China Construction Market

IntoductionChinas verbalism trade is currently in a state of over-supply, with an overreliance in the past on residential and moneymaking(prenominal) construction to drive economic growth leading to an apparent englut in the foodstuffplace (AECOM, 2013). This shift has created a number of concerns in the market, with the most prevalent the risk of further declines in house-prices in a cabal to spur additional demand and correct the possible supply-demand imbalance (BREE, 2014) (Wu et al., 2014). another(prenominal) risk inwardly the market has been the levels of debt taken on by construction companies during the years of exceptional growth since the slowdown in demand began, it has been tell that a number of pay backers throw away come under pressure, with some defaulting on payments due (Liu et al, 2014).However, it must be mentioned that despite the recent slowdown, the construction market in China still remains a key and probatory part of the countrys GDP and is expect ed to continue increase in the long-term prone rising urbanisation and incomes, albeit at a spurn rate (Financial Times, 2014). China will still remain an spellbinding market to consider for EU and US corporations moving forward, rising toil costs, greater concerns for environmental issues and an increasing middle class will as well as increase the desire for Chinas construction sector to develop more efficient and technological methods in a bid to lower costs, which in turn could present a number of opportunities for UK, EU companies lacking to gain access into the market (EUSME, 2013).Moving forward, both residential and commercial construction will see growth as development moves inland to occidental provinces looking to industrialise, composition the major cities of Shanghai, Wuhan and Beijing etc will every(prenominal) continue to grow on urbanisation and rising populations (Wu et al, 2014). As the Chinese government looks to rebalance growth towards domestic consumpt ion and demand, expect greater investing in infrastructure, especially investment creationed to open up the western regions to the eastern, coastal cities. convince ManagementWhen considering a potential JV into the Chinese market, a business must be aware of the change management that would need to occur to effectively merge into business commandment and practices inside China (Anderson, 2010) (Cameron, 2012). As noted above, the potential to form a JV based on the technology and knowledge within the high society is commodious as Chinese builders look to rein in costs and fight 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 head-to-head enterprises (World Bank, 2014). According to recent research undertaken (EUSME, 2013) privately-owned companies control 81% of the market, state-own ed 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. standard many companies that have attempted to establish Chinese entities have get a line strong regulatory constraints with the Chinese see protective of their domestic manufacturing (Rowley, 2014). It has previously been noted that it is difficult to obtain expression sector licenses granted that Chinese provinces will favour the use of local construction companies, with putridness 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 rude(a) expression/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 survey its implications on the wider industry , which to some could be seen as a form of protectionism wedded that the construction sector is such as large employer within the country. dapple a JV may be beneficial for an international troupe given its access to a local market player who understands the market, the keep 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 JVs with Western counterparts in a bid to gain access into the recovering markets in Europe and the U.S. Again, the contrast 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 preferably than product/ service quality (World Bank, 2014). To some Western companies, this may be business practices they are d isinclined 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 want the business and its employees in the joint venture. Given the difference in doing business and ethics, the UK Company must ensure that the JV does not match 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 outc omes of the UK Company want 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 JVs development in the marketplace (Paton, 2008). The company must also ensure that its safeguarding its keen property, mainly when dealing with Chinese companies that are in need of new development/ technology to improve fight 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)ReferencesAECOM (2013) Asia Construction Outlook 2014, London, AECOM.Anderson, D. and Anderson, L. (2010) Beyond sort Management, London, Wiley Publications.Bosshart, S., Luedi, T. and Wang, E. (2010) Past lessons for Chinas new joint ventures, London, McKinsey &038 Company.BREE (2014) China Resources every quarter Southern Winter- Northern Summer 2014, Sydney, Bureau of Resources and Energy Economics.Cameron, E. and Green, M. (2012) Making sensation of Change Management, London, Kogan Page Publishers.EUSME (2013) The construction sector in China, Beijing, European total 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 Chinas regional construction industry, KSCE Journal of Civil Engineering, 18(1), pp1-10.Paton, R. and McCalman, J. (2008) Change Management A occur to Effective Implementation, London, SAGE Publications.Rowley, C. and Cooke, F. (2014) The changing wait 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 Be yond Efficiency parsimoniousness 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 domain Finance and Economics, 48(3), pp522-545.