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News Release

Shanghai

Emerging Trend in China for Outsourcing of Facilities Management in the Industrial Sector

Savings of between 10%  to 20% achievable


In today’s economic downturn, the need for cost savings and improved efficiencies is driving a new trend of outsourcing facilities management in the industrial sector in Asia Pacific. This is particularly relevant to China where there has been a major industrial sector, as the country continues to attract manufacturers and industrialists to build plants and factories, and expand operations across its geography.

Mr Cameron Scott, Head of Integrated Facilities Management for North Asia at Jones Lang LaSalle says, ‘In China, we are seeing more industrial companies looking at outsourcing as a way to reduce operational costs. They recognize that this is an effective way for them to subcontract business functions that are outside of their core competencies and at a lower cost. From experience, first generation outsourcing companies can usually achieve FM operations cost savings of between 10% and 20%.’

Industrial FM outsourcing is only beginning to take root in Asia Pacific. However, similar to the early adopters of FM outsourcing like the financial services, technology and telecommunications industries, the industrial sector’s outsourcing potential is high.

‘We expect the momentum to grow rapidly in Asia as there is significant scale of operations in key markets like China, India, Singapore, Thailand, Vietnam and Japan. Our recent appointment by Philips is testament to this growing trend,’ says Mr Jordi Martin, Managing Director, Integrated Facilities Management, Asia Pacific at Jones Lang LaSalle.
The level of awareness with regards to outsourcing of FM to third party service providers is still low amongst industrial companies in China. Most of the FM services for these companies are still performed in-house or by a subsidiary company.

‘This decentralized model means that companies are missing out on opportunities to achieve economies of scale, which can be realized through outsourcing. A centralized facilities management model allows industrial companies to leverage resources across multiple sites or facilities and have more efficient use of space, resulting in better management of their facilities,’ notes Mr. Scott.
 
‘The specialized nature of FM is also another key consideration. FM is not a core function for industrial companies and for them to achieve operational efficiency improvements and minimize risks in the management of their facilities, they require specialists that understand both FM and their unique operational requirements. This is where the infrastructure and technical expertise of a third party FM service provider such as Jones Lang LaSalle become valuable,’ he adds.

Jones Lang LaSalle has a strong track record in the FM services business in Asia Pacific and has recently secured several appointments in the industrial sector. This include Philips, the world leader in healthcare, lifestyle and lighting, who appointed Jones Lang LaSalle to manage its 4.3 million sq ft real estate portfolio comprising 25 sites across 11 countries in Asia Pacific. The five-year outsourcing contract effective June 2009 is the first truly integrated regional outsourcing assignment for the manufacturing sector in Asia Pacific.

Other industrial FM appointments include Applied Materials, Sanyo and Henkel in North Asia.

The future for the industrial FM outsourcing business in China looks promising. “As more companies recognize the benefits of industrial FM outsourcing, we expect the level of acceptance to increase in China.  For Jones Lang LaSalle, this presents tremendous business opportunities for us to leverage on our integrated service delivery model and apply our expertise to push the boundaries and create new benchmarks in the outsourcing of FM in the industrial sector,’ concludes Mr. Scott.
 
About Jones Lang LaSalle’s Integrated Facilities Management

Jones Lang LaSalle is the market leader in facilities management services in Asia Pacific. We provide a comprehensive scope of services for more than 110 corporate clients totalling over 130 million sq ft of space across the region. Our team of over 3,500 workplace, technical and support staff across 88 cities and 16 countries drive consistent, high-quality service delivery and best practice for our clients.

Jones Lang LaSalle has a very strong commitment to servicing the industrial sector as evidenced by the set up of its specialized industrial real estate group. Last year, its Integrated Facilities Management (IFM) business in Asia Pacific expanded its space under management by 27 million sq ft to over 125 million sq ft. This growth has continued in 2009 and in the first half of the year, the portfolio of space under management increased by an additional 20 million sq ft.