The elevator installation business is accelerating, and a trillion-yuan market awaits exploration
This year's government work report proposed to orderly promote the renovation of urban villages and old residential areas, improve supporting facilities, and encourage the installation of elevators where conditions permit. As a piece of good news in the field of people's livelihood, the installation of elevators in old buildings has been included in the "Government Work Report". This not only encourages the people who need to install elevators, but also makes elevator enterprises more optimistic about the market judgment.
This year's government work report proposed to orderly promote the renovation of urban villages and old residential areas, improve supporting facilities, and encourage the installation of elevators where conditions permit. As a piece of good news in the field of people's livelihood, the installation of elevators in old buildings has been included in the "Government Work Report". This not only encourages the people who need to install elevators, but also makes elevator enterprises more optimistic about the market judgment.
2017 was a year of explosive growth in elevator installation in Guangzhou. In 2017, there were 742 elevator installation projects (project construction permits) subject to post-approval public announcement throughout the city, which was twice as many as in 2016. Many elevator enterprises predict that with policy support and market demand, the business volume of elevator installation across the country will rapidly increase to the level of the whole year of 2017 in the first half of 2018. However, in practice, there are many obstacles. The lack of policy guidance to solve the contradiction of elevator installation and the long installation cycle of elevators have restricted the progress of enterprises in expanding the market.
Positive news
It is expected to cover half of the cities across the country this year
Liu Jun, who is engaged in service consulting, has conducted market research for elevator enterprises. This is a manifestation of the country's efforts to promote a better life for its residents. Liu Jun pointed out that land resources in first - and second-tier cities are scarce, and the revitalization, utilization and value enhancement of existing housing have become topics of common concern for residents, the government and the market. The installation of elevators has become a crucial step in enhancing the value of existing homes. He expects that under the guidance of the state, various local systems and implementation details will be continuously introduced from top to bottom and from macro to micro levels, thereby effectively promoting the breadth and efficiency of community renovation and elevator installation.
Correspondingly, the elevator industry will also shift from focusing on the sales of new elevators in new housing units to simultaneously paying attention to the provision of services such as elevator installation, renovation, and maintenance in the existing real estate market, and transform from being a hardware provider to a comprehensive service provider that combines both software and hardware.
The elevator industry's emphasis on the installation business of old buildings is evident in the administrative structure adjustment. Listed company Kangli Elevator was the first to establish Kangli Xingfu Elevator Installation Co., LTD., exploring the market for elevator installation in old buildings. According to the research report released by Kangli, the "Research Report on the Forecast of the Development Trend of China's Population Aging" predicts that by 2025, the number of people aged 60 and above will reach 300 million. Meanwhile, almost none of the multi-storey residential buildings built in China during the 1980s and 1990s were equipped with elevators. Based on this, Kangli predicts that there are over 2 million old buildings in China involved in the installation of elevators, with a market value exceeding one trillion yuan. The trillion-yuan market cake has become a highly sought-after commodity among elevator enterprises. On the very day the unveiling ceremony of the elevator installation service center for old buildings in Liwan District, Guangzhou, it attracted 10 elevator enterprises to move in.
Hitachi Elevator is the largest elevator manufacturer in South China and one of the enterprises actively laying out the elevator installation market across the country. In 2016, Hitachi Elevator included the business of installing elevators in old buildings in its corporate development strategy. Over the past two years, the business volume of installing elevators in old buildings has increased by approximately 10% year-on-year. Cao Juhui, the head of the elevator renovation department of Hitachi, learned that some key cities such as Guangzhou, Nanjing and Suzhou began to conduct pilot projects in 2016, but they all remained at the local level. With the promotion of the government work report, the installation of elevators is expected to become a national project.
Encouragement
All districts are stepping up efforts to promote, and enterprises are actively exploring
Guangzhou, which took the lead, issued the "Measures for the Installation of Elevators in Existing Residential Buildings in Guangzhou" (hereinafter referred to as the "Measures") in August 2016. Even though many residents had voluntarily applied to install elevators before that, the introduction of the measures made Liu Jun clearly feel that all districts in Guangzhou were stepping up efforts in elevator installation, which encouraged residents and enterprises. 2017 became a year of explosive growth in elevator installation in Guangzhou.
According to the official website of the Guangzhou Municipal Commission of Land and Planning, among the elevator installation projects approved and publicly announced in 2017, Tianhe District had the largest number, with 229 cases, accounting for more than 30% of the total in the city. Haizhu District followed with 162 cases. Liwan District has included the installation of elevators in old buildings in its project list and has taken the lead in providing clearly priced financial subsidies: a subsidy of 100,000 yuan will be given to each old building that successfully installs an elevator, and the Liwan District Old Building Elevator Installation Service Center will be the main service point to provide residents with policy consultation and application assistance for elevator installation.
In Cao Juhui's view, the improvement of living standards in first-tier cities has driven up the quality of life, and residents' awareness of elevator installation has gradually increased. The elevator installation market in Guangzhou can be said to have policies at the top and demands at the bottom, operating relatively maturely. It not only has policy guidance at the top level but also benefits from Guangzhou's one-window acceptance and other simplified administrative measures, which is why the application for elevator installation business has seen a sharp increase.
Journalists have learned that large elevator enterprises have significantly increased the allocation of service personnel for installing elevators in old buildings, with the deputy general manager level taking the lead, while small and medium-sized enterprises are more proactive in delving into streets and communities. Chen Guangjun, the head of the Urban Management Section of Xicun Sub-district Office in Liwan District, introduced that an elevator enterprise had dispatched personnel to the sub-district office for on-site office work last year and jointly established an elevator assistance service team with the sub-district office and the community, bringing services such as mediation consultation and document review to the sub-district office in advance.
For large enterprises, an additional 100 cases of old building installation services may only account for 1% of their total business volume. What they gain is brand promotion and government relations. But for small businesses, it is a key business. The real benefits are worth spending time and money to expand the market. The head of a community renewal consulting company in Guangzhou said so.
Expectation
Local governments still need to issue more detailed guidelines
Many business leaders expect that in the first half of 2018, many cities across the country will introduce policies related to the installation of elevators, and the business volume will grow rapidly to the level of the whole year of 2017. Yuexiu District and Tianhe District have clearly included the installation of elevators in the ten key livelihood projects for 2018.
With clear guiding policies and strong customer demand, the market is right there. It is a trend for enterprises to invest heavily to explore the market for installing elevators in old buildings. But as the business entity, Cao Juhui admitted that he would consider the input-output ratio. The average implementation period for an elevator installation project is two years. In the early stage, a large number of research and service personnel need to be invested in the front line, and the enterprise bears a lot of costs. He hopes to find a balance point of interests.
This is also reflected in Liu Jun's research. In actual cases, addressing issues such as the protection of a few property owners' own interests and the investment problems of owners on higher and lower floors in the face of high installation costs are all practical obstacles that restrict the advancement of elevator installation work. Cao Juhui said that many times, the task of coordinating residents' opinions falls on the service personnel of elevator enterprises, and it is very difficult to advance.
In addition, the construction standards of old buildings are not as uniform as those of new buildings, and the construction difficulty is also greater than that of new buildings. If elevator enterprises want to install according to the strictest standards, it is not feasible for most old buildings. If non-standard handling is carried out, enterprises will bear a great quality risk. To ensure quality, many old buildings are abandoned. Cao Juhui said that this has restricted the increase in the business volume of installing elevators in old buildings.
Liu Jun pointed out that in terms of resolving residents' conflicts and installation standards, local governments still need to issue more detailed guidelines and provide residents with market regulation guidance such as maintenance and warranty after elevator installation to prevent safety accidents and market chaos.
The speed increase of elevators installed in Guangzhou
On April 25, 2012, the "Trial Measures for the Addition of Elevators to Existing Residential Buildings in Guangzhou City" was issued.
As of July 2016, the planning department had approved approximately 2,500 existing residential buildings for the addition of elevators.
On August 11, 2016, the "Measures for Adding Elevators to Existing Residential Buildings in Guangzhou City" was issued.
The original practice was continued in key terms such as the requirement for the consent of two two-thirds of the property owners to install elevators. Meanwhile, the new measures have strengthened and optimized the application process and the guidance for property owners to negotiate.
The year 2017 witnessed a boom in elevator installation in Guangzhou
The public information system of the Municipal Commission of Urban Planning and Development shows that the number of construction permits for elevator installation issued in Guangzhou in 2017 was twice that of 2016, with Tianhe District having the highest number, accounting for more than 30% of the total in the city.
Among them, Liwan District has included the installation of elevators in old buildings in the project list of the secretary, and has taken the lead in providing clearly priced financial subsidies: each old building that successfully installs an elevator will be given a subsidy of 100,000 yuan, and the Liwan District Old Building Elevator Installation Service Center will be the main service point to provide residents with policy consultation and application assistance for elevator installation.