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(MARKET ENTRIES & OPPORTUNITITES)

China’s construction industry is booming. There are around 128,000 enterprises with 28 million employees engaged in construction in China. In 2007 the output value of this industry, where architectural design is included but not prominent, reached 1,401.4 billion Yuan (up 12.6% from 2006, doubled from 2002 and tripled from 1995), according to National Bureau of Statistics.

LDI’s dominate the architecture market. However, there is a growing amount of private firms, mostly established by architects that returned after studying/working abroad (operating mainly from Beijing and Shanghai). Small-scale studios (maximum 30 person-staff) are mainly working in the cultural sector, as they push the boundaries of architecture design. They work on smaller commissions, knowing that more than 90% of the architectural design in Chinese cities (large-scale housing, public infrastructure, commercial/service buildings) is taken over by construction companies and real-estate developers dealing directly with bigger LDI’s. This new generation often act as mediators, international market principles with Chinese conditions, making Sino-foreign partnerships easier.

Innovative architecture projects are geared towards large-scale mixed-used developments, like in the SOHO-model, where office and residential are combined. Real-estate developers, i.e. SOHO China, CapitaLand, VANKE, work with domestic and international architects (OMA, GMP, Steven Holl, Zaha Hadid...) to capitalize on star-architecture. City branding is crucial as cities use architectural and landmark projects in leisure/tourism, sports, and public infrastructure to distinguish themselves from each other. Patrons of the arts and of architecture are now emerging: the ORDOS100-project is one example. In this last case, Mr. Cai, a Chinese tycoon, gave the opportunity to 100 international architects to each build a 1,000 square meter villa in Ordos, located in China's Autonomous Inner Mongolian Region.

In order to build in China it is important to develop a relationship with a local partner and to identify which firms could benefit from the design expertise offered by the foreign partner. Identification of those partners, LDI's or real-instate developers will provide valuable local market knowledge.

Through interdisciplinary architecture media (Urban China, T+A, World Architecture) there is a growing interested in products that incorporate 'social awareness' and sustainable ethics. Media has proven to enlarge the cultural understanding of architecture while engaging with (also international) cultural experts and universities. With the goal to incorporate notions on citizenship and culture into the profession and reaching a broader audience, it enhances the understanding of the field by high-lightening projects and being involved (as organizers, partners and/or sponsors) in conferences, exhibitions and award ceremonies. 2008 saw the start of the ‘China Architecture Media Awards’-awarded mainly by smaller private firms.

Cultural divulgation also happens in the form of exhibitions and publications. The past five-year saw a dawn of architecture exhibitions showcasing China being held in London, Paris, Brussels, Rotterdam… Domestic biennales (ABBeijing, Shenzhen & Hong Kong Bi-city Biennale of Urbanism & Architecture, Shanghai Creative Industry Week) are further enhancing exposure in China and throughout. Despite the criticism (in terms of content or curatorial decisions), it is clear there is a market for them and architecture firms, also European, are eager to present their work within these cultural settings.

According to the National Development & Reform Committee, since the 4th quarter of 2008, there were 2.3 trillion RMB allocated by the central government to invest in energy saving, ecological construction and environmental protection sector to respond to the global financial crisis. The 2.3 trillion stimulus package accounts for 10% of the total investment from the government in all sectors in the country, which shows the governments high emphasis on energy saving and its determination to promote this sector. Moreover, 1.3 trillion of the total 2.3 trillion investment will be used in waste and water treatment.

Sustainable development is an increasingly important topic in China, environmental problems, energy shortages, rising price level of materials and higher labour costs, increasing consumer demand (higher living standards, changing lifestyle) and exposure of Expo 2010 with the sustainable theme "Better City Better Life". Technologies are widely available. Localisation to geographical conditions and culture (specific needs, affordability) are crucial for success. Awareness is also a crucial factor. However, the Chinese market is not yet ready for large-scale application of sustainable building. The market is lagging behind western standards, also when it concerns specific sustainability conditions. Increasing importance of sustainable approaches is expected for the near future. There is still a lack of experience within the governmental, education institutes and the building sector characterised by a focus on short-term gains. It is not uncommon for building projects to change hands multiple times before tenants move in. Sustainable buildings do have a profitable return on investment over a longer period of time (15 – 65 years). Education is an important factor for further development of demand for sustainable buildings.

The Netherlands has an important background in sustainable building and urban planning but it is important to further promote awareness amongst the Chinese. Creating a local foothold before the market takes off in is the only way to capture market opportunities. China is more aware of sustainable building from 2005 and onwards, but is still too unaware of the benefits that sustainable building brings along. For the upcoming 5-10 years sustainable building won’t be a profit driver for Dutch company in China. The Dutch sector present here today is too small to make an impact.