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Strategy Analysis of Real Estate Company Development in Medium and Small Size Cities in China

A case study of the development of Fuxing Huiyu Company

Written by Ji Yiping

Paper category

Master Thesis


Architecture & Real Estate




Master Thesis 2.3 Strategies of real estate companies Patrick X.W. Zou and Alison Wong (2008) identified the opportunities and risks of foreign design and construction management companies entering the Chinese market, and formulated effective business strategies. I interviewed some senior managers of construction and engineering companies operating in China. They are all optimistic about the Chinese market, but there are still some risks. The biggest risk is that the company must cultivate a network of contacts, which comes from Chinese culture. For example, the company must maintain a good relationship with the local government to make more profits. Most local companies do better than international companies. A recent survey by Antonio Wong (2009) proposed a hybrid investment strategy aimed at capturing the long-term growth of the Chinese economy. Internationally, a 2003 survey by Martin Hoesli, Jon Lekander, and Witold Witkiewicz showed that real estate is considered an effective investment portfolio diversification, especially when considering domestic and international real estate assets. 3. Overview of Wuhan City 3.1 Overview of Wuhan 3.1.1 Location Introduction of Wuhan Wuhan City Group is the capital city of Hubei Province, the core central city of central China, and the political, economic, technological, and educational center of inland China. The nine provinces are connected geographically, as can be seen from the map of China below, because it is about 1,000 kilometers from Shanghai to the east, Chongqing to the west, Guangzhou to the south, and Beijing to the north. There are 13 administrative regions in the city. The total area is 8,467 square kilometers, the population is 8.31 million, and the permanent population is 6.66 million. Since the opening up, Wuhan has developed rapidly and its economy has continued to grow steadily. The average economic growth from 1992 to 1998 was 16%, which was higher than the provincial and national averages. Wuhan is the leading city in Central Continent of the Yangtze River Economic Circle. Wuhan is the 13th largest city in China, with a GDP of 456 billion yuan in 2009. 3.1.2 Introduce the regional characteristics and resource advantages of Wuhan Wuhan has comparative advantages in natural ecological environment, educational resources, industrial foundation, trade and logistics. All in all, from the map of Hubei Province, we can clearly see that Wuhan has some large lakes along the Yangtze River. It has brought a good natural ecological environment to Wuhan. 3.3 Introduction of relevant real estate policies and impacts The development of the real estate industry is very close to China's policy directions. In recent years, the government has paid attention to the real estate industry, the real estate economy, land transactions, real estate taxes, commercial housing, and affordable housing. 3.3.1 In recent years, monetary and financial policies are the most powerful tools for macroeconomic regulation and control. The government's monetary and financial policies. With the cyclical adjustment of financial policies and real estate, the government has made a series of flexible adjustments. Due to the economic crisis, the monetary policy of the real estate industry has been adjusted in recent years. From the beginning of 2007 to the end of 2008, the central bank of China adjusted 19 times the RMB (Ren Min Bi) deposit reserve ratio. As can be seen from the above chart, the deposit reserve ratio has risen from 9.5% at the beginning of 2007 to 15.5% (large banks) and 13.5% (small and medium deposit financial institutions) at the end of 2008. The benchmark one-year deposit interest rate dropped from 2.79% to 2.25% in 2007-2008. The benchmark annual loan interest rate was reduced from 6.39% in 2007-2008 to 5.31%. 3.3.2 From a regulatory perspective, before September 2008, in order to control real estate Overheated development of the market and excessive growth of housing lending, reducing market financial liquidity, and reducing economic risks in the real estate market, the central bank has adopted tight financial and monetary policies. On June 7, 2008, the deposit reserve ratio was the highest, reaching 17.5%, breaking the highest record in the past 20 years. year. As we all know, the government has issued a series of real estate control policies. And since 2003, the government has introduced more policies to control the overheated development of the real estate market. For example, controlling land supply; controlling real estate debt, etc. The purpose of these policies is to establish the standards for the development of the real estate market; the real estate market in some areas of China is too powerful to control; control investment in the real estate market; control the rise of the real estate market in some areas; control low-standard reconstruction; control illegal occupation of arable land; control the real estate debt market Imbalance. This series of policies has brought a certain impact to the real estate market in Wuhan, causing some customers to anticipate falling house prices and postpone their purchase plans. But in the long run, these policies will make the real estate market more mature and rational, and maintain the healthy and stable development of the market. Read Less