Looking back at the construction market this year, most in the industry have mentioned the term "difficult". On the one hand, as the traditional financing model of "land finance" gradually tightens, risks are transmitted to the real estate and construction industries. In recent years, the profit margin of construction companies has fallen below 3%, and at a time of "more monks than meat", coupled with local protection mechanisms, some regions have experienced non healthy market development; On the other hand, in the venture capital market, financing for construction technology projects is relatively quiet, and professional institutions have made fewer moves. According to senior practitioners, the popularity is only one-fifth of last year.
We also see some directions where leading construction companies and large design institutes are equipped with their own digital technology companies, research institutes, or digital teams, seeking breakthroughs in the digital direction; A large number of top real estate companies are pursuing a light asset transformation in their business organization, and their agency construction business is rapidly developing.
In order to fully reflect the real dynamics of the construction industry in 2022, after expert research and multiple interviews, we have selected the following 8 news articles with future influence, combined with market observations, and also attempted to infer potential trend changes for industry reference and discussion.
1. Leading the way, the entire 'industry' will be affected, and smart construction pilot cities will be implemented
On October 25th, the Ministry of Housing and Urban Rural Development announced 24 pilot cities for intelligent construction, which will start from the date of announcement and last for 3 years. Among them, the mandatory tasks involve the formulation of encouraging policies, the cultivation of supporting enterprises, the development of innovative industries in the six major tracks, the construction of demonstration projects, and the establishment of innovative management mechanisms such as digital supervision; Recommended optional tasks include the construction of smart factories, the promotion of industry university research integration, the improvement of standard system technology application requirements, and the exploration of professional talent cultivation models.
In the past, intelligent construction has long relied on the introduction of foreign technology and lacked core technological capabilities in areas such as independent intellectual property rights. In 2022, the tightening of government funding supervision has spread to the real estate and construction industry, creating a funding dilemma. After exploring a large number of project models, it is difficult to advance due to multiple conflicts, and difficulties in advance funding and repayment have become the norm for many enterprises.
As the "accelerator" for the transformation of the construction industry, the pilot cities for intelligent construction involve different roles in the industry, especially the adjustment of interests and changes in entry and exit of relevant market parties such as owners, designers, general contractors, and professional subcontractors, from top to bottom.
Facing 2023, the development of intelligent construction in cities, driven by strong policies, will bring new economic growth points to the entire construction industry, including huge investment demand. There will inevitably be a large number of top construction companies that focus on both upper level application points and lower level original technologies, such as mergers and acquisitions. However, in the short term, it may still be relatively slow, depending on the internal efficiency of the leading construction companies.
2. A large number of state-owned enterprises are equipped with digital organizations, and innovative enterprises are gradually reshuffled
Over the past year, China State Construction Engineering Corporation (CSCEC), leading local construction companies, and large design institutes have successively established and operated "digital technology" companies or digital organizations. For example, Shaanxi Construction Digital Technology Co., Ltd. officially started operating in February; China State Construction Corporation established the Science and Technology Innovation Group in October and the Science and Technology Company in November; Almost every large design institute is recruiting talents in digital fields such as BIM or development.
It can be seen that traditional construction enterprises will conduct point based application research and development for internal scenarios in 2022. With the improvement of research and development capabilities, traditional enterprises have formed a trend of self-developed platforms. Some people believe that this is a repeated waste of human and market resources.
However, a large number of state-owned enterprises equipped with digital organizations may lead to a gradual reshuffle of innovative enterprises. Under the pressure of this year's environment, survival is the key to development, and many innovative enterprises have experienced homogeneous competition.
Facing 2023 and beyond, construction technology companies with pure IT development capabilities may be eliminated. The focus is on strategic determination, and companies that tightly grasp original technology and specialized scenario solutions will become valuable high ground.
3. Spending 15 billion yuan to establish China Construction Science and Technology Innovation Group, state-owned enterprises may become 'VC big buyers'
On October 24th, China Construction Engineering Corporation (CSCEC) agreed to establish the China Construction Science and Technology Innovation Group, with a planned registered capital of 15 billion yuan. The group will focus on the dual carbon and digital economy fields, with a focus on cultivating specialized, refined, innovative, and high-precision enterprises. It is required to have independent and controllable core technologies, create well-known brands, create original technology sources, and promote the company's technological innovation and industrial development.
The key actions of top enterprises generally reflect the direction of the industry and have a strong impact on the industry, especially for the construction industry, where the vast majority of market share is concentrated in top enterprises. Secondly, strong government relations are a characteristic of the construction industry itself, and there is no situation where new entrants in certain industries can disrupt traditional enterprises through technological innovation. This makes innovative enterprises dependent on the project market dominated by top enterprises for survival.
Perhaps for innovative enterprises, top state-owned enterprises may become their last 'VC buyers'. Venture capital industry practitioners have stated that some leading state-owned enterprises are now laying out their capital and conducting in-depth research on innovative enterprises.
Overall, it is beneficial for the industry, but compared to VC itself, its characteristics are high efficiency and non-interference; State owned enterprises are inefficient and slow in their processes, as well as have high requirements for shareholding ratios, making "efficiency" and "monopoly" obstacles on this path.
4. The Nantong Construction Iron Army was almost completely wiped out, and the transformation of operation mode became the key
On April 1st, Nantong Sanjian established a Financial Institution Debt Committee and planned to carry out debt restructuring; In September, Nantong Sixth Construction, which had previously applied for bankruptcy three times, successfully auctioned off 100% of its equity; On December 20th, Nantong Second Construction announced that as of now, the company has accumulated outstanding debts of 116 million yuan due; In addition, in the past two years, Su Zhong Construction was applied for bankruptcy reorganization and Nantong First Construction went bankrupt and liquidated, causing the construction industry in Nantong to rapidly fall into the abyss.
The most practical reason is the inability to repay maturing debts. Industry insiders have mentioned that including advance funding, it can be said to be a common phenomenon in the construction industry. Nowadays, it is almost impossible to find projects that do not require advance funding, and the risks for construction companies have increased. Difficulties in receiving payments have become the norm this year. Chinese architecture looks at Jiangsu, and Jiangsu architecture looks at Nantong. Several years later, looking back at 2022, the changes in Nantong's construction industry will represent the "whale landing" of the industry's adjustment towards a new stage.
Where is the way out for those who are trapped to think of change? Some people say that companies without core technology will collapse at will, and no one wants their shells; Some people have also reported that the lack of talent is a core issue hindering the development of the entire construction industry, in addition to Nantong. As a private construction enterprise, Zhongtian Holdings has grown countercyclically. Perhaps for a large number of construction companies, stepping out of the comfort zone of traditional operating models and profit areas has become the preferred task.
5. The construction industry welcomes its first mandatory carbon emission quota, providing an opportunity for wealth flow and redistribution
On April 1st, the mandatory construction standard "General Specification for Building Energy Efficiency and Renewable Energy Utilization" GB 55015-2021 came into effect, which makes mandatory requirements for calculating building carbon emissions. Feasibility study reports, construction plans, and preliminary design documents of construction projects should include building energy consumption, renewable energy utilization, and building carbon emission analysis reports.
The calculation of building carbon emission intensity has risen from its inception to a strategic tool, and all new, expanded, and renovated buildings, as well as energy-saving renovations of existing buildings, should be strictly implemented. It is more about how to refine and implement it.
In 2022, methodological research on processes and projects based on different scenarios will become a focus, resulting in copyright fees for intellectual property rights; The driving forces behind different business owners of Party A include actual profits, government subsidies, low interest loans, etc; Green building materials and sustainable materials have attracted attention; Many companies have emerged in the fields of carbon detection and quantification.
However, more entrants are still laying out opportunities on the track, and the future is still waiting, including the exploration of more mature market systems and distribution mechanisms.
6. The National Digital Construction Innovation Technology Center has been established, and the transformation of scientific and technological achievements cannot be separated from a professional team
On June 25th, the National Digital Construction Technology Innovation Center was unveiled, with Academician Ding Lieyun serving as the Chief Scientist. The center's core mission is to break through key core technologies in digital construction and achieve industrialization of major research achievements.
The emergence of centers such as the National Digital Construction Innovation Technology Center connects closely with universities, research institutes, leading enterprises, and new research and development institutions, further guiding financial, social, and industrial capital to increase investment and promote the transfer and transformation of scientific and technological achievements.
The construction industry has a large number of technological achievements existing in "university laboratories", and many technologies have completed the primitive accumulation from 0 to 1, stuck in the difficult stage of scale and commercialization. This year, there have also been many start-up companies whose technology is derived from the transformation of university achievements. Of course, it may take a long time to find the breakthrough point of its application from the birth of original technology to market-oriented products.
Facing 2023, in this transformation process, scientists focus on technological innovation and upgrading, and there is a special need for professional managers to join and form a professional team from technology, products to management.
7. From innovative enterprises to 10 central construction enterprises, developing BIM has become a strategic direction
On November 5th, led by China Power Construction Corporation, together with 10 central enterprises including China State Construction Engineering Corporation, China Railway Group Corporation, China Railway Construction Corporation, China Communications Construction Corporation, and China Energy Engineering Corporation, a central construction enterprise digital transformation collaborative innovation platform was established. The platform will study and improve policies, standards, markets, ecosystems, sharing and other systems in the process of industry digital transformation
Although some industry insiders have doubts about the future value of the platform, the signals are clear, including that the platform will first initiate collaborative innovation and research on BIM major projects. BIM has undergone more than ten years of market-oriented development in China, and it can be said that the past decade has been a decade of establishing BIM awareness, promotion, and single point application in the Chinese market. Nowadays, independent and controllable BIM is becoming the mainstream business card for the digital transformation of state-owned enterprises in the construction industry.
Including the annual digital practice buzzwords launched by 36Kr (which statistics the frequency of content reports of Chinese construction companies with market value in the Fortune Global 500 and A-share 500), BIM experienced a small peak in Q2 2020, and its popularity was the highest in Q4 this year, nearly five times that of the small peak in 2020, reflecting to some extent the embrace of BIM by leading construction companies.
8. Qatar and Saudi Arabia's Chinese construction, Chinese construction companies going abroad may become a research hotspot
In the Qatar World Cup, a large sports stadium consisting of 974 containers that can accommodate 40000 people was built by Chinese companies, as well as Chinese figures in accommodation, new ports, airport expansion, and reservoirs; The Saudi government has announced the construction of a future new city, and China Construction Corporation has also secured a pilot project worth 7.86 billion yuan.
Looking at Chinese construction companies from key foreign projects, industry experts say that after more than 40 years of reform and opening up, China has continuously explored overseas development and has formed a group of multinational companies with international competitiveness. From "Made in China" to "China Construction", this business card has left a profound mark in overseas markets.
It can be imagined that Chinese construction companies will also become a research hotspot after going global. To create world-class construction enterprises, some experts have mentioned that the construction of a credit based market-oriented system within and outside the industry is a trend, including the formulation of global construction industry standards, which are crucial. In the future, in addition to China Construction, China Railway, and China Communications Construction, there will also be more leading private enterprises and specialized new enterprises, working together to form a good industry ecology and environment.