Digitalization of China’s residential service industry for 20 years, exploring the traditional enterprise transformation methodology

On September 21st, RealData, Tsinghua University China Economic and Social Data Research Center and 21st Century Industrial Research Institute jointly released the Report on the Digitalization Development of Residential Service Industry in China, which combed the digitalization path of residential service industry in the past 20 years, and pointed out that the relationship between supply and demand, policies and technology are driving the residential service industry into a new digital era.

Li Wenjie, Senior Vice President of Ke Holdings Inc., released a report.

For a long time, "residence" naturally has a low-frequency and high-value transaction attribute, and some links that are heavily dependent on offline completion have become an insurmountable digital gap in the residential service industry. According to the evaluation of McKinsey Global Institute, the degree of digitalization in China’s real estate sector is less than 10 points. However, with the advent of the mobile Internet era and the application of VR/AI technologies, China’s residential service industry is experiencing digital acceleration.

RealData, together with China Economic and Social Data Research Center of Tsinghua University and 21st Century Industrial Research Institute, first combed the digitalization process of residential service industry in China for nearly 20 years. Measured by digitalization for twenty years, China’s residential service industry has gone through the stages of informationization, internetization and mobilization, and is making great efforts to move towards intelligence.

Professor Xu Xianchun from Tsinghua University Institute of Economics and Management delivered a keynote speech.

In 1998, the era of welfare housing distribution in China ended, and the housing service industry in China started the marketization process. On the other hand, in foreign markets, most countries started the enterprise informatization construction in 1970s and 1980s, but in China, this process had to wait until 2001. Taking I love my family’s ERP system application as a milestone, China’s residential service industry has changed the mode of information sharing and cooperation between brokers in the pure offline era, and started the digital road behind.

In 2003, the SARS epidemic broke out, and the special background of the times prompted buyers to start "touching the net" on a large scale. With the launch of SouFun as a symbol, China’s residential service industry has entered the Internet stage.

With the popularity of mobile Internet and the wide application of APP, the residential service industry in China has been advanced in mobility since 2014. Online to offline, which is connected by online and offline processes, has entered the historical stage with the key nodes of love me, love my house and go online, soufun expanding from online to offline, and chain home marching from offline to online. According to the analysis of the report, the data of housing and people in the mobile stage are all improved by orders of magnitude, and the granularity of housing information dimension far exceeds that in the PC era. The behavior data of consumers and brokers are widely recorded, laying the foundation for the next intelligent stage.

Since then, the residential service field in China has explored a new development path. In April, 2018, Ke Holdings Inc., which was transformed from Chain Home Network, was established. It opened up a large amount of accumulated data capabilities, expanded multi-scene applications in the vertical field by using integrated digital technologies such as VR and AI, promoted multi-party collaboration, reconstructed the transaction process, and entered the intelligent application stage of domestic residential services.

Digitalization is changing the mode of production and lifestyle of human beings and greatly improving social productivity. Xu Xianchun, a professor at Tsinghua University School of Economics and Management and former deputy director of the National Bureau of Statistics, said that under the background of digitalization, the production and operation methods of enterprises, government governance methods and residents’ lifestyles will continue to undergo major changes. Digital transformation may cause major changes in the world economic structure. Whoever seizes the opportunity first may stand out and have greater development space and voice.

According to the United Nations "Digital Economy 2019" report, in 2018, the global digital economy accounted for 15.5% of GDP, and the global digital service export volume was about 2.9 trillion US dollars. In the past 15 years, the growth rate of digital economy was 2.5 times that of global GDP-the digitalization of residential services is undoubtedly a big market full of imagination. However, how to transform traditional industries into digital ones, and what is the way to digitize residential services? This is a proposition that many participants in the industry have been thinking about.

Taking Ke Holdings Inc. as a case, the report analyzes the four-step methodology of the digital transformation of residential service industry: the first step is to go deep into the industry, gain insight into the business, refine the key elements of the business and build an index system; The second step is to concentrate resources and make strategic choices under the constraints of resources and technology; The third step, standard productization, data accumulation and feedback business; The fourth step, product intelligence, reengineering process.

Looking back on the development of enterprises, Ke Holdings Inc.’s digitalization has experienced "vertical growth". Different from the consumer Internet, the transformation of the industrial Internet must be based on a deep insight into the industry. Relying on more than 10 years’ deep cultivation experience, Shell has identified the three elements of "house-people-process" and made digital breakthroughs one by one with this goal.

Reportedly, Ke Holdings Inc. invested more than 600 million yuan to incite the original data accumulation of housing. In the early days, the data were compared with the evidence by manually going door to door and taking pictures. Later, the building, unit number, floor number, room number and so on were photographed and recorded by relying on the GPS locator on the spot, and were verified manually. With the application of VR technology, the listing information has broken through the two-dimensional and static form. Since 2018, Shell has comprehensively upgraded the listing data, and at present, more than 6.46 million sets of VR listings have been scanned and reconstructed.

After conquering the digitalization of "house", shells began to accumulate more complicated big data of "people". By May, 2020, a total of 340 million pieces of 1307-dimensional user data have been accumulated to describe identity, gender, age, occupation and residence, location, browsing frequency, business opportunity frequency, etc.

And these data have become the basis for the leap to "process" intelligence. It is reported that Shell has built a network of 44.7 billion triple knowledge maps through the AI model, including 60 dimensions, 2.4 billion knowledge systems covering the reasoning relationships of business districts, houses, landmarks, schools, customers and brokers, and 294 dimensions, 5.2 billion knowledge networks covering ownership, price, contract signing, sightseeing, attributes and geographical location.

Externally, Ke Holdings Inc. is opening to the outside world. Through big data and digital tools represented by real estate dictionary, A+, Shell Branch and Beckham’s assistant, it has built a new industry infrastructure, which is open and exported to brokers, shopkeepers, brands and the government.

Moreover, the spillover effect and business extensibility of transaction data make the trading platform represented by shells begin to incite the digitalization of the whole residential service industry chain. It is understood that Ke Holdings Inc. has connected 34 banks and assessment agencies to open online capacity assessment data to them to improve the efficiency of housing assessment and housing mortgage loans. In the field of home improvement, consumers’ decoration needs are pre-excavated through VR+AI decoration products, and the online construction platform (bed home improvement) redefines the process of home improvement industry, realizes the visualization of project progress, and enhances consumers’ home improvement service experience.

On the whole, in the process of digital transformation, residential service enterprises still face challenges such as strategic cognition, capital reserve, talents and organizations, and data islands. The report pointed out that in order to promote the digitalization of the production, housing and service industries, on the one hand, enterprises need to rely on the industrial Internet platform to achieve light investment transformation on the basis of firm digital strategic determination; On the other hand, government policies can also provide protection for the transformation.