currently the East Coast cities are in a period of consolidating and maturing and need to create that quintessential brand that said Financial Shanghai, High Tech Beijing,  Green Tech Shenzhen and Eco-tech Tianjin.

Android phones to see big growth in 2011 in China

LG billboard for a new LG Android phone in a Shanghai subway station

Android is going to have a big year in China and it will occur due to the market size, the number of manufacturers, phone cost and growing community.

China is a big market for mobile phones – about 840 million subscribers and the phone is an all round device for many Chinese who use the devices daily for news, online chatting, stock market trading, reading books, music and many other activities. The market in China is huge that’s a given and keeps Nokia steaming along. Android is getting bigger just by the size of the market and the number of phones that are starting to come with some flavor of Android from LG, Samsung and local brands.

China’s market size has attracted nearly every mobile phone manufacturer from across the world and has kick started many other local manufacturers and they all have one thing in common – they provide a wide range of models in different form factors to suit the tastes of the market from tweens to rich businessman. The manufacturers with Android phones on the market includes LG, Samsung, Motorola, Sony Ericsson, Acer, HTC, Lenovo, Huawei, ZTE, Meizu with more upcoming models to come in 2011.

The Cost of mobile phone is often the deciding factor for many Chinese consumers – they have a budget in mind and this will be the single biggest reasons for the growth the sales of Android phones in 2011.  Although the iPhone 4 has become the must-have in Shanghai and Beijing streets as it seems every second person has one at the moment the problem is the iPhone 4 retails at 4999RMB($750USD) which is far out of reach of the average Chinese consumer.  Whereas, Android phones from local brands such as ZTE and Huawei start at 825RMB ($125USD) and international brands such as Samsung and HTC  have Android phones starting at 1200RMB($185USD).

Android phones can be easily customised and hacked lending them to community developed apps and services through forums and online markets and we can already see this occuring with Android forums and markets occuring on sites such as pconline. In recent times micro-payments for apps and services has been a relatively new occurrence in other countries. However,  in China the micor-payment market has been growing strong for many years through various services and sites such as QQ. The micro-payment market (from young to old age groups) for virtual goods is already established including the currency (cards purchased at shops or online banking transfers) and chinese users are already accustomed to making micro-payments for apps or virtual goods.

Happy Holidays and have a great 2011

I would like to wish everyone a Merry Christmas, Happy Holidays and a great 2011.

I would like to thank my family for their support in 2010 and especially my friends – Peter, Robert, Steve for their support also during the year. Every year has its ups and downs 2010 has been a bigger roller coaster than usual but  I am looking forward to 2011 with a positive outlook and hope to achieve a great deal with various projects and ideas.

I would also like to thank all the readers of World Landscape Architect and LAND Reader for your support, emails and comments. Looking forward to bring more great content to readers and hope more companies submit design projects for publication.

To all my followers on Twitter and LinkedIN – thanks for all the discussions and conversations during 2010 and I look forward to having more conversations and making new connections that widen my outlook and network.

BEST WISHES

Damian

Australian Economy: Factors to watch in 2011

These are observations of  factors I think will change the Australian market in 2011.  Other short-term factors will come into play that could change any or all of these factors. I predict these with great trepidation as I have heard only a fool predicts the future of any economy but it was fun exercise to think about. I am not an economist or financial expert by any stretch of the imagination but I would be interested in hearing your own conclusions via comments or damian@damianholmes.com

– Continuing high Australian Dollar against all major currencies

– Housing prices are high and afford-ability is low

– Interest rates will continue to rise and those with fixed mortgages will be going into a flexible rate of 7.5-8.0%

– Private debt will continue to rise as housing prices stay high and people redraw against already high loans to do home improvements

– Universities increased fees although they expect lower overseas enrollments

– Australian Government changed immigration laws for overseas students

– Continued contraction in Tourism as local and international tourism rates drop

– Continued growth in WA & Queensland due to mining; Other states will need to start spending on capital projects to get things moving as the 2008 Federal stimulus has finally dried up.

– Competition in industries are stagnant along with competition as M&A continues the only option for many companies to be able to grow and gain talent – how Singapore Exchange takeover of ASX is key along with how the government deals with increased interest from Chinese companies increasing investing in overseas markets in 2011.

– China is Australia’s largest export market

– 2 speed economy will continue as Mining sector outstrips any other sector and retail & tourism drops off

– Lower than expected retail numbers for Christmas and sales moving retail overseas moving overseas due to price gouging by retailers and high Australian dollar having effects on part-time & full time retail staff.

– Talent will be in short supply as more baby-boomers retire and along with a lack of middle managers to rise up the ranks as many where sacrificed in 2007-’08 to cut companies costs to keep the market & stockholders happy

Pigeon-holing employees – a recipe for employee churn

Recently, I have noticed more and more businesses are pigeon-holing people based on skill or one required task. Its not just corporate cultures who are doing this, I have seen more and more smaller firms hire people based alone on one skill set. It is becoming more prominent in China as businesses try to streamline processes and increase efficiency as labour costs increase as the China market matures especially in Tier 1 cities. However, this is going to come to haunt businesses as they head towards Chinese New Year, a time when people go home with family and think about the year ahead. Many employees who work for businesses that have started pigeon-holing people will look for new employers that provide more challenges and opportunities to grow.

Providing challenges and the opportunity to grow with your company is going to start to outweigh your company’s reputation and the location of your headquarters. Too often in China people look for the perfect person for the position they have open and assess each candidate on whether they are right for the position – usually this involves a check-list,  which is really another form of pigeon holing.  This method of recruiting just emphasizes the rigidity of the culture and therefore the company will miss out on people who can contribute in multiple areas of the company. The person might not have all the skills that you want for the position but may have a wider understanding of the industry or clients or suppliers, etc. Of course, attitude, passion and past positions are other attributes that you need to take into account when searching for the right candidate.

How is pigeon-holing a recipe for churn? Creating a culture where people are pigeon-holed into one or two tasks may create task efficiency but it will also create churn as employees lack challenges and a pathway through the company. It goes back to the hiring process, when you look to employ people don’t use a checklist, look at their wider skill set and immediately determine how they could progress in your company and what areas they could contribute to your business. Providing challenges and a pathway to grow is a great way to retain people, but you need to effectively communicate this to each employee and not just at their annual evaluation.  Always remember, the people who have a wider skill set, (which shows a willingness to learn and change) are better long term employees as they can grow within the company over longer periods of time thus reducing your churn rate and hiring costs.

SIDENOTE: This is does not only apply to creative or white collar businesses it also applies to production lines or other singular task work environments. People doing one task all day may create efficiency but people are not robots and in the long term can have a psychological impact as we have seen this year occur in the manufacturing sector.

Design changes the way you live, work and play everyday

Design affects you everyday from the time you rise from your bed to the time you come home and retire to bed. Design is everywhere and helps you in every way achieve you goals for the day. Design occurs from the mundane such as tap or door to the highly sophisticated such as a car or plane where numerous design elements come together to work as one system.

A designer is someone who solves a problem or creates a solution to a question never asked. Designers are not just people with special skills or way of thinking they are everyday people who are trying to creating a better and more interesting world.

Designers  can be architects, engineers, planners, stylists, musicians, artists, and also professional designer in various areas of design including  urban, industrial, graphic, interiors, lighting, sound, fashion, jewelery, web, game, furniture, visual and so on. Everyday designers effect the way you work, live and play – your desk, chair, computer, phone – your crockery, table, restaurant, car, plane – your racquet, console, bike. All these have elements of design that were created by a designer whether the object is practical, curvaceous, austere, clean, minimalist, modern, antique, whimsical or audacious. Design can be seen everywhere, everyday and designers effect everything you do and how you feel.

Designers are often the silent heroes to me  – the ones who aren’t the starchitects or fashion icons or jewelery powerhouses – these people who design day in day out giving the heart and soul to design items of practicality or beauty. Although many do it for ego, most do it for the love of design. So if you know a designer or buy a design that you love drop the designer an email or written note saying how it makes you feel as that will make any designers day.