Digging For A Trillion Yuan Of Prefabricated Buildings: The Change Of Thinking From "Construction Industry" To "Manufacturing Industry"

During the Spring Festival in 2020, under the "cloud supervision" of hundreds of millions of netizens, Wuhan huoshenshan and leishenshan hospitals have been built rapidly in more than ten days, with no difference in "China's speed".

Almost at the same time, in Hong Kong, China, a river apart, the emergency epidemic prevention observation center has been set up, which is known as the Hong Kong version of "Huoshen mountain". According to the materials and requirements of the port standard, it took the builder 45 days to complete the task that would have taken two years to complete.

Built in a short period of time and quickly delivered to use, the above two have a common name - prefabricated building.

Different from the traditional cast-in-place building mode, prefabricated building is to produce the components of the building in the prefabrication factory, and then transport them to the construction site for assembly. Compared with the former, it has more characteristics of standardization and informatization.

China started to propose to vigorously develop prefabricated buildings in 2016; the Ministry of housing and urban rural development proposed the goal in 2017: by 2020, the proportion of prefabricated buildings in new buildings will reach more than 15%.

Especially since 2020, Beijing, Hainan, Zhejiang, Guangdong and other cities all over the country have successively followed up the local plans for the promotion of prefabricated buildings. Large scale reconstruction of construction industry mode has started.

"For construction enterprises, the traditional investment + construction mode has reached the bottleneck. The construction industry has reached the critical point of change. " In an exclusive interview with the 21st century economic reporter recently, Zhou Zhike, assistant president of China Construction International Group (3311. HK) Co., Ltd., pointed out that it is necessary to use technology to promote change and make the construction industry thinking from pure building to manufacturing mode, which is also the essence of prefabricated building.

"Aging, labor shortage, environmental protection demands, etc., coupled with the gradual decline in the cost of prefabricated buildings in recent years, the two curves are gradually drawing closer to a convergence point. I think the prefabricated building will lead the traditional mode in the future. " He concluded.

Ping An Securities estimates that China's prefabricated construction market is expected to exceed 1 trillion yuan in 2021, of which prefabricated concrete structure accounts for more than 50%. CICC, on the other hand, believes that the scale of the fabricated building market will exceed 700 billion yuan in 2020, and the compound growth rate in the next six years may reach 17%.

Prefabricated buildings in the rising period

After a few years of policy foreshadowing, since 2020, the major provinces and cities in China have started the pace of promoting prefabricated buildings.

According to the statistics of Ping An Securities, due to the promotion of policies, China's prefabricated buildings ushered in explosive growth. The newly built prefabricated building area increased from 14.25 million square meters in 2012 to 290 million square meters in 2018 (accounting for 13.9% of the newly started area), with an average annual compound growth rate of 65.2%.

Among them, East China is the region with the largest number of new prefabricated building projects in China, and the proportion of projects in Shanghai, Shandong, Jiangsu and Zhejiang provinces and cities alone has reached 48%.

The Hong Kong epidemic prevention project mentioned at the beginning of the article is jointly promoted by the Hong Kong Branch of China Construction International and its subsidiary Guangdong Hailong construction. It is reported that among the prefabricated buildings of CSCEC, Hong Kong, China is also the majority of its business. Both the total number of projects and the total construction area, Hong Kong, China accounts for more than 2 / 3 of the total amount of prefabricated buildings in the company.

On the one hand, this is related to the process of policy promotion, on the other hand, it also takes into account the different acceptance of costs in different regions.

Guo Zhengting, deputy general manager of Guangdong Hailong Construction Technology Co., Ltd., told reporters that at present, the cost of prefabricated buildings is still slightly higher than that of cast-in-place buildings by about 10% - 15%, because the technology and scale of this field have not yet formed a system. Once the system is formed, the cost will be gradually reduced.

"I believe that from the mainland market, the larger the scale, the more cost can be further reduced." If there is not enough standardization in an assembly project, the cost will be high, he added. Therefore, through the establishment of the design and Research Institute, Hailong architecture is making efforts in design and technology to achieve standardization and reduce costs.

In fact, in recent years, local governments have special requirements for the construction of prefabricated buildings in specific types of projects such as affordable housing and hospitals, and some places will provide preferential policies in terms of plot ratio of projects. These are the background for accelerating the spread and maturity of such projects.

Generally speaking, cost is a problem closely related to scale, time, technology and market cognition. However, as time goes on, it may gradually become no longer the core dilemma.

Tianfeng securities in the research report pointed out that from the current data, assembly cost is close to the cast-in-place. "We believe that PC (prefabricated concrete structure) has lower cost and more popularization significance, while steel structure needs further maturity of objective conditions."

Industry insiders told the 21st century economic reporter that the current fabricated market is not a stock logic, but an incremental market. With the increase of prefabricated building rate and the increase of penetration rate of superimposed prefabricated buildings, the compound growth rate of the industry is expected to exceed 30%.

"At present, China's prefabricated buildings are in the stage of rapid improvement. I think it's rain and dew, industry companies are relatively good days. It is estimated that in 4-6 years, there will be overcapacity in many regions. When we start to compete for costs, it is also an important period to test the product quality of enterprises. We should consider the comprehensive ability of all aspects, and it is also the time when excellent enterprises can rapidly expand their shares. " He said so.

Thinking from construction industry to manufacturing industry

Although it has entered the Hong Kong market and has been recognized by the local authorities, how to take advantage of the policy to quickly open up the situation in the mainland market is a problem that all builders, including China Construction International, should consider.

Combined with the preliminary assumption of the 14th five year plan of CSCEC, the growth rate of its business income and contract amount has slowed down in the past three years, but the company will still move forward to the blue chip vision of "10 billion profits and 100 billion market value" during the 14th Five Year Plan period.

How to do it, we need to find revolutionary and breakthrough technology in traditional industries. At present, the industry focuses on prefabricated buildings.

Zhou Zhike pointed out that "in the past, the construction industry adopted traditional ideas. However, in the past two years, I think that the development direction of CSCEC international has changed greatly. It is a proof that China Construction International has really explored core technologies and deep-water areas, such as mic, which has entered the Hong Kong market. "

He also said that the construction industry should be further driven by technology. "The real idea of manufacturing industry is to have a product that can be quickly copied and the cost can be controlled. It can seize market share through large-scale, and achieve the goal of cost intensive through informatization and intelligence in internal management. After the scale is formed in the later stage, the market can be further expanded through capitalization. "

According to reports, in 2018, CSCEC Hailong established its intelligent manufacturing department, which is the extension of this logic.

"The ultimate goal is to open up the management model. Intelligent manufacturing is to integrate information, technology and intelligence into daily design and production. Although BIM (building information model) system has been used all the time, it is more important to build mature platforms such as production MES and use them. " He explained to the 21st century economic reporter that at that time, the construction industry will no longer consider the cost and profit based on the piecework system, but will consider the whole from the perspective of manufacturing industry and supply chain.

The MES system mentioned here is a production application platform built by China Construction Hailong, which integrates project management, component management, order planning, yard management and other information. Its data is mainly transmitted from the assembled BIM design platform, and after MES, the corresponding data is transmitted to the intelligent terminal for related link management.

According to reports, China Construction International will focus on the overseas Singapore market and the domestic East China and Hainan two major regions of prefabricated buildings.

"We find that the development level of Singapore's prefabricated building market is ahead of that of Hong Kong and the mainland of China. Moreover, the relatively high-end and high-value-added residential products in Singapore are very attractive to us. Of course, we can also add more capacity to CSCEC through exploring the Singapore market." Zhou Zhike pointed out to the 21st century economic reporter.

It is inevitable to participate in the high-end market. The Yangtze River Delta, led by Shanghai, is the largest market for high-end prefabricated buildings in China, which can also fit in with the group's business sector. Hainan Province has great market development potential due to its high requirements on ecological and environmental protection.

"On the whole, prefabricated buildings can save construction period and workload, and can complete the construction of the first floor in four days in the mainland market, and ensure that there are no quality and safety problems." Guo Zhengting pointed out that in the long run, this will be of great benefit to the real estate industry which emphasizes turnover.

Ping An Securities pointed out that although the direct construction cost of prefabricated structure is higher than that of traditional cast-in-place structure, the indirect benefits generated by shortened construction period and preferential policies can significantly improve the internal rate of return of developers.

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