Forms of Collaboration and Project Delivery in Chinese Construction Markets: Probable Emergence of Strategic Alliances and Design/Build

Changes in regulations to allow foreign contractors to qualify as wholly foreign-owned “construction enterprises” came into effect in September 2002 as one of the steps taken by the Chinese government to honor its World Trade Organization commitments. Emerging markets have a significant impact on the strategic planning of contractors; based on an electronic survey covering foreign contractors, clients (foreign investors), and design institutes, the design/build procurement route in conjunction with strategic alliances has been found to enable foreign contractors to enter the Chinese marketplace. The writers present a strengths, weaknesses, opportunities, and threats (SWOT) analysis to inform readers where opportunities for development might be found and to warn of threats to entry. The research also found that mutual trust, synergistic strengths and complementarities, market demand for services, flexibility for both parties, and minimum change of top managers were ranked as the top five critical success factors for strategic alliances between foreign contractors and design institutes. Finally, medium-sized, state-owned, and large-sized design institutes were ranked as the first, second, and third preferences, respectively, for strategic partnering by foreign contractors.     

Development Strategies for Chinese Design Institutes

China is gradually opening up its engineering construction services sector to overseas contractors and consultants as part of its move towards joining the World Trade Organization (WTO). Traditionally, design institutes have operated as state-owned enterprises (SOEs), and for them, China’s accession to the WTO in 2001 presents both a threat as well as an opportunity. Given the market conditions in China, most of the design institutes are restructuring their organizations to cope with the increasing competition. Through a pilot investigation, the strengths, weaknesses, opportunities, and threats of the Chinese design institutes are identified. Based on the analysis, this paper proposes development strategies for the sustainable growth of Chinese design institutes and suggests approaches for collaboration with foreign contractors and consultants. A case study is presented to demonstrate the practical application of these strategies.     

Chinese Contractors in Africa: Home Government Support, Coordination Mechanisms, and Market Entry Strategies

Africa is a traditional overseas market for Chinese contractors. Since the launch of “going out’ national strategy in the new century, and with the support and control of the government and subordinate agencies, associations and banks, and innovative approach such as Angola Mode, Chinese contractors’ presence in the emerging African market continues to grow. Based on original empirical data collected through interview and questionnaire surveys, this paper analyzes the mechanisms the Chinese government has established to facilitate Chinese contractors’ entry into Africa and the perspectives of Chinese contractors about the African market in terms of opportunities and threats. Regression analysis based on existing datasets indicates that despite perceived opportunities and threats, Chinese contractors’ performance in Africa in terms of business revenue actually hinges upon the availability of construction capital. The study also reviews the market entry modes used by Chinese contractors, concluding that they prefer to establish a long term presence and opt to commit large resources. Overall, the paper summarizes evidence about the status and innovative approaches of Chinese contractors in penetrating the African construction market, and also characterizes the potential of the African construction market for Chinese contractors.     

Factors Affecting International Construction

A construction company’s decision to expand into international markets must be based on a good understanding of the opportunities and threats associated with international business, as well as the development of company strengths relative to international activities. These factors were evaluated in this study by surveying the executives in charge of international construction of large United States based contractors. The information was collected by means of two rounds of a Delphi survey, the results of which were used as input in an analytic hierarchy process (AHP). The findings indicate that track record, specialist expertise, project management capability are the most important company strengths; loss of key personnel, shortage of financial resources, and inflation and currency fluctuations are the most important threats relative to international markets; and increased long term profitability, the ability to maintain shareholders’ returns, and the globalization and openness of the markets are the most important opportunities available in international works. This study is of relevance to practitioners as it systematically highlights the factors that affect international construction for the benefit of executives of medium-to-large size construction companies who are considering expanding into overseas markets. It is of relevance to researchers too as it demonstrates the successful use of the combined Delphi and AHP.     

Strengths, Weaknesses, Opportunities, and Threats: Case Study of Consulting Firms in Shenzhen, China

After China became a member of the World Trade Organization, Chinese architectural, engineering, and project management consulting firms faced competition from not only their domestic competitors but also from foreign firms. As most Chinese consulting firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This research involves a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Chinese consulting firms based in Shenzhen; investigates how they respond to opportunities and threats; and recommends how foreign firms can respond to Chinese consulting firms’ SWOT. The case study research design is adopted. Using semistructured interview questions, face-to-face interviews were conducted with 23 Chinese consulting firms based in Shenzhen. Foreign firms’ responses are investigated through a case study of a U.S.-based consulting firm operating in China. The SWOT analysis reveals that Chinese consulting firms are lagging behind foreign firms in design and technical capability; experience in international projects; general and project management ability; and financial capacity. Industry practitioners from outside China who are contemplating entering the Chinese market can leverage on Chinese firms’ strengths by forming joint ventures with them. Foreign industry practitioners can take advantage of Chinese firms’ weaknesses by offering superior products and services which would improve their competitive advantage.     

International Expansion Decision for Construction Companies

There exist several reasons for construction firms to expand their business into international markets. But the complex international environment is affected by diverse factors and creates risks that are not well understood by companies that are active mostly in domestic markets. It is therefore essential for construction companies to follow a disciplined and well-informed strategy when deciding whether to enter international markets. Company strengths relative to conducting business in international markets, the threats and opportunities associated with overseas work, and the costs and benefits of undertaking construction projects in specific countries need to be considered in this decision. The interactions between the complex factors can be structured in a model that can help one to make a rational judgment. The International Expansion Decision Model developed in this study is based on the Analytic Hierarchy Process (AHP) improved by the addition of a Delphi survey. The main objective of this research study is to facilitate the entry decision into foreign markets and to highlight the importance of the factors involved in this decision. This study is of relevance to practitioners as it allows executives of construction companies to test if their company is ready for expansion into international markets in general and into a specific country in particular. It is also of relevance to researchers as it demonstrates the successful use of the combined Delphi and AHP methods.     

Situation and Competitiveness of Foreign Project Management Consultancy Enterprises in China

At the end of the World Trade Organization transition period for China in 2006, the foreign project management consultancy sector entered a new era. Massive construction project development in China created a huge demand for various project management consultancy services, which has attracted an increasing number of foreign project management consultancy enterprises (FPCEs). Using the strengths, weaknesses, opportunities, and threats (SWOT) analysis framework, this paper identifies the FPCEs’ SWOT in China. A multifacet qualitative approach including a literature survey, statistical data review, regulation and policy studies, and semistructured interviews is adopted to investigate these factors. A total of 26 SWOT factors are identified. A SWOT strategies matrix is proposed to assist FPCEs in forming appropriate strategies.     

Analytical Framework for the Choice of Dispute Resolution Methods in International Construction Projects Based on Risk Factors

International construction projects provide opportunities for developing countries to advance in the global economy and for international construction and design firms to increase their profit and market share. Despite the attractive opportunities that international construction offers, international contractors are faced with many challenges and difficulties when moving into international markets. Many risks are associated with international construction, whether external or project-specific risks. Those risks affect how contract clauses are written, including the dispute resolution clause. This paper discusses the different dispute resolution methods employed in international construction contracts and develops an analytical framework (DRM-Risk matrix) suggesting the use of specific dispute resolution methods depending on the risks expected in the project. The matrix may eventually help international contractors in the selection of the appropriate dispute resolution method during contract formation depending on the risks involved in a project.     

Impacts of Overseas Management Structures on Project Buyout Management: Case Studies of Chinese International Contractors

Project buyout management is essential for the transition from the preconstruction to the construction phase. It is during this period that the project team is formed; subcontractors are finalized; the orders of material and equipment are placed; and project plans are made. Despite its importance, few studies have been conducted in this field, especially for international contractors who face many complex situations in project buyout. This paper presents the study conducted for the project buyout management for the Chinese International Contractors (CICs) in developing countries, with focus on the project buyout management under different overseas management structures, and the key influencing factors. It discusses the characteristics of CICs in developing countries; investigates the project buyout management under different overseas management structures; analyzes the advantages and disadvantages of each overseas management structure to project buyout, and identifies the major project buyout influencing factors. The results of this research will benefit both the industry practitioners and the academic researchers in this area.     

Risks in Chinese Construction Market—Contractors’ Perspective

With China’s entry into the World Trade Organization (WTO), the Chinese construction market will be increasingly open and finally become part of the international market. Because of different social and economic systems, as well as different historical and cultural backgrounds, contractors are likely to encounter different risks in different markets. Based on questionnaires and case studies, this paper adopts an importance evaluation index and makes an importance evaluation of various risks encountered by Chinese contractors when contracting for projects in Chinese markets. This paper also makes comparisons between and analyses of the research findings and related available investigation results. The Cox–Stuart trend increase test method is applied in the current research, the results indicating that the variance corresponding to the importance index value tends to increase as the risk event importance decreases. This tendency shows that those investigated tend towards unanimity in terms of higher importance risk events. This paper also examines the reliability of the questionnaires by means of Cronbach’s Alpha Coefficient. The research shows that the main risk currently encountered by Chinese contractors in domestic markets includes owner’s irregular behavior and government departments’ interference in construction markets. China’s accession to the WTO has provided greater opportunities for international contractors to enter the Chinese construction market. Therefore the research results described in this paper can provide valuable data enabling international contractors to gain a better understanding of the potential risks in the environment of the Chinese construction market.     

Strengths, Weaknesses, Opportunities, and Threats for Foreign-Invested Construction Enterprises: A China Study

China has been attracting overseas construction enterprises with its vast expanding business market. The country is further opening its construction market to overseas businesses as the result of its accession to the World Trade Organization in 2001. In line with this development, there are an increasing number of foreign-invested construction enterprises (FICEs) entering into the market. Using Porter’s competitiveness factor analysis method, this paper identifies the FICEs’ strengths, weaknesses, opportunities, and threats in the Chinese construction market. Data used in the analysis stem from multiple sources including statistical reports, literature review, regulations and policies, and interviews with construction professionals. These findings should provide a valuable reference for overseas construction enterprises who are interested in developing business in the Chinese construction market.     

Strengths, Weaknesses, Opportunities, and Threats for Architectural, Engineering, and Construction Firms: Case Study of Vietnam

After Vietnam became a member of the World Trade Organization, Vietnamese architectural, engineering, and construction (A/E/C) firms face competition from not only their domestic competitors but also from foreign A/E/C firms. As most Vietnamese firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This study undertakes a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Vietnamese A/E/C firms, investigates how they respond to opportunities and threats, and recommends how foreign A/E/C firms operating in Vietnam could respond. Using semistructured interview questions, face-to-face interviews were conducted with Vietnamese and foreign A/E/C firms. The SWOT analysis reveals that Vietnamese A/E/C firms are lagging behind foreign firms in financial capacity, experience in complex projects, knowledge in advanced design and construction technology, and management ability. Industry practitioners from outside Vietnam who are contemplating entering the Vietnamese market can leverage on Vietnamese firms’ strengths by forming joint ventures with strong and reputable private Vietnamese firms. To improve their competitive advantage, it is recommended that foreign A/E/C firms offer superior products and services and familiarize themselves with local culture and regulations. They should be mindful of corruption and set up surveillance systems to curb wasteful spending.     

Neural Network Model to Support International Market Entry Decisions

Bidding for international construction projects is a critical decision for companies that aim to position themselves in the global construction market. Determination of attractive projects and markets where the competitive advantage of a company is high requires extensive environmental scanning, forecasting, and learning from the experience of competitors in international markets. In this paper, a neuronet model has been developed as a decision support tool that can classify international projects with respect to attractiveness and competitiveness based on the experiences of Turkish contractors in overseas markets. The model can be used to guide decision makers on which type of data should be collected during international business development and further help them to prepare priority lists during strategic planning. Information derived from the model demonstrates that the most important factors that increase attractiveness of an international project are availability of funds, market volume, economic prosperity, contract type, and country risk rating. Similarly, level of competition, attitude of host government, existence of strict quality requirements, country risk rating, and cultural/religious similarities are the most important factors that affect competitiveness of Turkish contractors in international markets.     

Empirical Assessment of Internationalization Strategies for Small and Medium Construction Companies

In the wake of increased globalization, more small and medium construction companies (SMCCs) are expanding into the global market. However, the international construction industry is different from the domestic with respect to resource, regulations, culture, entry strategies, and risk levels among other factors. This paper explores various ways and modes of internationalization for SMCCs under 13 key hypotheses that are relevant to the issues of internationalization from the perspective of SMCCs. To verify these hypotheses, this study used actual data from 560 cases of SMCCs’ overseas projects performed between 1990 and 2007. It was found that SMCCs’ entry scheme as prime contractors was more rewarding than in the case of subcontractors. Moreover, SMCCs are likely to evolve from subcontractors engaged with home-country contractors to subcontractors engaged with foreign contractors. Also, cultural distance is positively related to performance, but the effects of cultural properties are not as strong compared to the international manufacturing industry. The results are expected to help SMCCs build internationalization strategies by determining promising entry modes, proposing possible evolutionary paths to enter overseas projects, and assessing cultural effects in reference to SMCCs’ successful performance.     

Approaches for Making Risk-Based Go∕No-Go Decision for International Projects

The world economy is becoming more global due to agreements such as the “Uruguay Round” in the General Agreement on Tariffs and Trade. The globalization of the construction industry provides tremendous opportunities for contractors to expand into new foreign markets. However, international construction involves all of the uncertainties common to domestic construction projects as well as risks specific to international transactions. Consequently, in opposition to the worldwide globalization trend, only 19% of the U.S. top 400 contractors actively seek international contracts. This paper discusses current approaches related to entry decisions into international construction markets. It then develops a comprehensive approach for making stable and systematic go∕no-go decisions for international projects. Finally, a pilot study is used to demonstrate and validate the approach.     

Awarding Construction Contracts on Multicriteria Basis in China

China’s entry to the World Trade Organization (WTO) will allow both domestic and overseas construction firms to compete under the same market conditions. This development will lead to a more rigorous participation from overseas construction professionals in the Chinese construction market. Nevertheless, this participation can only be effective or successful when there is a proper understanding about the construction procurement practice in China. The Chinese construction practice has its own characteristics, such as governmental regulations, professional qualification systems, and procurement systems. These characteristics present a different practice in awarding construction contracts from that in the West. This paper investigates the characteristics of construction business environment in China and identifies the key parameters used in assessing contractors’ competitiveness for awarding construction contracts in the market. The parameters are useful tools for assisting contractors in identifying their strength and weakness, thus reengineering actions can be adopted for improving competitiveness. A case study is used to demonstrate how these multiple parameters are used in the process of awarding contracts in the local market.     

Strategies for Developing Countries to Expand Their Shares in the Global Construction Market: Phase-Based SWOT and AAA Analyses of Korea

Korea’s level of competitiveness in the global construction market has significantly improved over the years; from being an underdeveloped country in the 1960s, Korea is currently one of the top ten countries in terms of revenue in the global construction market. In general, an international construction business entails various risks and requires advanced financing and managerial and technical ability to become competitive. Therefore, it is challenging for developing countries to expand their share in the global construction market. In this regard, the case of the Korean international construction business (KICB) may serve as a benchmark for other countries aspiring to enter or reinforce their status in the global construction market. To this end, the strategies to achieve and maintain competitiveness need to be analyzed chronologically rather than focusing only on a particular period, especially the current status. This paper details the history of KICB, showing its evolution over the past 40?years, divided into four major phases that correspond with significant events. Moreover, the important aspects for securing competitive advantage in the market are clarified using four sets of strength, weakness, opportunity, and threat (SWOT) analyses. In addition, the strategic evolution over the four major phases is explored by introducing the adaptation, aggregation, and arbitrage (AAA) framework. The research findings indicate that the strategies adopted by KICB for achieving competitiveness included presenting a memorable performance in a primary country of a particular region (adaptation) during the initial phase, achieving economies of scale in a few regions during the development phase (aggregation), developing international specialization during the depression phase (arbitrage), and adapting to receive orders in a severely competitive market while coping with the local industry protection policy during the resurrection phase (adaptation).     

论海外资源收购中歧视性干预风险的规避

无论是从国家利益还是企业发展的层面看,中国石油企业的海外资源收购都是具有长远意义的战略选择。但西方国家往往"妖魔化"中国收购行为,中国的这种对储量和资源的追求被误解为掠夺和控制全世界的资源而使得中国海外资源收购之路举步维艰。进入海外石油资源市场,中国也许需要更加智慧、冷静而富于耐心。唯有懂谋略,懂"兵法",中国企业的海外并购之路才会有惊无险,平坦顺利。     

Internationalization of Chinese Construction Enterprises

Thirty-five international contractors from China were included by the Engineering News Record in the list of the Top 225 International Contractors in 2000. Although Chinese international contractors are increasingly playing a significant role in the global construction market, relatively few studies have been completed on their historical background and foray into the international arena. Apart from seeking to fill this lacuna, this paper also provides an analysis of the these 35 Chinese international contractors to evaluate their achievements using the following performance indicators: International Revenue/Total Revenue, International Business Distribution, Overseas Management Structure, Involvement in Specialized Fields, and Overall Index of Internationalization. The analysis identified the top ten Chinese international contractors who are truly global in outlook. The study also suggests that the traditional multinational enterprise theories may not explain the development of Chinese international construction firms adequately.     

Causes of Bad Profit in Overseas Construction Projects

International construction projects do not necessarily produce a high level of profit, as opposed to what is generally expected of high-risk international attempts. Overseas construction projects tend to have various risk factors that can diminish project profitability. This paper provides a comprehensive hierarchical framework to investigate the cause-and-effect relationships of various profit-influencing factors for international construction projects. After long-term profitability trends are analyzed based on a total of 3,487 international projects performed by Korean global contractors during the last 4 decades, case surveys of 126 overseas projects are conducted to draw the criticalities of each factor and to develop a hierarchical framework. An in-depth comparative case study of 20 additional international projects is also performed to verify the applicability of the hierarchical framework. Finally, we present significant distinctions between successful and failed projects from the comparative case study.