China Construction Market The WritePass Journal

China Construction Market Intoduction China Construction Market ). As noted above, the potential to form a JV based on the technology and knowledge within the company is immense as Chinese builders look to rein in costs and compete more effectively in an oversupplied market. One area of consideration for a business would be the current structure of the market, with previous research noting that the Chinese construction market is largely made up of state-owned and local private enterprises (World Bank, 2014). According to recent research undertaken (EUSME, 2013) privately-owned companies control 81% of the market, state-owned 18%, while foreign-funded firms control less than 1% of the overall market. From this, it could be assumed that regulation and business practices may restrict some international companies from moving into the market. Regulation: many companies that have attempted to establish Chinese entities have experience strong regulatory constraints; with the Chinese see protective of their domestic industry (Rowley, 2014). It has previously been noted that it is difficult to obtain building sector licenses given that Chinese provinces will favour the use of local construction companies, with corruption still a major issue to overcome (US Department of Commerce, 2012). Furthermore, it could be mentioned that China is quite risk adverse to the introduction of new building/material techniques, with regulation in place that quite often restricts the entrance of new technology into the market due to an inability for the country to assess its implications on the wider industry, which to some could be seen as a form of protectionism given that the construction sector is such as large employer within the country. While a JV may be beneficial for an international company given its access to a local market player who understands the market, the company must be wary of the technology or knowledge it would be sacrificing in the process (Cameron, 2012). It may also be noted that given current market conditions in China, some Chinese companies may be willing to form JV’s with Western counterparts in a bid to gain access into the recovering markets in Europe and the U.S. Again, the difference in regulation may affect the attractiveness of the Chinese market to some businesses. Business Practices: taking into account practices, it could be seen that major contracts in China have been known to be awarded more through relationships rather than product/ service quality (World Bank, 2014). To some Western companies, this may be business practices they are unwilling to follow, or in some cases unwilling to support the management change that is needed to facilitate business in the Chinese market. Taking this into account, the business must ensure that is able to trust the business and its employee’s in the joint venture. Given the difference in doing business and ethics, the UK Company must ensure that the JV does not contradict its standards in the UK (Cameron, 2012). Key Characteristics: key characteristics of the market may also be of importance given that it could be assumed the Chinese growth in construction has to part been fuelled by quantity over quality. There have been a number of reports detailing the major $Billion efforts by cities within China to essentially support rapid expansion, however most of the building work appears to be of a much lower standard/ design than similar projects in the western economies. With this, it becomes a question of whether the current market in China would fit in with the interests and desired outcomes of the UK Company seeking the JV. To provide come concluding remarks, the UK must ensure that it picks a Chinese partner that meets its UK ethical standards and business practices, essentially aligning their priorities to develop a viable business plan for the JV’s development in the marketplace (Paton, 2008). The company must also ensure that it’s safeguarding its intellectual property, mainly when dealing with Chinese companies that are in need of new development/ technology to improve competitiveness in their home market. The company must also ensure that it picks a partner where it can be an equal stakeholder it he project (Bosshart et al, 2010) References AECOM (2013) Asia Construction Outlook 2014, London, AECOM. Anderson, D. and Anderson, L. (2010) Beyond Change Management, London, Wiley Publications. Bosshart, S., Luedi, T. and Wang, E. (2010) Past lessons for China’s new joint ventures, London, McKinsey Company. BREE (2014) China Resources Quarterly: Southern Winter- Northern Summer 2014, Sydney, Bureau of Resources and Energy Economics. Cameron, E. and Green, M. (2012) Making Sense of Change Management, London, Kogan Page Publishers. EUSME (2013) The construction sector in China, Beijing, European Union Research Centre. Financial Times (2014) [Online] Doing Business in China, Available at http://im.ft-static.com/content/images/892eae14-6323-11e4-8a63-00144feabdc0.pdf, Accessed 10.11.2014. Liu, B. Wang, X. Chen. C and Ma, Z. (2014) Research into the dynamic development trend of the competitiveness of China’s regional construction industry, KSCE Journal of Civil Engineering, 18(1), pp1-10. Paton, R. and McCalman, J. (2008) Change Management: A Guide to Effective Implementation, London, SAGE Publications. Rowley, C. and Cooke, F. (2014) The changing face of management in China (Vol. 6), London, Routledge. U.S Department of Commerce. (2012) 2012 Country Commercial Guide for U.S Companies, Washington, U. Department of Commerce. World Bank. (2014) Doing Business 2015: Going Beyond Efficiency – Economy Profile 2015 China, Washington, World Bank. Wu, J. Deng, Y. and Liu, H. (2014) House price index construction in the nascent housing market: the case of China, The Journal of Real Estate Finance and Economics, 48(3), pp522-545.