When education meets PPP: the indissoluble bond between Longyuan construction and education

On August 20, 2018, Longyuan Construction Group won the bid for the education PPP project of Weibei Middle School, Lintong Modern Industry Group, Weibei Industrial Zone, Xi'an Weibei Industrial Zone. The project invested 51,09.81 million yuan and operated in the PPP mode. The cooperation period was 12 years. This is the thirteenth educational PPP project that won the bid of Longyuan Construction. However, the relationship between Longyuan construction and national education has already begun before the PPP project, and can be traced back to the 1980s at the earliest.

Nearly 40 years of entrepreneurship, reluctant education feelings

Longyuan Construction was founded in 1980. Its predecessor was Zhejiang Xiangshan Erjian Group Co., Ltd. It entered the Shanghai construction market in 1984. Its headquarters moved to Shanghai in 1993 and landed on the Shanghai Stock Exchange in 2004. In 2017, the Group undertook nearly 50 billion yuan of business, ranked the top three in the comprehensive strength of construction enterprises entering Shanghai for 26 consecutive years (the first in 17 consecutive years), and ranked the top 500 private enterprises in China for 9 consecutive years.

As a listed company with the aim of "serving the society", Longyuan Construction has always been based on its own business and practiced corporate social responsibility since its establishment. In the mid-1980s, Longyuan Construction took the lead in putting forward the slogan of "Quality for Business". It regards quality as the basis for the survival and development of enterprises and assuming social responsibility, and firmly grasps quality management. Up to now, Longyuan Construction has served nearly 100 colleges and universities, and has constructed nearly 300 cultural and educational projects, of which more than 50 high-quality projects at or above the provincial level have been obtained. Longyuan can be seen everywhere in Shanghai, which includes not only Fudan University Academic Exchange Center, Tongji University Business School, Shanghai Jiaotong University Bao Zhaolong Library, Shanghai East China Normal University Yifu Building, Shanghai Institute of Foreign Trade and many other universities, but also the ten key projects of spiritual civilization in Shanghai in that year. —— Shanghai Bookstore Building on Fuzhou Road, Dongtan School affiliated to Shanghai Experimental School, which has just won the 2017 Magnolia Prize, and so on.

At the same time, Longyuan Construction has always been a firm practitioner of philanthropy in China, and its total investment in public welfare and poverty alleviation has exceeded 100 million yuan. Since the early 1990s, when Mr. Lai Zhenyuan, chairman of Longyuan Group, donated money to Lai Lan Hope Primary School, the road of building educational public welfare in Longyuan has never stopped.

In 2005, Longyuan Construction launched the project of "100 needy college students are subsidized free of charge every year". Every year, excellent students are selected from Fudan University, Tongji University, East China Normal University and many other universities to be subsidized free of charge. During President Barack Obama's visit to China, among the 100 student representatives of Fudan University, Longyuan Construction Group funded students.

In 2007, Longyuan Construction Group set up a charity fund for Xiangshan County. The interest on deposit of 6 million yuan was used to help the poor, relief and students. At present, the charity foundation of Xiangshan is in charge of the management.

In 2009, Longyuan Construction funded 300,000 yuan, and Wenhui Longyuan Hope Primary School, located in Longquan City, Zhejiang Province, was jointly funded by Wen Hui and Wen Hui Bao. The teaching building was named Longyuan Building.

Longyuan Building, Longquan Wenhui Longyuan Hope Primary School, Zhejiang Province

Since 2011, Longyuan Construction and Ningbo Radio and Television University of Zhejiang have jointly built "Longyuan Architectural Class". A group of students from poor families in Ningbo have already graduated and served Longyuan Construction Project Department throughout the country.

As a result of professional and educational public welfare activities, Longyuan has become the practice base of assisting students in Tongji University, the "production, teaching and research" base of Shanghai University of Engineering and Technology and Zhejiang School of Construction Vocational Education. In addition, branches across the country are also continuing to carry out warm charitable action. Continuously subsidize Zhang Guoqing Team of Guangdong Branch of Yuqing Poor Students in Zunyi, Guizhou, Zhou Quanmao Team of Shaanxi Branch of Weinan Local School, set up Ningbo Branch Staff of Free Classical School to deliver classical strength, and donate 300,000 yuan to Shangfang Design Institute, a subsidiary of Yanling Primary School in Jinggangshan, for library construction. These are all the modest efforts that Longyuan Group has made for China's education. However, the relationship between Longyuan Group and education is more than that.

When education meets PPP, the construction of Longyuan has gone ahead quietly.

In September 2014, the State Council issued Opinion No. 43 on Strengthening Local Government Debt Management (Guofa [2014). It proposed that "the cooperation model between government and social capital should be popularized and used. The government should make investors have long-term and stable returns through the prior and open revenue agreement rules such as franchise, reasonable pricing and government subsidies." " This means that the country has begun to vigorously promote the PPP model.

PPP model, full name of Public-Private Partnership, that is, government and social capital cooperation model, refers to a long-term cooperative relationship established by government and social investors for the construction of infrastructure and the provision of public services. One of its great advantages is that it can use market mechanism to rationally distribute risks and increase the number of public goods and services. Quantity, quality and efficiency can help the government smooth financial expenditure and effectively relieve the financial pressure of the government.

With the support and promotion of national policies, many governments have embarked on PPP express ships and launched a large number of PPP projects. The successful application of PPP model in other infrastructure and public service fields also promotes the application and development of PPP model in education industry to a certain extent. According to the statistics of Mingshu data, as of the end of August 2018, 371 PPP projects have been set up in the national education industry, with an investment amount of 190.872 billion yuan, a scale of 1.64% and a number of 4.64%. It can be seen that at present, the traditional mode of government direct investment is still the main mode of investment projects in the education industry, and there is still much room to improve the application of PPP mode in the education industry.

The rise of PPP mode also brings many opportunities and challenges to traditional construction enterprises. On the one hand, PPP mode provides a broader stage for construction enterprises, and enterprises with more investment projects can make a big contribution to the wider dimension of urban infrastructure construction. The role of investors expands more profit-making space for enterprises. On the other hand, due to the large investment and long duration of PPP projects, under the premise of imperfect legal system and management mechanism of the current government, the divergence of management concepts from the government and the errors in enterprise decision-making may lead to poor project management, thus affecting the return on funds. In addition, for the traditional construction enterprises themselves, the strategic level of adjustment, the overall capital operation capacity, the operation capacity of later projects is put forward higher requirements.

At the same time, on December 8, 2014 (the 6th day after the establishment of the PPP Center of the Ministry of Finance), Longyuan Mingcheng Investment Management (Shanghai) Co., Ltd., a wholly-owned subsidiary of Longyuan Group, was officially established. When many local governments took a wait-and-see attitude toward "PPP+education". At that time, Longyuan's first educational PPP project was quietly launched.

Longyuan Education PPP Road, Feelings and Temperature

On October 19, 2015, Longyuan Construction Group won the first educational PPP project, the infrastructure construction project of Juxian People's Government of Rizhao City. The total investment of the project is 1.6 billion yuan, which includes six projects: Wenxin Middle School Apartment Building, School Stadium Promotion Project, High-level Talents Innovation Pioneer Park, Small and Medium-sized Enterprise Park, Tianwang Project and Qingfengling Reservoir Ecological Wetland Project. Among them, the Wenxin High School Apartment Building project was completed and put into use on August 31, 2017, and then completed 44 elementary and secondary school stadiums in November 2017 and passed the acceptance. With the establishment and application of the project, the local school-running conditions have been significantly improved, which not only meets the needs of teachers and students for outdoor sports and undertaking various sports activities, but also solves the shortage of students'dormitories, laying a solid foundation for the next expansion of enrollment.

Infrastructure Construction Project of Juxian People's Government of Rizhao City - Wenxin High School Apartment Building

Similarly, in 2016, as far as Linwei District, Weinan City, Shaanxi Province, in the northwest, six newly-built schools also landed successively through the adoption of PPP model. Among them, Weinan Ruiquan Middle School is a key high school project in Shaanxi Province, and also a PPP demonstration project of the Ministry of Finance. The project consists of 13 single buildings and an underground garage, with a total construction area of about 126,000 square meters, and an estimated total investment of 895 million yuan. At present, the project of Ruiquan Middle School and Xi'an Road Primary School has been put into use in advance, and the installation and commissioning of some single fine decoration and facilities and equipment have been completed. This opening season will officially meet with the majority of new teachers and students.

In May of the same year, another PPP demonstration project of the Ministry of Finance, the PPP project of Shangzhou Senior High School in Shangluo City, Shaanxi Province, held a grand opening ceremony. It took less than half a year to practice the whole project from beginning to landing. The project covers an area of 250,000 square meters, and the newly built building area is 11.425 square meters. The original campus needs 26,000 square meters for renovation. The whole building is built according to the standard of "provincial demonstration high school", with a total investment of 528 million yuan. After completion, Shangzhou Senior High School will reach the school scale of 120 standard classes, 6000 students and 480 staff.

On August 31, 2018, another education PPP project: Ganzhou Zhanggong Yangming Middle School, Zhangjiang Road Cultural and Sports Center and Parking lot PPP project neutron project - Yangming Middle School new project junior middle, basically completed the construction of teaching area and delivered to use.

Since its establishment, on the one hand, Longyuan Mingcheng has accumulated experience in the construction and operation of educational projects through the successful PPP projects; on the other hand, it attaches great importance to the expansion and development of operational resources in various fields of education, and has set up a special operation and management department for high-quality educational operational resources. Up to now, Longyuan Mingcheng has signed strategic cooperation agreements with Hailiang Education Group and Tiankun International Education Group, jointly docking educational PPP projects, sharing resources and complementing advantages.

It is precisely because Longyuan's construction is proactive in the standardized operation of educational PPP projects. Even in document 92 (* November 2017, the Ministry of Finance issued document 92 -"Notice on Regulating the Management of Project Base of Comprehensive Information Platform for Government and Social Capital Cooperation"), which is called the most stringent PPP normative document in history. After the introduction of the normative storm of PPP, Longyuan Construction has maintained steady growth based on its first-mover advantage and adhered to the bottom line of compliance. Since November 2017, Longyuan Construction has won five education PPP projects, including the relocation project of Zhejiang Yuhuan Secondary Vocational School, Xinfeng Cultural and Educational Park and Weibei Middle School, with the winning bid amounting to 5.513 billion yuan. This achievement comes from Longyuan's long-standing educational sentiment, and more from the professional and pragmatic spirit of compliance.

Since Juxian, up to now, Longyuan has won 13 educational PPP projects, requiring 33 new schools and more than 50 school playgrounds. Educational PPP projects account for up to 20% of Longyuan's PPP projects. The project is distributed in Shaanxi, Shandong, Jiangxi, Yunnan, Zhejiang and Hebei provinces. Except for the three projects that have recently won the bid, all the other projects have been successful.利開工，開工率達76%，部分項目已陸續建設完工并投入交付使用。

擁抱PPP，續寫新的教育情緣

由于教育行業的特殊屬性，我國教育行業引入PPP模式較晚，仍處于起步階段。據全國PPP綜合信息平臺入庫項目顯示，現有教育PPP項目仍以學校建設及配套設施改造等輔助性活動為主，其中新建占比達88.74%，缺乏教育內容服務等軟性服務合作。一直以來，關于教育PPP到底要不要做，到底該如何做的行業聲音褒貶不一，龍元建設也在一系列教育PPP落地項目中不斷探索與實踐。

不可否認的是，教育項目引入PPP模式首先可以緩解地方政府的財政壓力。當前我國正經歷快速的城鎮化進程，有限的公共財政導致基礎教育資源供給嚴重不足，尤其在經濟比較落后的貧困地區。贛州章貢區PPP項目就是這樣一個例子。作為市府所在區，章貢區人口密集、生源密集，現有的辦學規模已經無法滿足日益增長的教學要求。按照傳統模式，政府在項目建設時相對集中支付建設資金，并且還要負責學校的運營管理工作，財政壓力較大。此時，適時地引入PPP模式，可以有效緩解中短期財政支出壓力。政府可以利用節省下來的資金參與其他教育項目，更好的發展當地的教育事業。

此外，充分調動社會資源、提高公共服務效率及質量是PPP模式的第二大優勢。當前，隨著居民生活水平的提高，對于高質量、多樣化、個性化的教育需求也日益增大，政府在這方面的供給依然十分有限。教學質量高的學校存在超規模辦學狀況，教學質量低的學校又面臨生源不足。PPP模式的導入，未來不僅僅將改變教育資源硬件投入不足的現狀，還將有助于教育軟實力的提升。社會資本通過引入優質教育管理團隊，擴大優質教育資源總量，進一步提升教育質量，滿足多元化的教育需求。

因此，教育類PPP項目，它不是功績、不是作品，而是可以成為推動教育發展和社會發展的重中之重。它將有助于幫助政府優化教育資源配置，引導教育事業的良性發展，推動基礎教育與社會經濟、城市發展相適應，對構建和諧社會具有十分重要意義。

教育是立國之本，是強國之基。如同教育需要長期的深耕細作，可以預見，教育PPP前行之路依然漫長且坎坷。但肩負使命的龍元集團，一定會迎難而上，用強大的社會責任感，努力把自己錘煉成具有豐富教育類PPP項目投資、建設、運營經驗的頂尖專家。未來，龍元集團將通過一個又一個教育類PPP項目，和國家教育事業共同續寫新的情緣。