Overview of the international competitiveness of Chinese construction firms

Puying LiAli Parsa

Simon HustonAnil Kashyap

Ph.D. flow diagram

Conceptual

RO1: pathwayRO2: competitiveness on construction RO3: global construction market

Exploratory

RO4: Methodology RO5: primary data analysis RO6: model

Operation

RO7: model test

Reflexive

RO8: CorroborationRO9: Conclusion

Data\Methodology

• Literature review of the China and global construction market

• Secondary statistical data analysis (the China statistical yearbook, Engineering news records and government reports)

• SWOT analysis

The current issues of Chinese construction firms (CCFs)

CCFs have captured the market lead in the African construction market, but challenges in the European and American markets still remain.

The CCFs’ international revenue still lower than Western counterparts.

Global construction market

Source: 1. Top 225 international contractors (ENR2003-2012) 2. Top 250 international contractors (ENR 2013-2014)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

167241.9 189412.2

224427.8

309782.9

390007.7 383732.3 383511.3

452898.9

510878.5

543840.4

Figure 1: the international revenue by top international constractors

international revenueUS$ MIL

Global construction market

Figure 2: The international revenue of region by top international contractors in last decades.

Source: 1. Top 225 international contractors (ENR2003-2012) 2. Top 250 international contractors (ENR 2013-2014)

The historical developments of Chinese construction firms

Worked on a non-profit basis on agreed projects to satisfy target plans

Reform of company structure and ownership to meet the demands of international construction markets

Emergence in global construction markets

Pre-1970s

1970s – 1990s

Post-2000s

Case: Chinese Communication Construction Company Ltd.takeover of John Holland

Ranking No.10 of top international contractors

Subsidiary of GRUPO ACS, Spain, which is ranking No. 1 of top international contractors

Case: WestConnex M4 East Motorway project in Australia

Chinese construction firms’ share in the global market

Figure 5: The market share of top 250 international contractors in 2013

Source: top 250 international contractors (ENR, 2014:8)

Chinese construction firms’ share in the global market

Figure 6: Annual turnover value of CCFs in different global construction market

Source: China Statistical Yearbook (2005-2014)

SWOT analysis of Chinese construction firms in global market

Helpful HarmfulStrengths

• Human resource capabilities • Lower bidding price • Advanced technology• Good relationship with

developing countries • Financial support by state-owned

banks

Weaknesses

• Lack of professional project managers

• Absence of design capability

Opportunities

• Government encouragement and promotion

• Good relationship with developing countries

• Asian Infrastructure Investment Bank (AIIB) was initiated by China

Threats

• High business risk• High political risks

Inte

rnal

Ex

tern

al

The international competitiveness of Chinese construction firms

Cheaper project costExperienced in working abroad The high level of productivity Advancement technologies The special loan interest from the China State-

owned bank The Bilateral and Multilateral agreements

supported by the Chinese government

Suggestions

Improve technology to support excellent project quality;

Innovate in finance to achieve more international revenue and turnover value, thus improve rank/position in the global market.

Develop project management skills to control energy saving, risk avoidance and project progress.

Further research steps

• Analytical review of portfolio management (finance, human resource, technology etc. ) to compare performance of top international and Chinese construction firms

• Develop competitiveness model and benchmarking tool

• Expert interviews (Delphi method) and intensive research on selective firms (case studies)

References:

China Statistical Yearbook (2004-2014). Engineering News Records (2004-2014). The top 250 international contractors. Ministry of Commerce of China (2014). Pheng, L. S. and Jiang, H. B. (2003). Internationalization of Chinese

construction enterprises. Journey of Construction Engineering and Management, 129(6): 589-598.

State Council of China (2014) Yan, Z. K. (2005). Human Resource Management under the strategy of Chinese

construction enterprises going overseas. Railway Construction Technology. 22(4): 12-20.

Zhao, Z. Y. and Shen, L. Y. (2008). Are Chinese contractors competitive in international market? Construction Management and Economics, pp. 255-236.

Zhu, Y. (2006). Making the international contraction enterprise. Construction Economy , 27(1): 70-72.

Thank you