China Construction Market

IntoductionChinas locution food foodstuff is currently in a state of oer-supply, with an overreliance in the past on residential and commercial construction to drive economic growth atomic outcome 82 to an apparent glut in the market (AECOM, 2013). This shift has created a tally of concerns in the market, with the most prevalent the risk of further declines in house-prices in a bid to spur additional demand and correct the realistic supply-demand imbalance (BREE, 2014) (Wu et al., 2014). Another 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 noted that a number of developers have come under(a) pressure, with some defaulting on payments due (Liu et al, 2014).However, it must be mentioned that despite the upstart slowdown, the construction market in China quiet remains a key and significant part of the countrys GDP and is judge to continue growing in the long-term given uphill urbanisation and incomes, albeit at a spurn rate (Financial Times, 2014). China will still remain an attractive market to consider for EU and US corporations miserable forward, rising labour costs, greater concerns for environmental issues and an increasing middle degree will also increase the desire for Chinas construction sector to develop more than efficient and technological methods in a bid to lower costs, which in turn could present a number of opportunities for UK, EU companies wanting to gain access into the market (EUSME, 2013).Moving forward, both residential and commercial construction will see growth as maturement moves inland to western provinces looking to industrialise, while the major cities of Shanghai, Wuhan and capital of Red China etc will all continue to grow on urbanisation and rising populations (Wu et al, 2014). As the Chinese government looks to rebalance growth towards domestic consumption and demand, stick out greater i nvestment in infrastructure, especially investment designed to out-of-doors up the western regions to the eastern, coastal cities.Change ManagementWhen considering a say-so JV into the Chinese market, a work must be sure of the change management that would need to occur to effectively merge into business regulation and practices within China (Anderson, 2010) (Cameron, 2012). As noted above, the potential to forge 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 plain of consideration for a business would be the current structure of the market, with previous research noting that the Chinese construction market is turgidly made up of state-owned and topical anesthetic 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 fir ms control less than 1% of the overall market. From this, it could be assumed that regulation and business practices may restrict some world-wide 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 antifertility of their domestic industry (Rowley, 2014). It has previously been noted that it is difficult to obtain expression sector licenses given that Chinese provinces will favour the use of local construction companies, with corruption still a major issue to get across (US Department of Commerce, 2012). Furthermore, it could be mentioned that China is preferably risk adverse to the entree 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 p rotectionism given that the construction sector is such as large employer within the country. While a JV may be effective 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 JVs with Hesperian 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 attractive feature 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 westward 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 speed business in the Chinese market. Taking this into account, the business must batten that is able to trust the business and its employees in the go venture. disposed(p) the difference in doing business and ethics, the UK Company must jibe 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 $ million efforts by cities within China to essentially support rapid expansion, hitherto 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 hesitation of whether the current market in China would fit in with the interests and desire outcomes of the UK Company seeking the JV.To provide come concluding remarks, the UK must figure that it picks a Chinese render that meets its UK ethical standards and business practices, essentially adjust 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 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)ReferencesAECOM (2013) Asia Construction wit 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 Chinas new joint ventures, London, McKinsey & Company.BREE (2014) China Resources Quarterly Southern Winter- Northern Summer 2014, Sydney, Bureau of Resources an d force 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 Chinas regional construction industry, KSCE diary of Civil Engineering, 18(1), pp1-10.Paton, R. and McCalman, J. (2008) Change Management A Guide to Effective Implementation, London, clear-sighted 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 unsophisticated Commercial Guide for U.S Companies, Washington, U. Department of Commerce.World Bank. (2014) Doing Business 2015 Going Beyond Efficiency Econ omy Profile 2015 China, Washington, World Bank.Wu, J. Deng, Y. and Liu, H. (2014) House price indicant construction in the nascent housing market the case of China, The diary of Real Estate Finance and Economics, 48(3), pp522-545.