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Establish a Facilities Management Company in China

05.08.2020, 22:53

Establish a Facilities Management Company in China

As facilities management differentiates itself from property management in China, new openings are becoming available to established European and U.S. service providers.

Establishing in an overseas market invariably involves multiple practicalities – in addition to a recognition that the terminology, ‘Facilities Management’, still remains unknown to many potential clients in the Chinese market who have become accustomed to many FM services being bolted onto traditional property management functions – including rent collection and HVAC system maintenance.

It is therefore useful to consider some basics about setting up in China.

Company Formation & Employment

To operate a Chinese Facilities Management company, it’s a good idea to run through a China company formation process to create a proper legal entity. Everything essentially follows from that point when taking this step.

Company Formation

A company like NH Global Partners has plenty of experience with setting up companies on behalf of foreign entities – see here: https://nhglobalpartners.com/china/company-registration-in-china/. They can provide what’s required to complete this process successfully.

Employment

It’s necessary to cover some essential employment roles as soon as possible. To get this accomplished, it’s often useful to use a Hong Kong Employer of Record that can be the sole employer for people needing to work on behalf of the business. Different arrangements can be made later when your Chinese company is fully operational. Proceeding this way prevents excessive delays at the start, which can derail plans.

Understanding the Scale and Scope Properly

China is vast with a population of over 1.25Bn people. Beyond the major city hubs of Beijing, Guangzhou, and Shanghai (to name a few), numerous cities have at least 1m people living and working there. When coming from the UK to the United States, one is immediately overwhelmed by the size and scale of the place. The same is doubly so when beginning from an American mindset and then entering China!

Due to the sheer size and scope of China, it’s fair to say that most Facilities Management companies are currently limited to one or more of the major hubs. Some others specialize in small tier cities with a 1m+ population to serve. Also, there are a few large Facilities Management companies with multiple facilities across several cities, but this is far less common.

What Services Do Facilities Management Companies Provide in China?

While some facilities companies offer little in additional services beyond the basics, that’s not a good way to proceed. Increasingly, facilities managers are tasked with greater responsibilities than that.

When setting up a facilities management company in China, it’s expected that many or most of the following services will be provided:

  • Cleanroom management
  • Contract management for equipment
  • Project management to change or renovate building interiors as required
  • Building maintenance to rectify issues and anticipate them
  • Space organization and effective management of such
  • Liability management for product defects
  • Exterior landscaping, lawn care, etc.
  • Financial management
  • Risk control and limitation
  • Cleaning services
  • A helpdesk that’s available around the clock

Whilst the above list is not exhaustive, it provides a reasonable idea about the services required and those expected by Chinese companies when working with a Facilities Management company.

In Conclusion

To succeed in China, new facility services providers need to focus on delivering value-added services in an otherwise competitive and price-conscious market which is notable for multiple providers of lower value facilities management services. Service differentiation is therefore essential.

CAMFIL HVAC Filtration Solutions

Staff Reporter

FMIndustry.com covers the latest news, trends and opinion from the facilities management (FM) and corporate real estate (CRE) sectors. The FM market is currently estimated to be worth USD 1 trillion annually and is projected to grow at a compounded annualised rate of approximately 5% between now and 2026.

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