Smart Intelligent Building Industry in China and Korea - Case Study Example

SWOTT ANALYSIS OF THE SMART INTELLIGENT BUILDING INDUSTRY IN CHINA AND PETEL ANALYSIS OF ENTRY INTO THE KOREAN INTELLIGENT BUILDING INDUSTRY By Course Instructor Institution Location Date SWOTT Analysis of the Smart Intelligent Building Industry in China and PETEL Analysis of Entry into the Korean Intelligent Building Industry Introduction The smart and intelligent Building industry has become one of the emerging industries in many countries. In this industry, different aspects of technology are incorporated in the construction if domestic, commercial, institutional and industrial buildings. The primary purpose of constructing intelligent buildings is to have an automated control and monitoring systems of buildings. This includes regulation of heating, security systems, access control, ventilation, climate, and entertainment systems. In the recent past, the construction of intelligent buildings has included the adoption of green technology because of its sensitivity to the environment in China and Korea are two of the countries in Asia who have exhibited efforts towards developing their smart and intelligent buildings industry. Currently, China is working on 36 different cities intending to transform them to smart cities. On the other hand, Korea has launched its first smart city Songdo which is an exemplary city that has incorporated different systems of intelligent buildings. This paper will offer a SWOTT analysis of the smart and intelligent building system in China and develop a PESTEL analysis for the Chines companies intending to venture into this the Korean intelligent building industry. SWOT analysis of the Smart Intelligent Building Industry in China Strengths One of the outstanding strengths of the smart and intelligent building systems I China is the fact that it has been identified as the largest market for this system on a global front. Moreover, China already has set up 36 development projects of the 36 cities it intends to transform into smart cities. Having made such steps makes china a leader in this sector. The Chinese government has recognized that the smart and intelligent building system is a critical part of the urbanization process which is rapidly increasing (Su & Hu 2012, p. 56). With the current efforts of solving china’s environmental issues, the emergence of intelligent building that incorporates technology is an additional strength in the industry in China. In the recent years, China has made remarkable steps in its economic growth, becoming the Asian leader and an economy recognized globally. Such tremendous economic growth has served as a factor that motivates the development of the intelligent building system. As china makes steps in the economic growth, it has remarkably adopted new technologies and has focused on rigorous innovations factors that have served to make the intelligent building system a flourishing industry (Navigant 2003, p. 1). Companies in the intelligent building system in China have the benefit of working closely with the ministry of housing, the ministry of rural and urban development and the China society of urban studies. Such collaborations have served to make the companies more comfortable and relevant in conformity with the nation’s plans. Weaknesses Since China made a rapid transformation from rural to urban life, and adopted industrialization without much concern for the environment, there is an evident challenge of utilizing the intelligent building system to solve environmental problems that resulted from increased industrialization. This has forced China to invest highly in green technology so that it can incorporate it into the intelligent building system. This has proved costly for the country and companies in the sector (Hancke et al 2013, p. 400). Companies in the intelligent building industry have initially focused on ensuring that carbon dioxide emissions are highly reduced and that the numbers of cars on an annual basis are reduced. Companies in the intelligent building system have faced the challenge of designing effective strategies of achieving green technology alongside a smart building. In the recent past, China has registered the highest energy consumption level in the globe. This places pressure on the intelligent building system to combat such energy consumption to manageable levels (PR 2011, p. 1). Opportunities The fact that China’ population has been predicted as having the potential to hit the one billion mark in the next 15 years is an opportunity for the smart and the intelligent building industry because the increased population will require more buildings. Moreover, the fact that buildings have registered the highest energy consumption levels, there is an evident opportunity for the smart and intelligent building companies because the government will have to rely on smart buildings in an effort to reduce the energy consumption (PR 2014, p.1). China’s commitment to address the issue of environmental concerns such as carbon emissions has also served as an opportunity for the industry. This is because smart and intelligent building companies often receive contracts to develop buildings incorporated with the green technology. The fact that China is the leading market for smart buildings is a factor that gives assurance to companies in the industry about the future (CCID Consulting Co. 2008, p. 1). The urbanization rate in China has proved to be unprecedented. This means that, more people are likely to move into cities a factor that opens up new opportunities for the smart and intelligent building system industry. Therefore, there is a high likelihood that China will initiate new projects in addition to the 36 cities under development (PR 2014, p. 1). China has registered a remarkable growth in the corporate industry and has opened up opportunities for foreign investments a factor that necessitates the need for additional commercial buildings. This is an opportunity for the intelligent building industry as it will be actively involved in the development of smart commercial buildings that will attract foreign investor (Wang et al 2012, p. 263). Threats One of the emerging threats of the smart and the intelligent building systems is the potential competitions from other established companies with vast experience in this sector. This may pose a disadvantage to Chinese companies, especially if such companies have a higher level of advanced technology. PESTEL Analysis of Entry into the Korean Intelligent Building Industry A Chinese company in the intelligent building system will benefit from a PESTEL analysis of the Korean market before it ventures into the Korean intelligent building system. The following analysis of the different aspects reflected in “PESTEL” can serve as guidelines for a company moving into Korea. Political Analysis South Korea, which officially recognized as the Republic of Korea has a centralized form of government. This is an evident strength for companies seeking to move into this market. Moreover, the government has made public its commitment to foster economic reforms. If this happens, Korea will be a recognized economic power in Asia attracting more foreign investors. The Korean government has a good reputation in forming foreign relationships. However, companies moving into this region are usually afraid of the potential influence of the military of the countrys politics and are also wary of the potential political violence. Moreover, the potential clashes with North Korea pose a future risk for South Korean politics (Pestle Analysis 2008, p. 16). Economic Analysis In the recent past, South Korea has undergone immense economic reforms which have proved sufficient to attract foreign companies to invest in the country. Such economic reforms are a potential motivating factor for a Chinese company in the smart and intelligent building industry to venture into this region. Such reforms are backed up by the country’s remarkable export sector (Research and Markets 2008, p. 1). Worth noting is the fact that South Korea has remained a closed market a factor that explains the reducing level of foreign direct investments. An additional factor which proves to be a challenge in Korea is its minimal imports a factor that can pose potential challenges. There are prospects of the Korean government giving freedom to free trade agreements to exist in this market as well as a level of liberalization in its service sector. There are hopes of the establishment of the tax policies that are both conducive and competitive. However, foreign companies face an increase level of hatred in Korea, which poses potential risks for a Chinese company venturing into this market (South Korea: In-depth PESTLE insights’ 2011, p. 47). Social Analysis South Korea has registered an increased level of urbanization in the recent past. There is still a great potential for future urbanization. This is definitely an attractive opportunity for a Chines company in the smart and intelligent building industry (Johnson 2004, p. 15). Moreover, the work force in Korea exhibits a remarkable level of education. However, a company moving into South Korea will need to adjust to paying the work force high wages which are the norm in this country. Moreover, Korean labour unions are likely to prove more powerful in the future a factor that may serve to raise wages further. Moreover, South Korea believes in a limited spending in social welfare a factor which may compromise the occupancy of the smart homes. This may pose a risk for a smart company moving into this region. Technological Analysis Government policies in Korea have been improved in a bid to foster research and development. Currently, there are centres of research and development that exhibit a high potential for the future. Moreover, Korea has made steps in launching its first smart city Songdo which incorporates different technological systems (Chao 2013, p. 1). This serves as evidence that Korea supports the technological advancements and is likely to absorb new technologies from a Chinese company. The presence of foreign players in the technology within Korea at the moment serves as evidence of this. However, the Chinese company moving into Korea will have to adjust itself to the overregulation by the government as well as the increased costs in research and development. It is sad to note that, the future may be bleak for foreign companies compelling them to pull out. Environmental Analysis The Korean government is committed to environmental protection a factor that will provide an opportunity for green technology incorporated for smart buildings (Mathews 2012, p. 762). Future prospects indicate that the Korean government is likely to spend more in green technology a factor that will provide an opportunity for a Chinese company venturing into this region to join the smart and the intelligent building industry. There is also a growing potential in an environmental technology a factor that will serve to accommodate green technology in more cities in addition to Songdo creating more opportunities for intelligent building companies (Inspur Group, Government Team Up in Building Smart Cities 2013, p. 1). Legal Analysis The Korean justice system has an outstanding constitutional court which serves as a strength in its legal issues. In the recent past, Korea has introduced favourable taxation policies and regulatory incentives. However, the justice system does not have juries, which serve to weaken the justice system. Moreover, its custom operations have been categorized as highly ineffective. These loopholes in the justice system serve to compromise the legal setup of South Korea. Conclusion Without doubt, the smart and the intelligent building industry in China has registered growth in the recent past and is likely to exhibit the same trend in the future. The industry has multiple opportunities that it can utilize to its advantage. One of the outstanding opportunities is the unprecedented urban growth, which necessitates the need for smart buildings. However, the industry has to address certain challenges as well as potential threats for the future. A Chines company intending to venture into South Korea will need to understand the Korean business environment precisely taking note of the potential challenges and the strengths. Bibliographies CCID Consulting Co., Ld 0008, CCID Consulting: Information Technology Lends Help to Smart-Grid-Based Business and Management Innovation in China, Business Wire (English), October, Regional Business News, EBSCOhost, viewed 8 July 2014. 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