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BROAD’S HOLON BUILDING: INTERNATIONALIZATION STRATEGY

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On June 5, 2021, an eleven-storey building was completed in Changsha, China, after just 28 hours and 45
minutes. This building, known as the Holon Building, was successfully developed after twelve years of
unremitting efforts by the China-based BROAD Group (BROAD). The building, which was made entirely
from stainless steel, adopted a streamlined production mode, Germany’s Passive House standard, and
China’s Nearly Zero Energy Building standard. All modules were 100 per cent factory made and stacked
together like LEGO blocks. After installation, the building was immediately ready for use. The Holon
building’s characteristics included a long lifespan, short construction period, strong earthquake resistance,
low lifetime cost, high comfort, energy efficiency, global transportability, and ability to be disassembled
and rebuilt in another location. Further, Holon buildings were well suited as skyscrapers, hotels, condos,
hospitals, and nursing homes. See Exhibit 1.

When the Holon Building was constructed, the total amount of carbon dioxide emissions from construction
and related industries accounted for nearly 40 per cent of global energy-related carbon emissions.1 High
construction emissions were in large part due to poor construction practices, especially poor insulation. So,
if Holon buildings could be popularized and expanded globally, BROAD could significantly improve
housing quality and achieve a reduction in global low-carbon emissions, which in turn would likely lead to
replacing traditional reinforced concrete buildings in the future.

The company’s video of the Holon Building’s erection was quickly picked up by CNN and other prominent
media. With over 100 million views in just a few days, the Holon Building engendered global attention and
heated discussions. Many governments, enterprises, and non-governmental organizations subsequently
expressed their willingness to cooperate with BROAD to develop Holon buildings. Company chairman and
CEO, Zhang Yue, planned to launch Holon buildings in international markets to play a leading role in the
global construction industry within eight years. To achieve his ambitious goal, Zhang had been considering
the best cooperation model with potential partners around the world.

1
“The 2020 Global Building Status Report Points out That the Development of the Construction Industry Deviates from the
2 ℃ Temperature Control Target of the Paris Agreement,” China Building Materials Information Network, March 22, 2021,
http://www.cbmf.org/BMI/zx/tjp/7061029/index.html.

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BROAD GROUP

BROAD was founded in 1988, as a privately owned enterprise, headquartered in Changsha, Hunan Province,
China, with RMB 30,000.2 BROAD’s mission was “For Humanity’s Future: the original low carbon and
durable technology for the earth, the original clean and safe technology for humans.” In support of its
mission, the company developed and exported hundreds of proprietary high-tech products to over eighty
countries. BROAD grew to include twelve wholly owned subsidiaries, with about 3,000 employees.

In 1992, BROAD developed non-electric air conditioning to tackle the problem of ozone layer depletion
caused by chlorofluorocarbons. Then they developed a new type of air conditioning in 1999 that used
powerplant exhaust to provide cooling and heating, achieving zero emissions, which faced the problem of
climate change head- on. And in 2008, BROAD developed a clean fresh air machine that provided 100 per
cent fresh air, filtering 99.9 per cent of PM2.5 particles, making indoor air 100 times cleaner than outdoor
air. BROAD's technologies, which combined high comfort and ultra-low energy consumption, meant that
building residents to enjoy fresh air while reducing carbon emissions.

By 2022, BROAD sold non-electric air conditioning and air products in eighty-five countries and regions,
ranking first in global market share of the non-electric air conditioning industry, with 100,000 customers.
Its products were widely used in hotels, airports, hospitals, universities, shopping malls, and industrial
enterprises (e.g., textile, steel, automobile, chemical engineering, paper mills), which helped cut global
carbon emissions by over 70 million tons.3 Many landmark buildings around the world used BROAD air
conditioning, including the Madrid Airport (one of Europe’s biggest airports), Dubai Mall (the world’s
second-largest shopping mall by area), and Princeton University. BROAD benefitted from its original
energy-saving technology, low-carbon and environmentally friendly products, and quality service to
establish a positive brand reputation globally.

Zhang was an active practitioner and promoter of environmentalism. He prioritized pollution reduction and
health improvement and embedded environmental protection into every BROAD employee’s mission.
Zhang advanced many ideas to protect the environment from the perspective of humanity’s future
development and protecting the earth rather than making his business more profitable. For his efforts, Zhang
was recognized as one of the Champions of the Earth by the United Nations Environment Programme in
2011, which was the United Nations’ top environmental award.

BROAD and the Traditional Construction Industry

In its early years, BROAD was a supplier of building equipment and facilities, providing green and energy-
saving air conditioning and air products for various types of buildings. However, after conducting in-depth
research on the construction industry, Zhang found that traditional industry suffered from a series of long-
existing disadvantages. To greatly reduce building energy consumption and carbon emissions, Zhang had
to study building structure to find a solution to the problem.
Most buildings were still created using traditional reinforced concrete as their primary building material. Over
time, concrete would easily crack due to thermal expansion and cold contraction, and the steel bars were also
prone to rust inside. When corrosion reached a certain level, buildings would be at risk of collapsing. Therefore,
the conventional building’s lifespan was generally fifty years, and then it had to be dismantled.4

2
RMB = Chinese Yuan; RMB 1 = US $0.16 on June 5, 2021; RMB 1 = US $0.27 in 1988.
3
This figure was calculated from BROAD’s global networked monitoring system dating to 1996, which was a forerunner of
“Internet Plus” and the Internet of Things.
4
“The Service Life of Concrete is 50 Years. Can People Live after the Expiration? The Answer is Here!” [in Chinese], SOHO,
http://news.sohu.com/a/576163742_120185835.

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However, building demolition and reconstruction created two problems: on the one hand, demolition
generated a large quantity of construction waste. Since reinforced concrete materials could not be recycled,
the environment would suffer. On the other, continuous reconstruction required cutting rocks and digging
sediment in rivers, which would damage the environment and cause resource wastage in the long term.

Moreover, reinforced concrete buildings had poor earthquake resistance, from the risk of building collapse
during an earthquake or materials aging and wearing. In 2021, ninety-eight victims died in a Florida condo
building collapse in the United States, due to structural complications. 5 Similar incidents of building
collapse led researchers to actively look for ways to improve building lifespans and safety, and methods of
saving material.6

On-site construction methods were still dominated by human labour even though most industries had
achieved some degree of automated and standardized production. This production method led to low
efficiency, lack of guaranteed quality and delivery time, serious pollution such as construction dust and
noise, and safety hazards.

And building energy consumption in ordinary reinforced concrete buildings struggled to achieve warm
winters and cool summers indoors. Most buildings’ energy consumption and carbon emissions came from
the operation process—that is, additional energy consumption and carbon emissions generated due to
buildings’ poor insulation. A small contributor came from the construction process, including burning
cement and steel bars, manufacturing decorative materials, and so on.

In contrast to the technical threshold required for other sustainable building aspects, building insulation did
not require fancy technology. The energy efficiency goals, and on-site construction, were much easier to
achieve than changing mindsets (i.e., ignoring building insulation), which was the most critical issue.

BROAD had found that poorly insulated buildings were the world’s most widespread source of wasted
energy. Since 2008, BROAD had undertaken thermal insulation renovation of all buildings in BROAD
Town, its industrial park. BROAD determined that they could reduce heating and cooling building cost by
80 per cent with minor investment. For example, BROAD renovated a 4,200-square-metre office building
so that: (1) the wall was equipped with 15-centimetre insulation; (2) the windows were converted from
single pane to triple pane; (3) an exterior shade was added; and (4) BROAD fresh air machines were the
standard equipment. Before retrofitting, the building’s energy consumption was 293 kWh/m2/year; after
retrofitting, it was 61 kWh/m2/year, a reduction of about 80 per cent. The air conditioning requirement of
800 kW was decreased to 140 kW.

BROAD worked on building air quality since people spent most of their time inside buildings. If indoor air
quality was poor, people’s psychological and physical health could be negatively impacted. At present,
traditional buildings’ indoor air quality was worse than air outdoors, and windows stayed closed for long
periods to run the air conditioning. Therefore, indoor air quality could only be improved with window
ventilation. BROAD formulated sixteen strict comfort standards, including air freshness, air cleanliness,
airflow comfort, thermal comfort, so that all residents could enjoy high-quality living. Difficulties in design,
materials, construction, cost, for example, meant that BROAD could not reach the standards using
traditional building methods.

5
“The Collapse of an Apartment Building in Florida Confirmed That 98 People Were Killed” [in Chinese], CCTV News, July
27, 2021, https://news.cctv.com/2021/07/27/ARTIXkZ7VXgTEViJf7TZxXZL210727.shtml.
6
Shaunacy Ferro, “Concrete Is Not as Strong of a Building Material as We Thought,” Fast Company, October 21, 2014,
https://www.fastcompany.com/3037370/concrete-is-not-as-strong-of-a-building-material-as-we-thought.

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BROAD decided that the current building industry had to solve three problems. First, the industry had to
develop strict, one-step standards for building insulation. Second, the industry had to eliminate reinforced
concrete as a building material because steel structure was better and stainless steel was the best. Third, the
industry had to prioritize buildings’ interior air quality.

MODULAR CONSTRUCTION

According to a McKinsey & Company report, modular construction, also called off-site or prefabricated
construction, provided a new way to construct buildings. 7 Generally, modular construction included
producing a structure’s standardized components at off-site factories then transporting to the site (often using
standard shipping containers) and assembling on-site. Recent modular projects had already established a track
record of accelerating project timelines by 20 to 50 per cent. Compared with traditional construction, its
advantages included speedy construction, labour costs savings, and reduced environmental pollution at the
building site. However, whether modular construction could realize cost and productivity benefits relied on
many factors such as material choice optimization, capabilities in mastering hybrid designs, manufacturing,
logistics and assembly, scale, and repeatability in a market where builders operated.8

Real-estate demand and available construction labour (relative costs) influenced whether a market accepted
modular construction. For example, some markets in Australia, the United Kingdom, and the United States
that faced big labour shortages and housing demand fit this criteria. Based on 2017–2020 average off-site
share of housing, Finland, Norway and Sweden were at 45 per cent; Japan, Germany and China were at 15
per cent, 10 per cent, and 6 per cent, respectively; and Australia and the United Kingdom’s share was 5 per
cent with the United States’ at 3 per cent.9

As new, lighter-weight materials and mature digital technologies were adopted, many construction-sector
leaders decided to reposition and enter this industry. Though modular construction in many countries was
still relatively uncommon, the market value for modular construction in new real-estate construction alone
was projected to reach “US$130 billion by 2030 for the new-build market in Europe and the United
States.” 10 Further, the authors from a McKinsey & Company report stated that: “Building-materials
suppliers would face a shift in the choice of materials available to customers and prefabricators. For
instance, cement companies would be affected if cross-laminated timber and steel-frame-based modules
gained market share. Public-sector entities, like private-sector developers, would be able to capture cost
savings and productivity benefits by taking a modular approach with any large-scale publicly funded
projects that had repeatable elements, such as schools and affordable housing.”11

7
One definition of prefabricated construction, according to Lake Country Modular, is “Any home can be considered as prefab
if portions of its structure are constructed in a factory setting and then assembled onsite. Modular homes consist of several
components that are built in a factory setting and then assembled on-site to create your new home, like LEGOs for real life.”
See “Modular Vs. Prefab: What’s the Difference?” February 25, 2014, https://www.lcmhomes.com/news/news/Recent-
Announcements/2014/02/25/18:modular-vs-prefab-what-s-the-
difference#:~:text=Any%20home%20can%20be%20considered,like%20LEGOs%20for%20real%20life.
8
Nick Bertram et al., “Modular Construction: From Projects to Products,” McKinsey & Company, June 2019,
https://www.mckinsey.com/capabilities/operations/our-insights/modular-construction-from-projects-to-products, 1.
9
Nick Bertram et al., “Modular Construction: From Projects to Products,” 22.
10
Nick Bertram et al., “Modular Construction: From Projects to Products,” 6.
11
Nick Bertram et al., “Modular Construction: From Projects to Products.” 27.

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B-CORE SLAB AND BROAD’s HOLON BUILDING

On May 12, 2008, an earthquake struck Wenchuan, China. Zhang visited the disaster area twelve days later
and saw the tragic collapse of many reinforced concrete buildings. He was deeply shaken but determined
to develop a truly secure steel structure building. Meanwhile, BROAD had begun to develop factory-made
steel structures, developing five generations of technology in seven years to improve building efficiency
and reduce environmental pollution.

When factory-built, ultra-energy saving, steel structure buildings started, BROAD had formulated six
sustainable development standards: magnitude 9.0 earthquake resistance, five times higher energy savings
versus industry norms, ten times longer lifespan, one hundred times better air purification, 100 per cent
steel structure, and 1 per cent construction waste. A total of fifty-eight buildings of various types were built,
all achieving the six sustainable development standards.

In October 2015, to achieve its ultimate mission BROAD announced a plan to stop producing mature and
popular carbon steel structured buildings; instead, they would only develop the ultra-light and ultra-strong
stainless steel B-core slab, which could be used for buildings, roads, bridges, and vehicles. BROAD hoped
to fundamentally transform the world’s lagging building structure materials. In 2018, the B-core slab was
successfully developed, and in the following three years, stainless steel buildings, elevated highways and
bridges, wind turbine blades, and vacuum train tunnels were constructed.

Factory-made building R&D began in 2009. With over 1,000 staff and RMB 8 billion spent over thirteen
years, BROAD developed a series of products that transformed the world’s construction, transportation,
and energy industries. Among them was the stainless steel factory-made Holon Building. In 2022, after it
went on the market, the Holon Building won first prize in the world Modular Building Institute awards in
the residential category, which attracted worldwide attention. Two months later, the Holon Building won
the global innovation award which was a part of the CTBUH (the Council on Tall Buildings and Urban
Habitat) International Conference. The Global Award aimed to recognize the outstanding contributions in
promoting the development of high-rise buildings and urban environment.

So why did BROAD choose stainless steel? BROAD believed that stainless steel had obvious advantages
over carbon steel. For example, the stainless steel corrosion resistance was 300 times better than that of carbon
steel. The Holon Building’s lifespan was theoretically ten times longer than that of a carbon steel building
(100 years) and twenty times longer than that of a reinforced concrete building (fifty years). Theoretically, a
stainless steel building could last hundreds of years. Moreover, BROAD emphasized that a stainless steel
building could be recycled, making it possible for family property to be passed down through generations.

The Holon Building was the world’s first stainless steel building mostly because the cost of stainless steel
was considerably more expensive than carbon steel. In fact, mild carbon steel was often up to five times
cheaper than 304 stainless steel.12 However, BROAD’s stainless steel B-core reduced the amount of steel
used in construction, which addressed the problem of stainless steel’s high cost. Leveraging streamlined
operations, stainless steel could be used to build economical buildings.

Specifically, the stainless steel B-core slab was composed of two pieces of stainless steel plates with an
array of extremely thin core tubes through a 1,100 ℃ copper brazing process. The stainless steel B-core
slab was light, with excellent mechanical properties that could save 80 per cent of the material used in
concrete floors. Indeed, when as many as twenty people stood in the middle of a B-core slab, the board did

12
“Carbon Steel – A Cost-Effective Alternative to Stainless Steel,” MetroSteel, https://www.metrosteel.com.au/carbon-steel-
a-cost-effective-alternative-to-stainless-steel.

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not bend. So, if a Holon building was compared to a reinforced concrete building, the weight of 1 square
metre of reinforced concrete was about 1.6 tons, while the weight of a Holon building was only 0.16 tons,
one-tenth that of a reinforced concrete building.

The core tubes in the middle of the B-core slab were filled with rock wool for sound and heat insulation.
Moreover, the Holon Building’s standard products adopted 22-centimetre-thick rock wool thermal-
insulated exterior walls, multi-layer glass windows, exterior shade, interior shade, fresh air heat recovery,
and other heat isolation methods. These changes meant Holon buildings saved 90 per cent on energy costs
and satisfied the Nearly Zero Energy Building standard. Other comparison parameters are shown in Exhibits
2 and 3. A household energy-saving example is a 135-square-metre apartment in areas with hot summers
and cold winters in which a Holon building had annual electricity savings of 13,830 kWh and carbon
dioxide reduction of 11,894 kg yearly. Assuming that one tree absorbs 18.3 kg of carbon dioxide emissions
yearly, this equalled planting 650 trees.13

BROAD considered all environmental protection factors during the Holon Building’s R&D and
construction process. For example, the Holon Building’s walls were made of galvalume sandwiched with
rock wool and inorganic and durable materials. Even the exterior wall paint was chosen to use inorganic
fluorocarbon paint, which was both UV and dirt resistant, and walls that did not need washing could greatly
reduce the pollution from the chemicals used in washing. The stainless steel materials recycling rate reached
98 per cent, eliminating construction waste because the Holon Building could be flexibly dismantled and
rebuilt. The Holon building also met sixteen comfort standards and was equipped with a BROAD clean
fresh air system. Environmentally friendly decorative materials were adopted, which complied with
European E1 and Chinese E0 emissions standards. Zhang said, “A traditional building method was just like
a man building a car in his garage. Our Holon Building was produced like an automobile assembly line.”

HOLON BUILDING DRAWS GLOBAL ATTENTION

On June 5, 2021, BROAD’s eleven-storey building, “Garden A-1”—the world’s first Holon Building—was
officially unveiled. It was completed in only 28 hours and 45 minutes. Global media picked up BROAD’s
video of the building, which led to a click rate over 100 million in a few days, and excitement soared.

On July 16, 2021, the “BROAD Holon Building Global Conference” was held at BROAD Town. Hundreds
of officials, scholars, architects, and customers from more than ten countries around the world attended the
conference online or in person. People generally highly praised Holon buildings for their environmental values
and enhancement of human life and placed great expectations on Holon buildings’ future development.

At the meeting, the eighth Secretary General of the United Nations, Ban Ki-moon, said,

The Broad Group has made a great progress in developing a new and very creative idea for Holon
Building since its inception in 2009. I believe that the idea will prevail in the future as it fits the era
of carbon net zero.

....China is leading the world with its sophisticated high-tech like the Holon Building of the Broad
Group. The Broad Group developed a new business model which was consistent with the vision of
President Xi for carbon net-zero. Holon Building of the BROAD Group set its target of one
thousand years of building and has been achieving it. It is closely related to the goal no. 11 of the
sustainable development goals of the UN which is “sustainable cities and communities.”

13
“The Holon Building and Human Evolution,” Broad Group, www.broad.com/ProductShow-142.aspx.

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....I am certain that there is no other solution to the problem of climate change than carbon net
zero. It was meaningful and significant for the Broad Group to convene this Conference to
promote energy efficiency and sustainability of buildings, which will eventually address the
problem of climate change.14

The official application process in China for the Garden A-1 project’s construction took 111 days. On April
20, 2022, Garden A-1 obtained China’s Real Estate Ownership Certificate, which meant it had legal status.
The building not only conformed to relevant Chinese construction technical standards, but also satisfied the
building code for steel structures in the United States, the European Union, Canada, the United Kingdom,
and Germany. Moreover, the core material, the B-core slab, had been patented in seventy-five countries.

On April 28, the 2022 World Modular Building Conference was held in the United States and attended by
representatives of 1,062 modular construction enterprises from more than twenty countries, including the
United States, Canada, China, and South Korea. The modular construction industry association selected the
annual outstanding projects according to the standards of architectural excellence, technological innovation,
sustainability, and completion time. The “Garden A-1” Holon Building project stood out from 141
candidate projects and won first place in the residential category above 2,500 square metres. It provided
China’s solution to the world’s widespread urban housing crisis, which garnered attention from
international peers in the industry.15

As Holon buildings were a newly emerging technology, many people had expressed their appreciation and
support, while others expressed concerns. Three main criticisms arose: First, some considered China’s
building quality inferior to overseas building like in Germany or Japan. They questioned whether the
industrialization of green buildings could really be defined with energy conservation and emission reduction.
Second, out of habit, some people, accustomed to living in buildings made of reinforced concrete, which
felt particularly strong, paid little attention to building insulation or its quality. Third, although some people
thought that buying apartments was a way to leave wealth for future generations, when they saw that a
building could theoretically last for 1,000 years, they felt that buying a Holon building seemed a bit
pointless because one could only purchase property rights for seventy years in China.

GLOBAL POPULARITY OF PASSIVE BUILDING

The construction industry’s high energy consumption, high pollution, and low efficiency buildings were
drawing global attention. Most countries were actively taking measures to deal with it. Europe was
advocating the construction of “passive houses,” buildings that realized a comfortable indoor environment
in winter and summer without traditional heating and air conditioning.16 Passive building was popular in
western and northern European countries such as Germany, Austria, Switzerland, and Italy.

Other European countries also enacted new legislation toward passive buildings. France formulated a number
of laws and regulations, proposing high-performance building requirements in terms of architectural design,
comfort, and energy consumption. In 2015, the French parliament passed a bill stipulating that new buildings
in the business district must be covered by green roofs composed of plants or solar panels.17 The Danish
Housing Construction Department issued regulations in 1996 requiring that all buildings install heat-metering

14
“Ban Ki-moon: BROAD’s Holon Building Is Leading the World,” BROAD News, http://en.broad.com/m/NewsDetail-101.aspx.
15
“BROAD Holon Building Won the First Place in the Residential Category in the 2022 World Modular Building Conference,”
Sohu Media, accessed October 10, 2022, https://m.sohu.com/a/542645456_121287746.
16
“Reflections on Passive Housing in Europe,” Passive House, http://www.gba.org.cn/nd.jsp?id=844#_np=2_335.
17
“Many Countries Promote the Development of Green Buildings,” [in Chinese], The People’s Daily, June 13, 2022,
http://paper.people.com.cn/rmrb/html/2022-06/13/nbs.D110000renmrb_17.htm.

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energy-saving devices. Through this initiative, the total energy consumption of indoor heating in Denmark
had been reduced by 50 per cent. In 2019, Denmark saved nearly 40,000 megawatt hours of energy from
buildings and achieved the national goal of 14 per cent energy savings by 2020.18

In the United States, the LEED Green Building Rating System had been established and implemented by the
US Green Building Council. It was the most influential assessment standard among buildings’ environmental
protection, green building, and sustainability assessment standards in the world. It was evaluated from six
perspectives: (1) sustainable site assessment; (2) water usage; (3) energy utilization and atmospheric
protection; (4) materials and resources; (5) indoor environmental quality; and (6) innovative design process.

In China, the Holon building was consistent with the future development direction of China’s construction
industry. The Chinese government actively promoted the application of new green building materials,
prefabricated buildings, and steel structures, and strived to make the proportion of prefabricated buildings in new
buildings 30 per cent within ten years.19 On January 24, 2019, China issued the first leading national standard
for building energy efficiency, the Nearly Zero Energy Building standard, which aimed at establishing a
technical system that conformed to China’s national conditions and Chinese solutions. The building standard
had played an important role in promoting building energy conservation and emission reduction, improving
buildings’ indoor environment, and promoting the transformation and upgrade of building energy savings.

BROAD HOLON BUILDING’S COMPETITORS

Modular construction covered a range of different approaches and systems.20 Based on different market
segmentation classifications such as type (permanent vs. relocatable), application (commercial, hospitality,
education, and others), and geography (North America, Europe, and Latin America), the key players in
submarkets varied. In the global market, though the Holon buildings were a new category, they shared some
similar features with prefabricated modular buildings and passive (green) buildings. However, the Holon
buildings’ B-core slab and other innovations made it a unique product, so finding close competitors in the
application of stainless-steel structures, also in the short term, was difficult.

Some possible relevant competitors in the modular construction industry included Laing O’Rourke from the
United Kingdom, with 12,796 employees in 2017–2018 and which had some activity in modular construction;
ATCO from Canada, with a Structures & Logistics division; and Red Sea International Company of Saudi
Arabia.21 Bouygues Construction of France, VINCI Construction Grand Projects of France, Skanska AB of
Sweden, and Algeco of France were also competitors.

THE HOLON BUILDING’S STANDARDIZATION LOGIC

Although the Holon Building was just completed, Chairman Zhang was confident about its future
development. His dream was to make the Holon Building affordable to both rich and poor countries so that
people who had never lived in a building could live in an upscale building and enjoy warm winters and cool
summers. He planned to launch the buildings in international markets so that BROAD could play a leading
role within eight years in the global construction industry.
18
“Many Countries Promote the Development of Green Buildings.”
19
“Opinions of the CPC Central Committee and the State Council on Further Strengthening the Management of Urban
Planning and Construction,” [in Chinese], The Central People’s Government of the People’s Republic of China, February 21,
2016, http://www.gov.cn/zhengce/2016-02/21/content_5044367.htm.
20
Nick Bertram et al., “Modular Construction: From Projects to Products.”
21
Laing O’Rourke, Annual Report and Consolidated Financial Statements For The Year Ended 31 March 2018,
https://www.laingorourke.com/media/jueinqea/laing-orourke-annual-report-fy18.pdf.; ATCO LTD., Annual Report For the Year
Ended December 31, 2021, https://www.atco.com/content/dam/web/about-us/investors/atco-2021-ye-annual-report.pdf.

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To achieve this goal, Holon buildings would need a strong price advantage in the market, which drove
BROAD to spare no effort in controlling Holon buildings’ costs. BROAD believed that the principle in
building a Holon building was like building a car: Like the auto industry, which standardized specifications,
if all parts were standardized and the purchase volume of a single category was sufficiently large, product
price could be greatly reduced. Construction costs were high because construction processes were not yet
standardized, and they still relied heavily on manual labour. So, if standardization could be done well,
Holon buildings’ costs could be lower, and more people could live in better apartments at a lower cost.

GOING GLOBAL

Before the Holon Building was successfully developed in 2020, McKinsey & Company reported that
another BROAD sustainable building offered four business models for a potential go-to-market strategy:
(1) package franchisee (BROAD transferred its technology and management system and its local partners
were responsible for factory set-up and all operations); (2) sales and installation franchisee; (3) sales
representative; and (4) individual projects via an engineering, procurement, and construction model.
Running a sustainable building factory with an annual capacity of two million square metres required an
investment of US$30 million and 500 people.22

In 2020, BROAD innovated and upgraded sustainable buildings and introduced the Holon Building.
BROAD was considering providing new business models for Holon buildings’ potential market strategies:
(1) franchising (BROAD provided technology and trademark use, and the franchisee had the right to sell,
produce, install, and maintain within its jurisdiction); (2) joint ventures (BROAD provided products and
production line technology, employee training, and supply chain resources, and its local partners were
responsible for factory construction and operation); and (3) agency and distribution.

BROAD planned sixteen Holon building production centres and thirty-seven production lines with
multinational partners from Beijing, Shanghai, Singapore, the United States, and Europe. BROAD ensured
that Holon buildings could achieve annual production of 100 million square metres in three years and locally
produced. BROAD would provide technical support to the production centres with its supply chains and
local partners would invest in and operate the centres. Around each production centre, ten to twenty
distributors could be developed to build and service Holon buildings in different communities, cities, and
countries. BROAD envisioned hundreds or even one thousand global partners.

BROAD expected that within seven or eight years, Holon buildings would be available around the world
and create a win–win business proposition. As the Holon Building creator, BROAD would only earn a
small profit, leaving more profit to the local partners such as distributors and suppliers. However, a Holon
building could create local employment opportunities, increase local taxes, and help local energy
conservation and emission reduction. Therefore, BROAD hoped local governments would welcome the
buildings into their markets.

Zhang wondered which partners would be most suitable if BROAD was to realize the Holon building
business’ sustainable development globally. What means should BROAD have used to internationalize
(e.g., through modes such as exports, licensing, joint ventures)? To manage risks and exploit local market
opportunities, how should BROAD have selected partners? Or how should BROAD have designed and
specified international strategic partners’ duties and rewards to create a win–win situation?

22
All dollar currency amounts are in USD unless specified otherwise; McKinsey & Company, “GII Visit to Broad Sustainable
Buildings (BSB),” 2017, https://www.mckinsey.com/~/media/mckinsey/business%20functions/operations/our%20insights/gii/
site%20visits/broad%20group/gii-visit-to-broad-sustainable-buildings.pdf.

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 W31768

EXHIBIT 1: HOLON BUILDING STRUCTURE ILLUSTRATION

Source: BROAD Group.

Page 10

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 Page 11 W31768

EXHIBIT 2: TRADITIONAL BUILDINGS VS. HOLON BUILDINGS

Item Traditional Holon

1. Method Site work Factory made
Hard to control quality; heavy Quality is assured; zero pollution
construction pollution; long during construction; short
construction period; hard to control construction time, three floors/day
delivery time
2. Structure Reinforced concrete Stainless steel
Fifty-year lifespan, wastes family Possible 1,000-year lifespan, a
assets and human resources; the generational legacy; recyclable after
earth is filled with construction waste disposal; ductile material, extremely
after buildings are taken down; brittle earthquake-resistant
materials, buildings collapse easily in
case of earthquakes
3. Space Fixed Flexible
Limited space of non-bearing structure Large space of non-bearing
(the length and width are generally structure (11.7 × 4.8 cm); walls,
less than 4 metres); no alteration doors, and windows can be
allowed after back wall and door removed or changed after
completion completion
4. Comfort and Less comfort, higher energy More comfort, lower
energy efficiency consumption consumption
Poor thermal-insulated exterior wall, Nearly Zero Energy Building
air conditioner high energy standard and Germany’s Passive
consumption, very noisy House standard are adopted; 90%
higher energy efficiency (air
conditioner noise level reduced by
90%)
5. Air quality Worse than outdoor 100 times cleaner than outdoors
Normal ventilation by windows; when When BROAD Clean Fresh Air
air conditioner is on, windows are Machine is used, 100% fresh air is
usually closed; indoor air quality is achieved, filtering PM2.5 by 99.9%
poor
6. Outdoor noise Transfer into building Complete isolation
Poor sound isolation of windows; Four-paned glass windows, 22 cm
ventilation via windows cannot isolate rock wool for exterior walls;
the indoor noise from outside noise ventilation through fresh air
machine isolates indoor noise from
outside

Source: BROAD Group.

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 Page 12 W31768

EXHIBIT 3: ENERGY EFFICIENCY CALCULATIONS FOR BUILDING AREA OF 135 SQUARE

METRES PER HOUSEHOLD

Hot
summer
Hot summer ＆
＆ warm
Cold cold winter Warm
Severe cold winter
Beijing, Shanghai, Kunming,
Climate zone Harbin, Baotou, Guangzh
Lanzhou, New Changsha, Guiyang,
Moscow, Ottawa ou,
York, Tokyo Rome, New Sydney, Nairobi
Taipei,
Delhi
Dubai,
Rio

Item Parameter summer winter summer winter summer winter summer summer winter

66m2
Exterior wall 17 1,443 92 1074 167 685 277 2 359
K=0.2W/m2K
2
36m
Heating ＆ cooling demand

Window 65 622 986 546 1,431 244 2,443 135 35

K=1.4W/m2K
200m2 80%
Fresh air heat 70 554 225 319 669 185 355 23 13.6
recovery
100W LED
Lighting 59 -110 128 -92 200 -62 578 52 -15
3.3W/m2
500W /5
Personnel 84 -99 187 -91 296 -68 416 39 -13
people
600W
Including
Electrical kitchen and 124 -204 271 -191 423 -135 797 74 -29
home
appliances
Total kWh/a 419 2,205 1,890 1,566 3,186 851 4,867 324 351
Heating ＆
cooling kWh/m2a 3.1 16.3 14 11.6 23.6 6.3 35.9 2.4 2.6
demand / m2
Total kWh/a 1,361 1,395 1,299 1,568 202
A/C Annu
power al
cons. kWh/m2a 10.1 10.3 9.6 11.6 1.5
avera
ge

Total kWh/a 235

Fresh
air Annu
power al
cons. kWh/m2a 1.7
avera
ge
Total annual kWh/a 1,596 1,630 1,534 1,803 437
Annual/m2 kWh/m2a 11.8 12.0 11.3 13.3 3.2
Equivalent to
kWh/m2a 30.6 31.3 29.4 34.6 8.3
primary energy

Source: “The Holon Building and Human Evolution,” BROAD Group, www.broad.com/ProductShow-142.aspx.

This document is authorized for use only in Sheetal's Strategies for International Markets: Challenges and Opportunities at Indian Institute of Management - Shillong from Sep 2023 to Mar
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