Construction Practices in China

Construction Practices in mainland mainland chinawareConstruction practices in chinawareAbstractChinese economy has experienced fast growth since the adoption of the devote door polity in the past over 20 years. Real estate and anatomical social organization, which act as a core industry in mainland china, demonstrable quickly as well. Quality professional services in the atomic number 18a of real estate development and body structure is one of four main industries in Hong Kong which is internationally renowned. Since the Central Government of China has continually introduced policies like the signing of CEPA to stimulate economic growth, the real estate food market will booming in the coming decades. The Hong Kong professionals in the field of real estate and social structure industry should take these opportunities to explore mainland China market to give full play to their returns of the ability to combine economic and financial principles with mold direction and co nstruction technology.The objective of this paper is to estimate the market opportunities for Hong Kong professionals in the areas of real estate, casting and construction consultation in Mainland China. This paper will analysis the market environment using SWOT method and give some suggestions to the clients while they are devising strategic management plan.IntroductionChina, the worlds second largest economy, enlarge their demands for professional consultancy services in the field of real estate and construction market which including real estate, surveying, planning, retch finance, development, building and construction after access World Trade Organization (WTO).In the meantime, the competition patterns of Chinas construction industry fetch been formally changed since China became a member of WTO. These changes comprise three perspectives. The first one is the growing foreign competitions in the Chinese construction industry. Secondly is the increasing typeicipants of nativ e construction firms in the worldwide construction market. The third one is changes of construction market environment by envisaging Chinas WTO commitments. The implementation of the WTO framework raised the train of legal enforcement in the construction industry which means a quick response to the changes is essential for Chinese contractors in ontogeny their competitive advantage. This increase the numbers of professionals and consultants who are intend to dangle their business in mainland China with their unique insight and professional advantages. Hong Kong professionals and consultants are familiar with westerly justices as well as both eastern and western culture, they croup take their advantages in this particular chance. Moreover, Hong Kong real estate and construction industry is a developed and competitive field, explore mainland market can wipe out some competitive pressure during process of talent output .Market environment in Mainland ChinaThe demand on the const ruction industry is closely related to the national rigid capital construction investment scale, which has been increasing rapidly along with the country s economic growth. The growth can be seen in the chart below and we can conclude that the fixed asset investment will increase continually in the coming years as china still define construction as a pillar industry.Although China accepts devote-door policy and some economic innovation to develop the country, mainland China market still hold its unique characteristic as uses Centrally controlled clay. The hierarchy in China is too complicated that the Joint Ventures have difficulties in developing business in China (Walker, 1991).Chinas Background InformationNature of workQualificationHuman resourcesManagement skillsTechnical / Financing abilityOrganisation structureSocial influence (CSR)China-related factorsQualification in ChinaBusiness coveragePublic relationThere are many types of Joint Ventures in China Mainland, namely, eq uity joint ventures, co-operative ventures, compensation trade and wholly foreign owned ventures. China uses this way to develop for many reasons1) The investors bring the professionals and advanced equipments which contributing to rapid development2) China can save a lot of money of the construction development3) The modern construction methods have been brought into ChinaTo sum up, China welcomes international and competitive investors like the developers of Hong Kong to have business in China Mainland and if the company does not know too much about China or it has no qualification of construction work in China, it should co-operate with local government or local companies and this is main part of the paper.Identification of business objectiveAs a Hong Kong developer needs to start business in mainland China, first of all, the objectives must be confirmed in the initial stageObjectives1) Qualification of construction in China MainlandSince the company does not have any qualificati ons of construction work in China, it must co-operated with the government or some local firms, the best schema is to have long term partnership with one company which possesses relevant qualifications, so when there is a new construction confuse, less time is needed for getting governments approvals.2) Expend the reputation in mainland China3) Business extensionThe company is still in the developing stage and intends to occupies part of the market in main cities of China.SWOT assessment for the business developmentSW (Strengths and Weaknesses)Good project management skills Hong Kong developers are equipped with mature project management internet system. Project workshop like project process management, danger management are increase their management ability in a large extent.Better knowledge management facility Hong Kong has new information and technology and these become the advantages when developing business in China Mainland, e.g., the cyclical and sustainable system are widely applied to different fields of construction work in Hong Kong (Lam, et al., 2010). Moreover, the communication systems including project management system and business disposal system make sure the process and linkup between different parties proceed effectively and smoothly. The use of building information modeling (BIM) also modify effectiveness of construction practices.Advanced machinery and equipment tHigher labour productivity In general, labour productivity growth increases the capacity of the economy as to a greater extent outputs could be generated from any given amount of labour inputs, thereby enabling the economy to expand at a faster pace. In the case of Hong Kong, a city with limited natural resources as well as modest population growth, the continued enhancement in labour productivity is particularly merry for rendering growth impetus to support a sustainable and healthy economic development. Moreover, Hong Kong labour own a unspoiled reputation in game y productivity as they are keen on improving their living standards continually.Good finance- elevation ability Compared with local developers, Hong Kong developers own more comprehensive finance raising method which including RIETS, foreign loan and bonds, securities or even raise the money from their parent companies. Base on the statistic annual book of China, for the native developers, there are over 80 percents of funds for property development only comes from direct and indirect bank loans. This factors also illustrate that Hong Kong developers are easier to diversified their invest risk through combining different sources of investment amount.Good comprise control ability the utilize of modern information facilities ensure Hong Kong developers control project cost better than local companies. The cost control system generate a higher profit and monitor the construction cost during project life cycle. loss leader to good human resources Hong Kong government pays great atte ntion to the quality of the construction worker and managers, take the Construction Industry Training Authority (CITA) which was established in September 1975 with an amendment in 1991 (Rowlinson and Walker, 1995) as a example, CITA offers trainings and helps to the ones who are in the construction field or will enter in the near future and it level up the quality of the staff, furthermore, numerous professional from western world come to Hong Kong which is also contributes to the high quality construction design and build.Higher production be Increasing production costs on the Chinese mainland will eating into thin profit margins for Hong Kong developers definitely. Demographic dividend in China is reduce day by day and developers are facing manpower shortage as well.Limited channels for market information Although the internet smaller the world and it seems that all the information can be found from it, actually, in China Mainland some real information of the market will be to s ome degree blocked by the government, so some depression parts cannot be clearly found and there would be more risks when having construction projects in China.Lower businesses qualification, Nothing can be done if the developer of Hong Kong has no qualifications of having construction work in China Mainland, such as safety qualification, construction qualification and some land encyclopaedism problems. Every place has its own guideline of design and build, and the developer who requisites to have business in China should learn relevant law and regulation, if something is done over Chinas law and regulation, the project cannot get the stamp from the authority department even though the project is in the final stage.Limited businesses relationship matchless of the most important things of having business in China is the relationship with Chinas government, it is very common for Chinas government to assign projects to the companies they have good relationship with, even in the t endering, both reputation of a company and the relation with government are important, in short, without governments help, the project cannot be approved in the initial step.Leung, Chan and Chong (2010) also mentioned that relations meant a lot in China, people in the construction industry should have good relations with friends in the society, especially the ones within construction organizations. Zhang (2011) also illustrated that in China, prior to the commencement of construction work, the company must apply to the Planning dominance and obtain a Construction Planning Permit, so to build up good relations with the local Planning Bureau is very important.OT (Opportunities and Threats)Improved policy environment for foreign business The policies published by China government stated that they would continue to improve economy environment to attract foreign businesses such as the accession to the WTO and signing of CEPA.Government promotion of construction The twelfth Five-Year P lan which begins in the year 2011 set the mission that the whole social fixed assets investment on construction industry must grow more than 15% every year. This is a strong evidence that Chinese government want to cement the pillar industry status of construction industry which also strengthen confidence of Hong Kong developers to explore their business in mainland China.establishment of credit system China will promote the establishment of a nationwide social credit system comprehensively in the next five years, or the 12th Five-Year Plan period (2011-2015). The Chinas State Council stated that the country will accelerate legislation and regulation improvement concerning the credit system and push forward the construction of credit systems within industries and government departments, and at local levels. The government will also give their mind to make sure the credit system be shared in the nationwide, develop credit rating agencies and promote use of credit products in an orde rly way. Meanwhile, the government should enhance its own credibility by increasing transparency, and strengthen education on social honesty.development of understanding of international practicecertain restrictions on foreign investment China uses law to restrict the foreign investors in China, e.g. China welcomes the investors who hold advanced technology and can improve the living environment of China, can provide international level products, etc., so Chinas government would spend a lot of time to assess whether the investor is suitable or not.increasing intense competition The open door policy creates opportunities for many foreign companies to enter Chinas huge market which increase the competition among companies.the risk of breaching contracts.Reassessment of the feasibility after(prenominal) the SWOT analysis, it is necessary to reassess based on the advantages and the disadvantages.ReferencesGanesan, S., Hall, G. and Chiang, Y. H. (1996). Construction in Hong Kong. Engla nd.Lam, P. 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