HONG KONG, CHINA - Media
OutReach - 23
April 2019 - Cushman & Wakefield, a leading global
real estate services firm, recently released its research publication Mainland
China Unicorns - Galloping to New Markets. According to the report, mainland
China has seen a rapid increase of domestic unicorn companies present in the
region over the past five years. At the end of 2013, there were just two but by
the end of January 2019, this number had grown to 82. What is more, in the
first 10 months of 2018, more than one-fourth of new unicorns globally originated
in mainland China.
The reasons behind
this tremendous growth mainly lie in: Generous government support and massive
investment from Mainland China-based tech giants.
In advancing the
"Made in China 2025" initiative, the Chinese government has adopted a
series of policy levers to foster the growth of domestic start-ups in
strategically important industries, such as artificial intelligence (AI), IT
and robotics. Meanwhile, up until the end of 2017, 50.8% of unicorns in
mainland China had been directly or indirectly invested into by the BAT group
(Baidu, Alibaba and Tencent), which had a combined market value of about US$945
billion as at the end of February 2019.
Over the past two to
three years, unicorns in mainland China often hit the headlines. In fact,
accompanying the development of mainland China's New Economy characterised by
smart, sharing and green development (see our China's New Economy: Smart,
Sharing and Green report), unicorns in mainland China have widely penetrated and
brought big changes to the lives of ordinary people in the region.
"Thanks to a wave
of mainland China-unicorn-inspired innovation, traditional industries around
the country have embraced great changes in not only the technology adopted but
also in the way these industries operate," said Shaun Brodie, Senior Director, Head of Occupier Research, Greater
China, Cushman & Wakefield.
Along with change, new
business opportunities have appeared and many unicorns in mainland China, which
have seized the business openings, have subsequently grown their organisations.
As their businesses grow, so their appetite for commercial office space has
increased. This trend is clearly seen in the results of our recent mainland
China unicorn company survey: 78% of surveyed unicorns indicated that they
intend to expand their office occupation in mainland China in not only existing
city markets but also new city markets, according to Cushman & Wakefield's
mainland China unicorn office occupier intention survey.
Jonathan Wei, Managing
Director, Occupier Services, Greater China at Cushman & Wakefield said: "It is expected that those fast expanding unicorns in the
region will become a major force for office space absorption in Mainland China
in the coming years."
Digging further into the results of our survey, among
the selection criteria for new office space, one of the foremost factors
unicorns in mainland China place on new office location is the surrounding pool
of talent. This has resulted in their strong preference towards business park
office locations near universities and research institutes, such as Beijing's
Zhongguancun Business Park and Shanghai's Bay Valley and Chang Yang Valley.
"Office landlords, which are fortunate to have
projects located in business parks close to renowned universities in mainland
China, have enjoyed strong levels of leasing for a number of years now. As new
business opportunities arise for new products and services in China's New
Economy and as new unicorns emerge, so office take-up in these areas will
remain strong," said Vicky Shen,
Senior Director, Head of Office Agency, China at Cushman & Wakefield.
Mainland China's millennials-filled (and often led)
unicorns are also responding to a growing awareness of health and wellness. As
our survey indicates, wellness programs that promote a healthy and active
workplace environment will be widely adopted by unicorns in mainland China,
with an overwhelming 83% of respondents saying they will incorporate such
programs into their office workplace in the future.
Additionally, being high-tech driven themselves, most
unicorns in mainland China are willing to make use of smart office space
technology to enhance operational efficiency and to even develop their own
Moreover, the majority of unicorns prefer to adopt
some sort of co-working/flexible working workplace arrangement after being
inspired by the co-working trend and recognising the benefits in terms of space
optimisation, employee engagement and job satisfaction.
However, there is still room for improvement in terms
of unicorn adoption of space in green buildings. Concerns for higher rental
costs and limited availability of green buildings in business parks have led to
green buildings to feature less on the priority list as the location of choice
for their workplace. Looking to the future, the government could take the lead
on this by encouraging owners of business park office buildings to green their
property portfolio, which in turn could provide the same owners with higher
rental incomes and higher value appreciation as space is increasingly taken up
by unicorns, which are both environmentally conscious and want to offer their
employees a fully-fledged green space from which to work.
Finally, by taking account
of not only the aggressive expansion plans unicorns in mainland China have for
their businesses over the next five years but also their passion for
innovation, unicorns in the region will not only have a stronger presence in
terms of office occupation but they are also likely to bring a number of
positive changes in mainland China's office workplace, such as office space
design and the implementation of office space technology.
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