Pie or trap? -Analysis of property management market expansion in second-and third-tier cities

In recent years, due to the active efforts of many property management companies, the competition in the property management market in first-tier cities has become increasingly fierce, and there are few "cakes" left. In the next few years, the property management market in first-tier cities will no longer be a bull market. Under the background of few projects and low profits, powerful enterprises are bound to step out of first-tier cities, and exploring the property management market in second-and third-tier cities will be the key way to open up new living space and profit space. There are indications that second-and third-tier cities have tended to become an important battlefield for property management companies to fight.

■ The development of property management market in second-and third-tier cities faces "five traps"

With the acceleration of urban construction, residents in second-and third-tier cities have an increasing demand for comfortable living environment and property management services, and the time is ripe to develop the property management market in second-and third-tier cities. As far as individual cities and projects are concerned, second-and third-tier cities are small in scale, and most of the projects are middle and low. However, from a national perspective, the property management of these cities has just emerged, with a total scale exceeding that of first-tier cities, with broad market development space and unlimited development prospects. Therefore, for some brand property management companies, the property management market in second-and third-tier cities is like an uncultivated virgin land. Whoever can occupy early and take the lead in land reclamation will take the lead. However, the failure of some property management enterprises in the property management market of second-and third-tier cities also reminds these successor enterprises that the property management market of second-and third-tier cities is indeed an attractive pie, but we must also see that there are still many traps on the way to get the pie.

1, cost trap. There are many property management communities in second-and third-tier cities, and the scale is small. A residential area is often artificially divided into several residential areas, and the residential property is too scattered and exported, which makes it difficult to effectively implement closed management and increases the cost of property management. In order to maintain a high service level, the cost of foreign property management enterprises is generally higher than that of local enterprises. In addition, the labor cost of enterprises remains high, and the communication and transportation costs are high. These factors have obviously increased the cost of enterprises.

2. Price trap. After property management enterprises in developed areas arrive in second-and third-tier cities, prices often become their achilles' heel. Because the local property management enterprises in second-and third-tier cities pursue relatively small profit space, flexible price operation and obviously low labor cost, foreign companies have no advantage over local property management enterprises in pricing. Therefore, before entering the property management market, property management enterprises should carefully analyze the price levels of second-and third-tier cities and make appropriate adjustments to their original price systems to meet the needs of local market competition and prevent falling into price traps.

3. Uneconomical trap of the initial scale of the project. The so-called "uneconomical initial scale" refers to the phenomenon that after the property management enterprise takes over the project for a period of time, due to the large initial investment, the project is often developed in stages, resulting in a serious imbalance between income and expenditure. This phenomenon is more serious in enterprises that have long taken over a large number of extended property projects. Many people we have contacted who manage outreach projects have said that it is quite difficult for property management companies to occupy the property management market in second-and third-tier cities in the early stage, such as acclimatization, prolonged management chain, resulting in increased management costs, low management efficiency, large initial investment in new branches, wage differences and the contradiction of different pay for equal work. It is precisely because of these factors that in the initial stage of entering the mainland market, the resources of the original parent enterprise are difficult to enjoy, or the degree of enjoyment is not high, and it is difficult to obtain better economies of scale due to the expansion of scale. On the contrary, it is often manifested as "uneconomical initial scale".

4. Competition trap. Property management enterprises in second-and third-tier cities mainly take two ways to crack down on foreign competitors for the needs of competition. When several foreign enterprises participate in bidding, local property management enterprises often form a "low-price alliance", resulting in a very low average price, and foreign enterprises often fail to bid because of price problems. If the "low-price alliance" is difficult to form for some reasons, some developers' property management companies will try their best to raise the quotation, resulting in the average quotation being much higher than the market price, so that the seemingly fair government bidding will eventually have to be "unsuccessful".

6. Manage traps. Brand property management is relatively smooth in the property management market in the place where the company is located or in the first-class city, but with the rapid expansion of the company in the property management market in the second-and third-class cities, the management difficulty is obviously increased. Without the support of mature management, it is difficult for enterprises to go far. The concept of expansion includes not only the expansion of scale, but also the expansion of talents. If an enterprise does not establish a set of models that can stabilize the foundation of the enterprise in salary system, incentive model and corporate culture, it will become a bottleneck that restricts the enterprise from realizing its expansion plan. In practice, the pace of expansion of many property management companies in second-and third-tier cities has stagnated due to strong management resistance, which is enough to prove our understanding.

■ "Planting crops in the desert" must cross "five fences"

A property manager who has worked hard in the property management market in second-and third-tier cities for many years once vividly expressed the difference in the property management market environment between second-and third-tier cities and first-tier cities in one sentence: in second-and third-tier cities, doing property management is like planting crops in the desert; Doing property management in first-class cities, especially economically developed big cities, is tantamount to planting flowers and plants in oases.

It is no exaggeration to use the word "desert" to describe the market environment of property management in most second-and third-tier cities, and "planting crops in the desert" to describe the difficulties encountered by foreign companies in second-and third-tier cities! Because second-and third-tier cities, especially county-level small towns, which account for the majority of cities in China, are still in the "corner" forgotten by modern property management due to the influence of many factors such as economic development level, policy inclination, open mind and urban planning and design. The property management market of these cities is obviously inferior to that of first-tier cities represented by Shenzhen and Shanghai.

The problem is that even if your enterprise has made plans to expand the property management market in second-and third-tier cities, and you are psychologically prepared to grow crops in the desert, you still have to cross the "fence" tied outside the local market.

1, the fence of market mechanism. At present, the property management market in most second-and third-tier cities is developing slowly, and the competition mechanism in the property management market and the two-way selection mechanism between owners and property management enterprises have not yet formed. Most of the communities in second-and third-tier cities have not selected property management companies with corresponding qualifications through bidding or agreement. Developers in these cities often hold the idea of "selfish departmentalism" and "rich water does not flow from outsiders" and are unwilling to let foreign companies manage their own properties. Most residential quarters are managed by subsidiaries entrusted by developers. Government departments in some cities even openly restrict foreign property management companies from entering the local market. For example, in the bidding documents issued by some local governments, "Only locally registered enterprises can bid, and developers can designate several enterprises to directly participate in the bidding ..." and other bidding conditions have discouraged many foreign enterprises.

2. Fences of government departments. First, the current property management policy is not involved. The existing property management laws, regulations and policies are basically aimed at residential quarters with a certain scale in big cities, and the residential quarters in second-and third-tier cities lack practical and authoritative management methods. As a result, in practice, they go their own way, which easily leads to the embarrassing situation of poor service quality and high charge price. Second, the responsibilities of departments are not clear. In second-and third-tier cities, there are more than ten departments and units directly related to property management, such as construction, planning, price, environmental protection, finance, housing management, neighborhood offices and community neighborhood committees, municipal administration, sanitation, gardens, public security, transportation, fire protection, water supply, power supply, communication and cable TV. Due to the unclear responsibilities of these departments and units in residential property management, prevarication occurs from time to time, which leads to foreign enterprises being at a loss.

3. The fence of local enterprises. In the first-class cities, the competitors of general property management enterprises are mainly similar property management enterprises, while in the property management market of second-and third-class cities, the competitors also include some local small and medium-sized property management enterprises that are quick and sensitive to the market. When foreign brand property management enterprises attack the property management market in second-and third-tier cities on a large scale, the property management enterprises in these cities will inevitably unite against the same competitor for the benefit. When the operating performance of foreign-funded brand property management enterprises rises sharply, these local enterprises may lose their competitiveness due to scale restrictions, but in the initial stage of competition, it will bring considerable resistance to the market development and expansion of foreign-funded brand enterprises in second-and third-tier cities.

4. The fence for recruiters. It is necessary for property management enterprises to export expatriates when they enter second-and third-tier cities, but in order to control labor costs, they must recruit a certain number of local employees. However, in most second-and third-tier cities, due to the lagging development of the property management market, the number of property management talents is extremely scarce, and the overall skill level of employees is low. There are few compound talents who can work in multiple positions, and professionals who can hold positions above department managers are even more scarce. Relying on local recruiters, it is difficult to meet the requirements of foreign companies to build brands and expand markets, and it is difficult to satisfy owners with management services in the short term, which seriously restricts the market expansion of foreign companies in second-and third-tier cities.

5. The walls of urban residents. Influenced by the traditional housing policy for decades, coupled with the lack of guidance from the government and public opinion, a considerable number of owners in second-and third-tier cities have a vague understanding of the concept of property management, and subconsciously there is still the idea that paying property management fees is equivalent to secondary rental. Therefore, they are uncooperative in the formulation and payment of property management fees. Some owners confuse property management with neighborhood management, thinking that property management is nothing more than cleaning, guarding the door and raising flowers, which is equivalent to general public management, and has not upgraded property management to the level of enjoying high-grade, high-grade boutique services and maintaining and increasing the value of building products. Some residents cannot afford limited property management fees because of their low income. What's more, individual owners have long delayed and refused to pay property management fees. Property management companies are forced to reduce service standards and quality in response, so the property management of residential quarters has entered a strange circle.

■ Strategic thinking on developing property management market in second-and third-tier cities

(-) Reasonable access to the market and rational distribution.

When exploring the second and third tier cities, foreign property management enterprises should not only have a keen insight into their huge development space and business opportunities, but also rationally analyze and judge the uncertain factors and risks, and also have a clear understanding of their own economic strength and management strength, so as to scientifically grasp their own market positioning and the timing, rhythm and depth of entering the target market. When property management enterprises expand into the secondary and tertiary markets, they must grasp three points: first, judging from the current economic situation of the secondary and tertiary markets in China, choosing a city with relatively dense population and relatively active economy between the secondary and tertiary markets will promote the rapid growth of enterprise management. Secondly, rational planning and layout, to seize the property management market in second-and third-tier central cities as the commanding height, radiate to the surrounding areas. Thirdly, find a competitive location, seize the "heart" location of the city, stabilize its competitive position and popularity in the local area, and prepare for the future "alien invasion".

(B) the focus of market expansion of enterprises of different sizes

Large-scale brand property management enterprises should enter second-and third-tier cities from a high starting point. For medium and low-end small and medium-sized projects, priority should be given to consulting management services, and the whole project should be easily refused. Because generally speaking, compared with small and medium-sized property management enterprises, if large property management enterprises manage and serve low-end properties and small-scale properties, their costs will be much higher and it is difficult to produce good economic benefits. On the contrary, for high-end and large-scale property management projects in these cities, the whole Committee can be considered. Shenzhen Zhonghai Property's "Four Disconnects Principle" can be used for reference by other large property management enterprises. The "four unconnected" of China Shipping refers to the unconnected projects of multi-layer national committees with low scientific and technological content; Do not accept the projects of developers with poor social reputation; The urban property management market has just developed, and the whole project is not accepted; Do not accept the second-hand projects entrusted by the owners' committee. It goes without saying that its general direction is the high-end market. The reason why the company refused to accept the National Committee project of newly developed cities in the property management market is because they think that these cities lack the social conditions to implement high-level property management. Undertaking the project of the National Committee of the Chinese Revolutionary Committee will inevitably be subject to many constraints, such as concept collision, public opinion recognition, cost support, cooperation from all walks of life and so on, and bear the dual pressure of cost and quality. China Shipping Real Estate advocates seizing business opportunities, developing the whole project with a good market environment, and striving for a double harvest of economic and social benefits. When the market is just developing, we should engage in consultant management first, and then choose the opportunity to seek greater development after establishing the brand.

Small and medium-sized property management enterprises are the main force to expand the property management market in second-and third-tier cities. Generally speaking, small and medium-sized property management enterprises entering second-and third-tier cities should take over low-end and small and medium-sized property projects mainly through discretionary means. We should try our best to avoid a positive market conflict with our peers, not to get involved in price competition when the property management fee is very low, and not to take the initiative to rob our peers of their jobs. The way is to create new advantages and seek new market gaps.

(C) second-and third-tier cities property management market management strategy

1. Property enterprises should build high-quality products, establish brands and strengthen brand promotion in second-and third-tier cities. "Brand" and "excellent products" are the key factors for property companies to expand the market. In the future market competition, property enterprises must take the road of brand to successfully expand the market. When expanding the property management market in second-and third-tier cities, property enterprises should determine and establish a unique brand image for the target market, design and spread the overall image of the brand, so as to occupy a unique and valuable position in the hearts of target customers. Then make a long-term publicity plan by combining print, television, internet and other media to strengthen brand promotion. On the one hand, the brand strategy of property companies can promote the improvement of the quality of property management services, on the other hand, it can also produce a strong radiation effect and demonstration effect. Especially for those "weak" property management companies, it is more necessary to guide consumers and show their advantages through media and advertisements.

2. Adhere to the principle of territorial management and talent localization. Overseas enterprises should "do their homework" in management culture, fully analyze the consumption habits and regional cultural characteristics of local owners, try to shorten the process of acclimatization when entering a new city and integrate into the local market as soon as possible. At the same time, it is necessary to strengthen the cultivation of local management teams and management talents and implement the localization strategy of talents.

3. Join local property management enterprises and adopt flexible methods to occupy the market through cooperative operation. Occupy the market through cooperation means that foreign property companies and local property management companies manage through joint-stock cooperation. This situation is generally that the property is better and there is a certain profit space. The two property companies also want to link the interests of both sides through cooperation, strengthen cooperation and reduce risks. Entering the foreign market has brought great impact to the local property management industry and enterprises, and also received some resistance. If foreign companies want to take root in other places, they should adopt flexible cooperation methods, such as consulting management and cooperative management, so as to win the market and avoid confrontation with local enterprises as much as possible. Property management enterprises in second-and third-tier cities can cooperate with enterprises in first-tier cities such as Shenzhen, Beijing and Shanghai, borrow brands and transplant models to achieve "win-win".

4, the implementation of market development, market cultivation, and actively carry out market-oriented operation. Property management enterprises should focus on the future and formulate business strategies from the perspective of sustainable development when expanding the property management market in second-and third-tier cities. The traditional marketing idea of winning market share and making profits as the first goal is no longer applicable. Due to the small scale of property management in second-and third-tier cities, low charging standards and difficulty in charging, owners lack awareness of property management, and enterprises must operate at low cost. Secondly, expand into the deep business of property management, seek new economic growth points for enterprises and improve the comprehensive competitiveness of the market. If there are companies with certain scale and professional expertise, independent accounting elevator companies, electromechanical companies, greening companies and cleaning companies can be established. These companies can not only provide professional services for their own companies, but also make full use of their experience and professional knowledge to undertake related business to the society.

5. Actively create a relaxed development space and environment through public relations activities, and constantly enhance the market competitiveness of enterprises. Carrying out public relations activities is the lubricant for the operation and development of property companies in second-and third-tier cities. The contents and purposes of public relations mainly include: ① contact with the press, create and use news, and publicize the company's management services and boutique properties; (2) Open enterprises to promote the understanding of the company from all walks of life, especially owners and users; ③ Strengthen contact and communication with government departments. When undertaking projects in second-and third-tier cities, enterprises should go through various procedures in strict accordance with the relevant provisions of the local government, abide by local policies and regulations, and actively report to the local government authorities for instructions. At the same time, it is necessary to strengthen communication and coordination with relevant government departments and actively promote the revision of relevant local laws and regulations to make them more reasonable and operable.