This is a best prospect industry sector for this country. Includes a market overview and trade data.
Design and Construction Services Sector
China is the world’s largest construction market with the industry forecasted to grow at an annual average of 5.2% in real terms between 2021 and 2029, according to the Fitch Solutions Infrastructure Report. The COVID-19 pandemic has slowed China’s construction development, but the market has shown signs of a slow recovery since May 2020.
China recently launched the “New Infrastructure” campaign to offset the economic impact of the COVID-19 pandemic and boost sustainable growth. “New Infrastructure” projects will focus on the construction of seven areas: 5G networks, industrial internet, inter-city transportation and inner-city rail systems, data centers, artificial intelligence, ultra-high voltage, and new energy vehicle charging stations. From 2019 to 2021, construction industry revenue value in China is expected to increase from $968 billion to $1.1 trillion.
Source: BMI Research
China’s urbanization rate is among the highest in the world. Data from the American Institute of Architects (AIA) Shanghai reports that by 2025, China will have constructed the equivalent of 10 New York-sized cities since the 1990’s. According to the Chinese-language report, Analysis of the Development Trend of China’s Architectural Design Industry in 2019, architectural design industry revenue in of China reached $189.3 billion in 2018.
Based on the Five-Year Plan for the development of the Construction Industry (2015-2020), the year-on-year increase rate of the architectural design industry was to be 7%, which means by 2020, total income should reach $220.8 billion by the end of the year. The impact of the global pandemic in Q1 2020 may reduce that number slightly but not significantly.
Recent trends in China’s design and construction sector point to a focus on local communities, younger people, and culture related projects. New super-high buildings over 500m are banned and high buildings over 250m are restricted. New technologies also play an increasingly important role to increase the quality and safety of buildings, such as Building Information Modeling (BIM), green building and smart city solutions, and artificial intelligence applications.
Except in rare exceptions, U.S. architectural design companies need to work with local design firms on projects in China because it is difficult to get a full architectural license. Only a few multinational companies have obtained the “Class A” license by acquiring local companies.
Benefiting from the continuous growth of China’s construction market capacity, the demand for engineering services has increased rapidly. The previously referenced Five-Year Plan for the development of the Construction Industry (2015-2020) reports that the operating income of engineering consulting service companies, such as engineering supervision, cost consulting, and bidding agencies, increased by 8% annually, despite a short slowdown in Q1 2020.
Market opportunities for engineering services mainly lie in the following areas:
- Engineering inspection for urban infrastructure projects
- Testing services (e.g., energy efficiency evaluation, indoor air quality testing, new material, and infill testing)
- Construction quality and safety supervision services
- Engineering and consulting services for historic districts & building preservation
- Repositioning and adaptive reuse of old buildings.
The challenges for U. S. firms will be increased domestic competition and the relative shortage of senior professionals. Although the Ministry of Housing and Urban-Rural Development and the Ministry of Commerce decided to abolish the Regulations on the Administration of Foreign-Invested Construction Enterprises in 2020 which improves market access for foreign firms, it is still very complicated to meet all the criteria for U.S. companies to get fully qualified without working with a local firm.
China Refrigeration Expo 2021 – Refrigeration, Air-conditioning, Heating and Ventilation, Frozen Food Processing
April 7-9, 2021 Shanghai, China
Guangzhou International Lighting Exhibition
June 9-12, 2021, Guangzhou, China