Business Case (McKinsey MGI)

McKinsey MGI

- Central question for the BUSINESS CASE as developed by McKinsey and OMA:

Now both postindustrial and post-suburban, the district’s organic growth has largely been overtaken by commonplace market-driven development models.

  • Can the Chinese development models be adapted to nurture the diversity of program and communities we find in 798 today?

Below the 30 slides by team MGI investigating a new positioning and business case for the future of 798 Art District. Also available as PDF.

Supporting the file is a sound recording introducing the PDF, followed by the handover discussion with OMA


■ 798, starting from a spontaneously formed artist village , has been evolving during the past 10 years, and now reaches the cross road
■ Conflict of interest, gentrification and vague positioning are the key challenges in the evolution of 798, to be solved in future planning
■ Common commercialization pattern can be identified via a retrospect on 798’s peer districts in Beijing and other parts of China, and similar evolution trajectory is found in NYC’s urban art districts history; the dynamic created by artists ironically starts the dilution of the artistic value
■ Successful art districts resolved the challenges and gained prosperity thanks to joint-effort from artists, government, property owner and other public forces

■ The future positioning of 798 depends on 4 key factors: Beijing’s needs, competitive landscape, stakeholders’ perspectives and economical prospect
– With the ambition of becoming a “global city”, Beijing has to make arts & culture one of its core competitive advantages
– 798 has a unique advantage to position itself as center for art industry presenting/transaction/services, and an attractive public art center for Beijing; Meanwhile, Beijing’s commercial space is saturated and seldom artistic, the integration between art creation and artistic commercial could be 798’s uniqueness
– Art creation, presenting and transaction can bring substantial return to the local economy, especially in China’s booming market
– Different stakeholders’ interests and requirements need to be reconciled in the future planning of the area
■ To sum up, to become the “Vibrant Art Heart of Beijing” should be a future vision worth pursuing for 798 district
– Empowering: an integrated platform supporting fine art creating and value realization
– Energizing: A dynamic multifunctional urban center characteristic
– Enlightening: an interactive center advocating art education and appreciation
– Engaging: an open window for facilitating international art exchanging

■ 798 art district should be primarily an art industry cluster, with art creation, commercial functions and creative industry zone as necessary supplements
– For art districts, there are 4 archetypes on the spectrum of art & culture significance ; 798 should choose its focus and elements from them
– With the ecosystem, 798 will become a world-class dynamic art industry cluster, with the function of a public art space and a sustainable value creation center
– Different zones of the art district have different features, thus require different mechanisms and elements to ensure success
– A well-connected function mix provides enduring vitality and diversity for Southbank Center in London, to become a world-class arts center
■ 798 should have the ambition to become a world-class art presenting & transaction center, leveraging favorable policies of “Tax-free Art Zone”
– Along the art value chain, 798 has great intrinsic and potential in art presenting, art transaction and Tax-free Art Zone services
– 798 should capture the opportunity of “Tax-free Art Zone” by actively seeking government policy support and cooperation with key resource-holders like Gehua Group, and building a world-class services infrastructure (copyright transaction, art presentation, etc.) to gain first-mover advantage in the supporting industries of the TAZ
■ 798 should further enhance and capitalize its irreplaceable position for China’s contemporary art, bridging public audience and artists into a coherent society
– Taipei Songshan Cultural and Creative Park is a successful case for connecting public audience with artists

■ Financial model: build a sustainable public-private partnership model that could provide the patience and expertise needed to nurture art
– Current problem in the financial model and ownership of 798 is that the land and properties in 798 are currently fully owned by Seven Star with lack of government providing more long-term strategic guidance & support to artists, as well as organized public support
– Many successful art districts are using a public-private partnership model in financing structure. For example, Temple Bar art zone in Dublin used public-private partnership financing model to solve property ownership problem and support art development
■ Management model: ideal management structure should include a management committee to make key decisions and an executive office for daily operation

– Problems can only solved with different stakeholders being heard and properly involved in management and decision-making process
– 798 should separate its management structure into a coherent and professional management committee for joint decision-making, plus an executive office for daily operation
■ Tenant policy: tenant selection, management and support should follow some principles with consideration of long-term sustainability of the area
■ Initial financial assessment: 798 could achieve ~1 billion CNY rent income with 70% from commercial usage on 25% surface area with FAR of ~2.4
■ Layout design: the layout of the zones should fit in the overall requirements of different functions of the art district



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