Facilities Management China Market Intelligence

*This report was last updated in Q4 2018. Please click on request customization if you are looking for an updated version of this report

Report Coverage

  • Facilities Management Market Trends
  • Outsourced Facilities Management Sourcing Models
  • Best Practices – Major SLAs and KPIs
  • Key Regional/Local Suppliers: Service Portfolio

Table of contents

  1. Facilities Management China Executive Summary
  1. Facilities Management China Market Analysis
  1. Facilities Management China Procurement Best Practices
  1. Facilities Management China Cost Analysis
  1. Facilities Management China Supplier Analysis

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Regional Market Outlook on Facilities Management

Facilities Management Sourcing Dynamics

  • The level of outsourced FM penetration within the Chinese market is very low
  • Lack of knowledge among buyers on the benefits of outsourced FM services and supplier capabilities within the country are the biggest challenges for the FM industry
  • Booming construction and real estate market are the drivers for the FM industry in China
  • Growing concerns on large buildings contributing to already high levels of pollution is pushing buyers to look at outsourced FM service providers for sustainable and efficient energy management practices
  • Most of the demand for outsourced FM services is centred around established industrial and business cities of Guangzhou, Beijing, Hong Kong and Shanghai

Facilities Management Drivers and Constraints


Cost Optimization:

  • Companies are now looking at ways to optimize spend on indirect categories to have a competitive edge
  • Buyers prefer to outsource FM services over self-performing, as it is a cost effective option

Transfer of Operational Risk:

  • Outsourcing allows the buyer to transfer operational risks to the service provider
  • The legal responsibility for regulatory compliance would still be the buyer but the risk can be transferred to the supplier through strict regulatory compliance contract clauses

Increasing Regulations and Incentives:

  • Increasing regulations and incentives by the government for buildings and other facilities, increasing trend of sustainability, has increased the importance of expertise in the required areas.
  • FM companies do possess skilled personnel and technological support to meet buyer requirements


Subcontracting by Suppliers:

  • Sub-contracting is a common practice in the facilities management industry. This practice indirectly affects the buyer, since sub-contractors charge a margin from the service provider, which is eventually passed on to the buyer.
  • This margin-on-margin, increases the spend of the buyer, which is essentially a trade-off for exploiting local synergies at a tactical level

High Labor Rates:

  • Employee wages constitute almost 60% of the overall spend on integrated facilities management services. Increasing labor costs and the scarcity of skilled labor is a major growth constraint to the FM industry

Slow Adoption Rates:

  • Lack of knowledge and adoption of the IFM concepts is a growth constraint for the IFM suppliers

Porter's Five Forces Analysis

  • Large buyers have strong power because of the large consolidated business volumes
  • Suppliers are trying to improve their supply capabilities to offer a holistic service portfolio and thereby gain some negotiation power

Supplier Power

  • China has medium to low supplier maturity, based on the location. Supplier reach is also not uniform across the country
  • Integrated FM is still in the nascent stage, and hence suppliers catering to this segment of service is very less – thus in this aspect, supplier power is low

Barriers to New Entrants

  • IFM market is still highly fragmented in developing countries and hence barriers to entry is quite low in these regions
  • Presence of untapped markets with weaker supplier presence is also encouraging the emergence of local FM service providers

Intensity of Rivalry

  • Integration of FM services is at the infant stage with many providing only single service
  • Consolidation of FM players is low and there will be only trivial competition between major service providers
  • Few regional suppliers like Aden, etc. who have pan Asian presence, will have a stiff competition from global IFM suppliers like CBRE, ISS etc.

Threat of Substitutes

  • Threat of substitution will be very low, as in-house manufacturing or partial outsourcing will not prove to be cost-efficient for buyers

Buyer Power

  • With respect to buying integrated FM services, buyers can wield maximum power, due to the hungry supplier market for large FM contracts
  • Buyers will continue to have their upper hand with respect to integrated contracts, as most suppliers are in the phase of strengthening their market presence beyond the major business cities

Major Technology and Innovation in Facilities Management

Use of Internet Of Things (IoT)

  • IoT refers to a network of internet accessible devices utilized within the facility for various functions
  • IoT relies on tools such as sensors, thermostats, and actuators to evaluate data and reduce the amount of energy used for different tasks within a facility
  • Sensors or compatible devices pick up data on a building to better inform a facility team of current temperature, light, vibration or even sound levels in areas of a building thereby providing actionable items to reduce energy bills and improve occupant happiness within the facility by adjusting different settings
  • Examples of practical IoT implementation by FM suppliers are:
    • use of smart bins that let cleaners know when they need attention
    • An integrated security guard patrol application that uses beacons to alert supervisors when a security patrol is missed
    • IoT software that uses sensors to control lighting and temperature in the work place
  • The main challenge today that limits the widespread adoption of IoT systems is that connectivity can be very cost intensive to set up. The technology requires a common hub to integrate all the sensors and devices into, without which it will be impossible to aggregate facility data into actionable metrics
  • This technology is expected to develop further with increased collaboration among FM suppliers and technology companies to bring down the costs while improving the functionality of the system

Making Buildings Smart with Data Analytics

  • Smart building technology integrates building systems and sensors to improve efficiency, comfort, and productivity
  • IoT coupled with data analytics provide the required tools to understand what's going on inside the building at all times, from a structural as well as personnel level, thereby providing a holistic picture of how the building is used
  • Real-time data monitoring by sensors help the facility management software suite understand to proactively respond on maintenance requirements, switch off energy consumption for areas that are not currently being used etc.
  • Being able to monitor how every aspect of your office is functioning in real-time, ensures that the building is always running at peak efficiency

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