Business Planning Analysis-03 Name: Lee Xiantao Branches: Business School, Binhai University Tel:

Preparation Question: (1) Are you familiar with China’s property market? How do you think about the future of property market? How do you think about the future of property market? (2) Is there any really asset bubble in property market? How do you think about “investment” and “speculation ” ? How do you think about “investment” and “speculation ” ?

Property Market in China (1) Evolutionary road of property market (2) Marketing analysis of property market (3) Asset bubble in property market (4) Funding chain of property developers (5) Mainstay industry ---China’s Urbanization VS. Pseudo-Urbanization ---China’s Urbanization VS. Pseudo-Urbanization (6) Opportunity and challenge of property market

Learning objectives (1) To make an independent analysis for property market; (2) To write an research paper about future trend of China’s property market; (3) To write a marketing plan for property developers

Evolutionary road of property market ① Traditional phase ( ) ☆ Government-oriented, residents can’t get property rights ; ☆ Government-oriented, residents can’t get property rights ; ☆ House as public welfare, pay a little rent ; ☆ House as public welfare, pay a little rent ; ☆ forbid trade in the market ☆ forbid trade in the market ② Transitional phase ( ) ☆ Partial property rights (from government to individual) ; ☆ Partial property rights (from government to individual) ; ☆ House as commodity, pay the price and receive some funding ☆ House as commodity, pay the price and receive some funding ☆ Establish relevant policy ; carry out regional experiments ☆ Establish relevant policy ; carry out regional experiments

Evolutionary road of property market ③ Commercial phase (1998-) ☆ Privatization of property rights ; ☆ Privatization of property rights ; ☆ House as a pure commodity ; exchange based on ☆ House as a pure commodity ; exchange based on the market price (depending on demand and supply) ; the market price (depending on demand and supply) ; ☆ Mature regulation / prosperous commercialization ☆ Mature regulation / prosperous commercialization ☆ Multilateral game ☆ Multilateral game

Marketing analysis of property market Stakeholders’ game (1) Government Property developer Speculator Bank Purchaser landfund loan interest house revenue house spread registering tax loan credit

Marketing analysis of property market Stakeholders’ game (2) Government vs. Property developer Government vs. Property developer Bank vs. Property developer Bank vs. Property developer Property developer vs. Speculator and Purchaser Property developer vs. Speculator and Purchaser Bank vs. Speculator and Purchaser Bank vs. Speculator and Purchaser Government vs. Speculator and Purchaser Government vs. Speculator and Purchaser

Marketing analysis of property market Profit distribution and stakeholders’ hierarchy GovernmentBank Property developer Speculator Purchaser35%-45% 6%-7.7% 15%-25% 5%-12%

Marketing analysis of property market (1) Why is the housing price so high? ☆ the gap between demand and supply ; ☆ the gap between demand and supply ; Urbanization / dual economy / investment and speculation Urbanization / dual economy / investment and speculation ☆ monopoly (land / capital / trade market) ☆ monopoly (land / capital / trade market) Only the highest bidder can get the land. Only the highest bidder can get the land. ☆ inflation ☆ inflation Widening income disparity along with upgrading consumption Widening income disparity along with upgrading consumption ☆ worse business environment ☆ worse business environment

Marketing analysis of property market Inflation—CPI rising Inflation—CPI rising

Marketing analysis of property market (1) Why is the housing price so high? ☆ global finance crisis ☆ global finance crisis (lending cost / exchange rate / industrial structure) (lending cost / exchange rate / industrial structure) ☆ transaction cost is rising ☆ transaction cost is rising (property tax / stamp tax / rent-seeking / material price) (property tax / stamp tax / rent-seeking / material price) ☆ “popular ” land finance ☆ “popular ” land finance (funding and tax revenue from selling land account for large proportion of total revenue in some local governments) (funding and tax revenue from selling land account for large proportion of total revenue in some local governments)

Marketing analysis of property market (1) Why is the housing price so high? ☆ hot money (speculative capital) ☆ hot money (speculative capital)

Asset bubble in property market Where is my house?

Asset bubble in property market land finance (Total revenue from selling land)