Home›Forums›In Chengdu›Feasibility of a Renovation Company?
- This topic has 9 replies, 5 voices, and was last updated 6 years ago by wu-wei.
March 6, 2017 at 6:03 pm #52246
I’m looking for advice on the feasibility of setting up a renovation company in Chengdu please.
I currently run a successful, small, design and build company in London, UK. I operate within the high end domestic market and I’ve got a built portfolio of one off custom houses and contemporary renovations/extensions to urban properties in London.
My wife is from Chengdu, we have two young children together. My wife would like to live in Chengdu, I’m open to the idea as I’ve enjoyed living in the city in the past. I speak conversational Mandarin.
My wife has experience working as an interpreter and project manager’s assistant for Chinese state owned construction companies- which is how we met.
I’ve renovated an apartment for my parents in law in Chengdu before. I’m also toying with the idea of demolishing their derelict country house and building a custom house for them. I think this would be a good way of furthering my knowledge/contacts for getting things built in China.
I’m very familiar with modern construction methods, custom fabricating of furniture/fittings, bespoke handmade kitchens and joinery, exotic soft furnishings, creative lighting design, ‘smart home’/audio visual installations and all the other ostentatious frivolities the rich like to put in their homes.
I’ve managed to carve out a good living for myself in London with good quality work and creative branding/marketing. Could I do the same in Chengdu?
I’m not looking to strike it rich, just earn a reasonable living.
Any help with this appreciated, thanks in advance.March 7, 2017 at 12:07 am #52250CharlieKeymaster
If you have a successful business in London I would not give that up to move to Chengdu. The cost of living in Chengdu is a fraction of what it is in London so I don’t think you’ll have any issue making a reasonable living here. But as any foreigner who has started or managed their own business here will tell you, it is not easy and comes with a significant learning curve. Speaking Chinese and having a Chinese spouse will be huge advantages. Just my $0.02, good luck!March 8, 2017 at 2:48 pm #52260Rick in ChinaParticipant
Charlie’s on point, but in addition regarding the ‘derelict country house’, it’s not as easy as wanting to do it and doing it.. there would be an enormous amount of paperwork and authorizations involved in legally doing construction (or demolishing) in most any farm property, I loved the idea back in the day also.. you can buy property pretty cheap in the countryside, but the restrictions on use are significant. You could renovate the existing building of course but that’s probably all you’d end up being able to do, and keep in mind: one day soon, some random day, they may come ‘force’ the sale of said countryside house, and your renovations go out the window (maybe literally, but more likely, crushed under migrant worker hammers). Property ‘owned’ isn’t the same as property ‘owned’ in other places 😛March 8, 2017 at 9:56 pm #52262
Rick, are you sure that is how it works? I know a few people who have built on land they have the rights to and they did what they wanted. Limitiations were more about lack of knowledge rather than not getting the correct permits or authorizations. Even a few projects on public land, two I was involved with directly, required no permits or approval or inspection. When someone has a di quan zheng and the government or a developer wants to repossess the land, they actually follow laws to buy it back from the holder of the certificate. This is why after property is set for demolition many homeowners set out remodeling like mad to increase the “value” of their property to get more ‘chai qian’. This remodeling follows the formula set out by the aforementioned laws and just increases payout they collect. Actual improvements to property on old construction or new wouldn’t just be a flush of money down the toilet.
An American friend here in Sichuan had a home built in the countryside completely to USA building code standards. It was expensive as hell and a great challenge to find the appropriate materials but they successfully did it without a prohibitive amount of time, paperwork, permits, or inspections.
Wu-wei, if you have a family here with some connections that can help navigate setting up such a business, I think your idea is worth exploring. Hell, I’d be interested in being involved. Especially your idea for fabricating furniture, cabinetry, or fixtures to the caliber you indicated. It’ll be a tough sell for sure, considering what you’d be competing with, but there is a higher end market here for quality work. I’ve been in the homes of a number of wealthy people, who know what building standards are like outside of China, and they are frustrated that their expensive new home or apartment has drains that constantly clog, electric circuitry that isn’t safe, and other shit that looks bad and falls apart. Most other people don’t even know that there’s an alternative.
Be warned though that finding craftsman (carpenters, masons, electricians, plumbers) that won’t cut corners or will be receptive to learning a new standard of doing things will likely be your biggest hurdle.March 8, 2017 at 9:58 pm #52263March 9, 2017 at 1:52 pm #52265CharlieKeymaster
Check out this article: chabuduo!
This was a great article that I hadn’t read, thanks for sharingMarch 11, 2017 at 3:20 pm #52283otchengduParticipant
God topic & points all. As intended above it’s doable but you have to monitor closely for changes in rules, if you do that the agony of defeat can be minimal and/or eliminated. I purchased a new place in the ‘du”, no issues just alot of paperwork and only mine for 70 years.
2nd, i do have a chunk of land in the country side and have had no issues. It’s much easier if you obtain the property via family members as there really is no change of hands. Once the property is sold to an outsider, non family member thats when the rules start to change. 3rd, the inlaws visit the city clearks office where they obtain property rights changes and/or updates. another possible issue is when you try to sub-divide a certain parcel. Other than that obtaining and holding it isnt too much of concern for now.
I have actually considered getting one of the pre-fabbed home kits from menards and ship it over to avoid all the jerry-rigging.March 12, 2017 at 12:19 pm #52285
I recently spoke with an Chinese friend who has done a fair bit of business with renovation, here and abroad, and is by all accounts a seasoned business man. He warned that the with the more common apartment renovations one is still dealing with the building infrastructure and typical construction longevity, which makes higher quality improvements less worth it in the long run. Even though he could contract his own work and do it better he still just outsources because the added costs aren’t a sound investment.
Regarding building or renovating in the countryside, he was of the opinion that one would encounter a level of resistance based on local standards that would be very difficult to overcome. Also, that city folk with money don’t often think to build vacation homes in China because of the challenges related to policies of general property ownership and hukou issues. Many would rather invest in real estate abroad because they would actually own it and could will it to the descendants. According to him the few that do invest in property like we’re talking about have to pay off local officials, often have to have the property in someone else’s name, and risk losing their investment due to what I understood as eminent domain.
and keep in mind: one day soon, some random day, they may come ‘force’ the sale of said countryside house, and your renovations go out the window (maybe literally, but more likely, crushed under migrant worker hammers). Property ‘owned’ isn’t the same as property ‘owned’ in other places
You’re right Rick.
I haven’t researched this extensively but the only direct knowledge I have of such a company existing is of a Swedish couple who opened a construction company up on the plateau. They consult with energy efficient building materials and methods like insulation, radiant floor heating, thermal-rated multi-pane windows, etc. Their business isn’t doing super great even in spite of the fact that Tibetans by and large have lots of money and the impact of what they’re trying to promote would be huge for locals’ living environment. They told me that with nearly every one of their customers its a difficult sell. Why spend so much on high quality materials when the same money could be used to build a whole second or third storey with the old standard?
Interesting topic for sure. The business man friend I spoke with seemed to believe that any change would be decades away, if ever, considering the policies and laws of the presiding regime.March 16, 2017 at 4:11 am #52313
Many thanks for all the replies, has given me food for thought for sure.
Also thanks for the ‘chabuduo’ article link, made for very interesting reading.
Regarding the in law’s house in the country. I was unsure of the legal implications but we were just going to follow what one or two of the neighbours in the area have already done. The structure as it stands is a very basic structure which is in a bad state of repair. It’s not worth trying to save as it would be easier to rebuild. My mother in law still lives there part time as she has many friends and family in the area. I’d build a new house similar to what is there, within the existing footprint of the building but built well, with contemporary detailing. It would be a good way of assembling a small team of tradesman. Dealing with the issues mentioned above initially would be better on my own project rather than other people’s homes. I would also be running at a serious brownie point surplus with the in laws which could prove useful in the the years to come.
When I asked the neighbours about the legal implications, the general consensus is ‘those rules don’t apply around here, you can do what you want’. I’m sure this isn’t the case. It wouldn’t cost a great deal to build but I’d need to look into it further to ascertain whether it is worth the risk of the house being demolished one day.
Building materials shouldn’t cause too much of an issue. I could build a passivhaus with sand, cement, gravel, brick, sheet/flexible plastic, glass, rubber, sheet/round timber, foam, sheet metal and aluminium extrusions.
It seems the biggest hurdle I’d face is getting local tradesman to increase their working standards/competency. This isn’t something that is unique to China, admittedly it may be more pronounced in China. I’ve had issues like this in Malta, Spain and even the UK too. Not to mention high end work requires standards that are much higher than the norm even in countries in which construction standards are already high. It will of course be even harder to overcome these issues in China however I feel I can do it.
The first thing I would do is buy/lease an industrial unit and equip it with tools and machinery so that we can make interesting things in house. Also if it’s worth the cost I could import quality non perishable building materials and store them there.
I would then need to assemble a directly employed team. It’s crucial to get the right people, willingness/openness to learn and do things differently would be the number one requisite. They would need to be financially and otherwise rewarded for working for me in comparison to working for anyone else. They also need to buy into the ideals and feel that they’re a part of it. I would initially need to be onsite at all times, behind every single detail. If they can’t do it, then I will show them. They need to be old enough to have been trained with a couple years experience but young enough to not be set in their ways and hostile to being told what to do. Early/mid twenties is perfect. After working this way for sometime I would then take on a site manager and train him in the same way. Then repeat the process if the market allows it. Each project needs at least a working foreman, possibly a manager.
I feel by building the business this way it will be entirely possible to carry out very high standard work, even in China. The next issue, and where I’m not sure and hence asking for advice on this site is: can I make it pay.
Carrying out projects in the way mentioned above is obviously going to cost more than employing your average local contractor. Therefore I cannot compete with them on price for standard specification refurbishments. My market would need to be wealthy people who indulge in life’s luxuries, like to flaunt their wealth and are prepared to pay for it. Are there people like this in Chengdu? There seems to be a lot of flash cars and gucci stores around the city so I have a hunch there is.
I can provide a service which possibly the vast majority, perhaps all, local contractors just aren’t able to. You can only learn this stuff by doing it, which I very stress-fully figured out early on in my career. It maybe the case that there are other very good renovation companies in Chengdu. There are lots of other very good renovation companies in London but the demand for such services has always been greater than the amount of companies able to do it, even during recessions.
I’m prepared and able to trade at a loss for the first year or so if required.
What really propelled my business in London was getting my work into design magazines. I would seek to do the same in China. I would also consult a local branding agency to ensure I’m emitting the luxury/exclusive image in ways that suit Chinese tastes. I’ve got a solid London portfolio to sell myself on too.
Another way I’ve managed to differentiate myself is to utilize an open book accounting method on projects. All my costs/profit are transparent to the client, I earn between 10-30% profit margin depending on project size/scope. If the project cost comes under the initial price given the savings are shared 50/50 between me and the client, but I still stand by my price if it goes over unless design changes has been made by the client during construction. This has been a good selling point for myself as I’m confident in my abilities to deliver the project to budget. It’s also good for the client as we are then both on the same team, instead of the usual adversarial relationship. They have a construction/design professional they can trust will design and deliver a quality project without cutting corners. It also lets them go wild with their specification if they so choose.
I’ve really gone on a bit here. Thanks if you’ve read this far.March 16, 2017 at 4:36 am #52314
Also regarding whether it would be a worth giving up what I’ve got to start a new life in China. I didn’t meet my wife in the UK, it was never set in stone that we’d live in the UK forever. She wants to live close to her family after living away for so long. I knew when I married her that we would eventually, someday live in China.
I’m 31, I’ve been working on the business since leaving school at 16. I’d enjoy a change and a new challenge. I feel like I’ve taken the business as far as it can go in London and am not enthused about the idea of banging my head against the ceiling for the rest of my working life. There’s a possibility that no such ceiling exists in China.
I don’t think I’d be able/want to do anything other than this in China. It’s all I know and I live it.
If I can’t make it work in China then the worst case scenario is we lose a bit of money but spend a couple of years in Chengdu. I can always come back to London and get a good job working for another firm.
If I can’t make it work as a renovation company for clients. The alternative I would like to look into/seek others opinion is to become a boutique property developer in China. Buy the best apartment, in the best area and renovate it to an out of this world standard then hope to sell it to a rich person that buys it with their heart and not their head. What do you guys think?
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