Strategic management in construction in China

Citation

Egbu, C. and Ying Liu, J. (2010), "Strategic management in construction in China", Engineering, Construction and Architectural Management, Vol. 17 No. 6. https://doi.org/10.1108/ecam.2010.28617faa.002

Strategic management in construction in China

Article Type: Guest editorial From: Engineering, Construction and Architectural Management, Volume 17, Issue 6

This special issue focuses on Strategic Management in Construction in China.

The last three years have seen many economies and industrial sectors feeling the impact of the global economic crisis. The construction industry is not immune to this. Indeed, many would argue that the construction sectors of many countries are feeling the impact more than most sectors. However, it seems the impact is felt more by developed economies in the west than by many developing countries. Interestingly, even in the current economic climate China happens to be one of very few countries that have shown a positive economic growth. In relative terms, the growth, scale and pace of China’s construction and property markets in the last two decades are nothing short of phenomenal. This has attracted attention from academics, practitioners, consultants and policy makers alike from developed and developing economies. This growth and pace in China’s construction and property markets has, however, not been matched by parallel research and critical discussions and reflection of varied strategic implications now and for the future. This takes heightened urgency with the current global economic crisis, the collapse of the property markets in many developed countries, increasing globalisation and competition and escalating costs of dwindling resources. The importance of strategic choices and effective strategic management have never been more important and needed in the management of construction and property assets. The last couple of decades have seen China become a manufacturing powerhouse, and exerting real influence on world economy. An increasing number of manufacturing companies are moving their operations to China due to its huge market potential and relatively low cost of productive resources.

Arif and Egbu in their paper “Making a case for off-site construction in China” presented a case of the potential that off-site construction could make in meeting the growing housing needs in China. Their paper alluded to the importance of exploiting the manufacturing base in China in increasing the level of off-site construction work. However, they noted the strategic challenges involved, especially in terms of improved skills and competencies needed in delivering quality buildings through off-site construction, and the need to address sustainability issues through off-site construction. Their paper calls for strong strategic leadership from a host of players – government, the construction industry in China, and leaders at the municipal level. This is so, as a move towards off-site construction is a shift in culture and attitude, especially where a population has been orientated towards a particular type of construction for many decades and centuries.

The paper by Xiao and Boyd on “Learning from cross-cultural problems in international projects: a Chinese case” documents interesting findings with strategic implications. They contend that personal constructs established through our own life experience within our own culture are not always readily applicable in a different cultural setting, and that it is our personal constructs that may be inadequate in new cross-cultural situations. The building of trust is very important in cross-cultural cooperation but it is also very difficult to establish and maintain. They reminded us that what is important is to improve our capability to learn new things and adjust to a new cultural environment. They argue that one way to prepare for this is to go beyond learning specific cultural information and to learn how to learn about other cultures where we actively work to find a common ground and identify the issues we need to work on to move forward. These results have real implications for organisations working across national boundaries and involved in collaborative environments such as joint ventures, alliances and framework agreements.

Yang, Chan and Li’s paper entitled “Density dependence in the Chinese construction industry: Focus on mortality of Jiangsu Province (1989-2007)” provides a new dimension in analysing the evolution of the Chinese construction industry and the mortality of construction companies by drawing on the density dependence theory. The density dependence theory, in effect, proposes that populations change over time as a result of two general social processes: legitimation and competition. These are embodied in the density of organizational populations, or the number of firms operating in any industry. The findings of their paper reveal that the mortality of Jiangsu construction companies is influenced by many factors, including the density, macro environment, policies, and company characters. Many of these factors are beyond a company’s control, such as the density dependence process that companies cannot interfere with. The authors, however, contend that construction companies can maximize their chances of survival by recognizing and analyzing these processes and adjusting the state and characteristics of their own companies.

The findings of the paper by Ling and Lim on “Improving export performance of contractors from China” revealed that firms from the People’s Republic of China (PRC) achieve satisfactory cost and quality performance, but poor schedule performance; and higher number of defects and reworks. This suggests a need for improved planning and scheduling capabilities, if they are to be competitive in winning projects overseas. In terms of strategies, their study revealed that PRC contractors make use of cost leadership and networking strategies, but are relatively weak on differentiation and diversification. While low cost strategy is commonly implemented by Chinese firms, it is recommended that PRC firms adopt cost optimization strategy to secure projects.

The final paper by Chen, Lu, Lu and Zhang entitled “Analysis of project delivery systems in Chinese Construction Industry with Data Envelopment Analysis (DEA)” investigated the use of different procurement systems in the Chinese construction industry, and noted that construction management (CM) and project management contracting (PMC) were the two least used procurement systems. The authors also employed data envelopment analysis (DEA) to analyze projects under different project delivery systems (PDS), with a view to providing guidance for PDS selection. The SE-DEA-CCR-I model which was developed to assist clients in the selection of appropriate project delivery systems has potential, but there is scope to improve it further in terms of accuracy and ability to receive and interrogate data.

Special thanks to each of the contributing authors and reviewers for their contributions to the papers in this particular issue.

Charles EgbuThe University of Salford, Salford, UK

Jun Ying LiuSchool of Management, Tianjin University, China