| Collaboratory for Research on Global Projects

Construction Market and Construction

Firms in China: Strengths, Weaknesses
and Development Trajectory




Vishnu Sridharan






Working Paper #0033




September 24, 2007













2

The Collaboratory for Research on Global Projects at Stanford University is a multidisciplinary cen-
ter that supports research, education and industry outreach to improve the sustainability of large in-
frastructure investment projects that involve participants from multiple institutional backgrounds.
Its studies have examined public-private partnerships, infrastructure investment funds, stakeholder
mapping and engagement strategies, comparative forms of project governance, and social, political,
and institutional risk management.

The Collaboratory, established in September 2002, also supports a global network of schol-
ars and practitionersbased on five continentswith expertise in a broad range of academic disci-
plines and in the power, transportation, water, telecommunications and natural resource sectors.





















Collaboratory for Research on Global Projects
Yang & Yamazaki Energy & Environment (Y2E2) Bldg
473 Via Ortega, Suite 242
Stanford, CA 94305-4020

http://crgp.stanford.edu
3
About the Author
Vishnu Sridharan is a third year student at Stanford Law School. After graduating from Magna
Cum Laude from Columbia College in 2004, he spent two years as a Peace Corps Volunteer in El
Salvador, focusing his efforts on increasing municipal transparency and facilitating citizen participa-
tion in their government. Vishnus current work and research interests center on legal reform
strategies in China. Vishnu worked in Shenzhen for a labor rights NGO in the summer of 2007,
and he spent the summer and fall of 2008 working with GTZ Legal Advisory Services and the ABA
Rule of Law Initiative in Beijing. After graduating in May 2009, Vishnu plans to continue working in
and writing about legal, political and economic developments in China.



















4
Introduction:

With Chinas quick and massive recent economic development, it is no surprise that
many people consider it the construction market for the 21
st
century. However, several signifi-
cant weaknesses plague the market, in addition to the weaknesses that plague the Chinese and
international construction firms that are attempting to capitalize on the markets opportunities.
This paper will first examine the strength of the Chinese market and show why there is
much reason to be optimistic about its prospects. It will then outline the greatest weaknesses of
that market and the constructions firms operating within it. To close, it will comment on the tra-
jectory that the market will likely take in the short and long-term.
This paper was prepared based on lecture notes, personal interviews and power point mate-
rials collected at the Institute of International Engineering Project Management (IIEPM) Summer
2007 conference, which took place at Tsinghua University from July 9-20. The two-week pro-
gram attended by students, practitioners and academics from around the globe offered an in-
tense but comprehensive introduction to the legal, political, social and economic environment of
construction work in China. In essence, it offered an introduction to the practices that local and
foreign construction firms need to master in order to survive and grow in the Chinese market.
Conference instructors came from different organizations with various educational and profes-
sional backgrounds, including university professors (local and overseas), governmental officials,
Architectural, Engineering and Construction (AEC) firm management, client organization repre-
sentatives, lawyers and consultants.
This paper offers a broad, industry-wide, China-wide, helicopter view of all that is go-
ing on in the Chinese construction industry. It will be of interest to several audiences. Western
5
construction firms seeking Chinese joint venture partners will gain useful insights into the
strengths and weaknesses of their Chinese counterparts. Western investors and developers look-
ing for capital investment opportunities will gain both a unique perspective of the macro-trends
that are now sweeping China, but also a sober appreciation for the on the ground implementa-
tion challenges of actually getting permits approved, contracts signed, projects developed, and
disputes settled. Researchers and practitioners from the fields of construction management, legal
studies and project finance will come to a fuller understanding of the state of practiceand the
research, education and consulting opportunitiesthat exist as China conducts what may be the
largest program of urbanization and building construction in human history.

Strengths of the Chinese Construction Market and Construction Firms

Clearly the greatest strength of the Chinese Construction market is its size. Investment in
fixed assets, construction market GDP and the added value of the construction market in China
have more than doubled in the last four years alone (see Fig.1). With this fantastic growth,
which looks to continue well into the future, Chinese contractors are assured ample business op-
portunities in which to hone their management practices and business approach. The capacity of
the Chinese Construction market is also illustrated in the sheer volume of Chinese participants:
as of 2005, there were 15,545 design firms and 104,297 construction firms in China, employing
upwards of 40 million people. Altogether, China currently consumes 25% of the worlds output
of steel.

Figure 1: Investment in fixed assets (blue), GDP of construction industry (red) , construction in-
dustry added value (white) from 2002 to 2006 (100 Million Yuan)
6











Source: Presentation by Hui Zhao, IIEPM Conference, Beijing, July 12, 2007, Deputy Director
of Rural Development Department, Chinas Ministry of Construction, 2007.

Other trends in China also point to the opportunities available within its construction
market. For instance, China is currently undergoing an amazingly strong and rapid process of
urbanization. While this is of course true for major cities such as Beijing Shanghai, and Guang-
zhou, the effects can be seen in hundreds of smaller cities throughout the countrys 23 prov-
inces. For instance, in the centrally located city of Chongqing, 453,400 people become part of
the urban population every year, and between the years of 1998 and 2006, the percentage of the
areas population that was considered urban grew from 14 to 46.7
1
. Although part of this
change must be attributed to the growth of the cities themselves accompanied by the seizure of

1
For further discussion of Chinas urbanization, and especially the case of Chongqing, see Urbanisation in China:
Chinas Chicago, The Economist Print Edition, July 26, 2007, available online at
http://economist.com/world/asia/displaystory.cfm?story_id=9557763

43500
55563
70477
88774
109870
18527
23084
29022
34552
40975
4698 4655
5616
6900
8182
0
20000
40000
60000
80000
100000
120000
2002 2003 2004 2005 2006

7
neighboring lands and relocating its people to the city the net effect on the construction mar-
ket is the same: an unprecedented need for new residential buildings and service facilities for the
growing urban masses.
In addressing the demands of these increasing populations, many smaller city govern-
ments are forced to go beyond their traditional sources of funding. Luckily, Chinas opening
up has provided these governments with many new options, including the following: listing
their projects on the stock exchange, issuing enterprise bonds, seeking loans from foreign gov-
ernments, finance leasing (since foreign banks cant directly loan them money), concession con-
tracts, and most relevant to our discussion of the Chinese construction market, Public-Private
Partnerships (PPPs). These small cities increasing need for municipal services has led a large
number of them to seek private funding, although one must note that the regulations regarding
foreign involvement in government projects vary depending on the sector. That is to say, al-
though even national defense projects are technically open to foreign investment, the applicable
regulations make certain investments much more alluring than others. For instance, there are
strict limits on foreign ownership in the water supply sector, whereas in the wastewater treatment
sector there are no such regulations. In fact, by one estimate by Jumbo Analyses, over 70% of
Green-land wastewater treatment plants involved some sort of PPP
2
(Liao Zhang, 2007). As
such, it is clear that the market for such cooperation has already taken hold in China, and will
continue to expand as the march toward urbanization continues, especially in those sectors with
less governmental restrictions.
Also worth noting in examining the construction market in China is the relatively recent
change in government regulations with respect to national residential patterns. For instance, up


8
until 1997 most Chinese people were assigned a government house, often with minimal space
and sparse luxuries. In addition, foreigners who wished to reside in Beijing were relegated to
foreign zones, zones in which exorbitant rents were charged. Now that these restrictions have
been lifted, many Chinese people are looking to find places to live that offer more amenities,
while foreigners are looking to maintain their lifestyles in more comfortably priced locales. This
has resulted in a boom in the luxury market
3
(similar to that seen in the rest of the world), and an
increase in the square meters per person that are being demanded by the Chinese, especially in
major cities such as Beijing.
Two other trends worth noting in our evaluation of the Chinese construction market are
Chinas industrialization and massive growth population. Chinas GDP has grown by more than
8% a year since 2000 and is forecasted to continue till 2010 (see Fig. 2). During this time, China
has starkly moved away from the agricultural industry toward low-skill, labor intensive indus-
tries such as textiles and simple electronic good (such as toasters, fans and TVs). Chinas ability
to support these industries has depended crucially on its enormous population, a population that
will continue to grow at a rate of
1.1% for the coming years. Although this number appears quite small, given a population base
of over 1 billion, growth at a one percent rate provides scores of labor for new factories and in-
dustries throughout the nation, and also readily explains why China is the largest consumer of
basic foods and industrial goods in the world.
Of course, the construction industry is a huge benefactor of the presence of cheap labor in
China. In fact, many experts in the field tout low-cost labor as one of the greatest strengths of

3
Jessie Ho, Luxury housing leads ongoing property market boom, Taipei Times, July 19. 2007, online at
www.taipeitimes.com/News/biz/archives/2007/07/19/2003370323.

9
Chinas construction industry. The savings arent simply in the low wages that are paid to con-
struction workers though; savings are also found in the amount of time these workers are willing
to work and the conditions they endure. The laws regarding

Figure 2. Chinas real GDP change, past and future forecast.










Source: China Economic Intelligence Unit, 2007.

overtime in China are rarely enforced, and stories of Chinese workers toiling 3 shifts a day, day
and night, even through national holidays, are commonplace. Also, many Chinese contractors
dedicate a relatively miniscule percentage of their funds to addressing occupational safety, health
and environmental concerns of their projects. Ethical issues aside, one result of these stream-
lined costs is that Chinese firms are often able to complete projects very quickly and at very low
(financial) cost.
10
With the urbanization, industrialization and increasing wealth of the Chinese, it is no sur-
prise that more international businesses are currently seeking to establish a firm presence in
China. This results in a Chinese construction market, especially in large cities, that has an influx
of insurance companies, banks and other professional service providers. However, in most cit-
ies, the available Grade A office space
4
constitutes far less than 10% of the total available of-
fice space. Ernst and Young and Price Waterhouse Cooper are just two of the corporations that
have recently had to scramble to find the high-end, Grade A office space that they need to con-
duct their business in Beijing, and Beijing has the best office space in the whole country. As
Chinas wealth continues to grow, it cannot be doubted that more firms will look to have a brick
and mortar presence in the country. As a result, high quality office pace will continue to be in
great demand, and those in the Chinese construction market are sure to take note.
One strength of Chinese construction firms both in their own market and abroad is that
they can often avail themselves of generous governmental financing (although we will later see
that, in other cases such as those of PPP, governmental financing is a weakness). In bidding for
aid-funded projects in Zambia, for instance, China has a marked advantage over other firms be-
cause it can provide cash up-front for the 2% bid bonds that are required under World Bank
bidding rules
5
. Zambian firms have much more difficulty accessing such capital, which leaves
Chinese firms with a great, usually insurmountable competitive advantage. In addition, these
Chinese government/bank loans can be crucial when projects (domestic or international) run
over-budget or encounter unexpected difficulties.

4
As classified by Jones Lang LaSalle, based on the office buildings characteristics such as location, wiring, insula-
tion, back-up power generators, floor-to-ceiling height and the quality of property management.
5
Peter Mukalula, Lecturer at Copperbelt University in Zitwe, Zambia, personal interview, Beijing, China, July 9.
2007.
11
Last but not least, the Chinese construction market like all other markets in China
have become more welcoming to foreign investment in light of Chinas accession to the WTO in
2001 (Lu and Wang, 2002). Now that their 5-year accession anniversary has passed without ma-
jor cause for concern, many international corporations should feel more secure in their invest-
ments in the region given WTO investment protections. In addition to allowing greater invest-
ment in the sector, accession has also benefited the construction market by increasing govern-
mental transparency in their legislation and approvals, and the decreasing of restrictions on the
sectors in which fully owned foreign entities could invest or own. Now that we are in 2007, the
three year transition period for the construction industry and the five year transition for the de-
sign and build industry are also over, and the Chinese construction market is officially com-
pletely open for foreign involvement.


Weaknesses of Chinas Construction Market and Chinese Firms

According to Professor Hubert Vaughan, currently a consultant for the Chinese govern-
ment on mega projects such as the 2010 Shanghai Expot, more than 80% of construction projects
in China dont finish on time or on budget. Moreover, he contends, the progress of projects are
difficult to measure at any point in time, project baselines are often ignored, valuable man-hours
are shamelessly wasted and there is a general inability to schedule and manage resources
6
. He
attributes these disappointing results which not only impact domestic efficiency but also pros-

6
See also Managing construction projects in China the transitional period in the millennium. William K Chan,
Francis K W Wong, David Scott, International Journal of Project Management Vol 17, No. 4, pp 260-1, 1999, for
difficulties of Project Management in China how they have changed little over the intervening 8 years.
12
pects for joint ventures
7
to what he deems the Chinese Do-and-Fix (DAF) methodology (see
Fig. 3), which he contrasts with the more Structured Methodology of much of the rest of the
world.
The core difference between the DAF and structured approach is that with the DAF
methodology, there is less emphasis on early planning, and as a result many changes in design
and structure occur throughout the construction process. In addition, instead of the utilization of
human resources as needed (i.e. planners at the beginning, hard laborers only after the design is
completed), under the DAF methodology, all employees are employed for the entirety of the pro-
ject. This leads to a large waste of money and man-hours, but given Chinas large need to pro-
vide employment to its people, this particular aspect is generally accepted. Under the Structured
Methodology, on the other hand, extensive planning is undertaken, the initial plan is generally
adhered to and manpower is only employed when needed.
One reason for the prevalence of the DAF methodology in China is the presence of pro-
jects that are primarily political in nature, which are done for namesake if nothing else. These
government projects are typically poorly defined, lack specific goals and detailed plans, and pro-
vide no measureables with which to quantify success. According to Professor Vaughan, one ex-
ample of such a political project is 2010 Shanghai Expot. Since the details of the project are
completely up in the air, the government leader who ordered the program is free and expects to
be able to change his mind at any point

Figure 3. DAF v Structured Methodology.

7
See Risk Assessment for Construction Joint Ventures in China, Shen, L. Y., Wu, George W. C.,
and Ng, Catherine S. K., Journal of Construction Engineering and Management, Janu-
ary/February 2001, 76-81 for a discussion of the specific risks facing joint ventures in china.
13

Source: Presentation by Professor Hubert Vaughan at IIEPM Conference, Beijing, July 20, 2007.






during the construction process and have her whims accommodated. Another example of such a
project is the National Stadium (also known as the Birds Nest) in the Olympic Village , in
which the Beijing 2008 Olympic opening and closing ceremonies are to be held (See Figure 4).
The specs to this multi-billion dollar project were changed when political pressure from academ-
ics and politicians led to the scrapping of the originally planned retractable roof, with the ration-
ale that since China was a developing country, it could not afford such luxuries. The post-
14
contractual change did save China 37-40 million dollars USD
8
, but it also resulted in a serious
drop in the price of the National Stadium, as all post-Olympic events and concerts held in sta-
dium will be vulnerable to rain cancellations and inclement weather, in addition to reducing the
Stadiums brand value and delaying the construction schedule by half a year (Wang 2007). In
order to adequately compensate the private parties who will lease the stadium after the Olympics,
the contract is set to be re-negotiated at the termination of the games. As we can see, with these
kinds of political/namesake projects, planning is almost impossible and wastes are inevitable,
and as a result Professor Vaughan urges construction firms to reject such offers.
In fact, the ability to change ones mind during a construction project is common
throughout China with any kind of project, even outside of the government sector and political
projects. Chinese customers expect that, if situations change or they simply change their mind,
they will be able to modify the specifications of a building as desired. Moreover, most project
managers within Chinese construction firms are unwilling to say No to any of these requests,
since they view the customer as the ultimate sponsor and because culturally they wish to avoid
conflict and resolve issues harmoniously. Although this may eventually lead to a satisfied cus-
tomer, it also results in much waste and the propagation of habits that are shunned by interna-
tional construction firms.


Figure 4: Beijings Olympic Village; National Stadium (sans roof) on the right.



8
Robert Marquand, Eye on Athens, China stresses a frugal 2008 Olympics, Christian Science Monitor, August
13, 2004. Online at www.csmonitor.com/2004/0813/p07s01-woap.html.
15









Source: Presentation by Lu JianZhong, at IIEPM Conference, Beijing, July 18, 2007.

The instability of the Chinese construction market in which firms must operate has many
other sources. First and foremost, as hinted at in the previous paragraphs, contracts are not hon-
ored and are considered malleable subject to ad hoc opportunism. Four main factors make this
so: 1. Relations before business. In China, guanxi is the basis of most business transactions
(Phen and Leong, 2000), and since these personal connections are strong there may seem to be
less need for formalities such as contracts. The reliance on guanxi is also problematic for con-
tract enforcement because those agreements are often rooted in a particular personal relationship
as opposed to the legal structure. As a result, if an election (or imprisonment) leads to a change
of the government official with whom a business has negotiated, it may find yourself completely
out of luck if the new official is not sympathetic to that agreement (which is quite likely if the
past official was corrupt). This is especially problematic at the local level of government, in
which personnel changes are more frequent. 2. State owned enterprises. As mentioned earlier,
16
with government enterprises there may less of a concern with money and time rather than poli-
tics and image, so contracts might not be so important. Moreover, if the company is not publicly
listed, there are not a large number of independent stakeholders who will suffer a direct financial
loss if the project is late or over-budget. 3. Not a litigious society. Culturally, Chinese firms are
more inclined to resolve disputes harmoniously and informally, and there is not a common prac-
tice of looking to third parties like courts for help. 4. Weak courts. Courts in China lack the in-
dependence they need to be impartial, and are decentralized to such a degree that uniformity in
legal enforcement cannot be expected in any given locality (Guo, 2006). Thus, the enforceability
of contracts is quite undependable, especially at the local level in which governmental relations
and personal expediency likely trump most formalities. Given all these factors, it is no surprise
that the vast majority of contracts are renegotiated, those that arent end in arbitration and that
international firms put little stock in the contracts they sign.
Another source of instability relevant to the Chinese construction market is the fact that
China is such a rapidly developing country. With such a quickly growing economy and chang-
ing society, construction regulations also change quickly to meet new demands and respond to
new political pressures (See Figure 5 for recent changes in relevant PPP laws). For instance, in
2002 the Chinese government outlawed having fixed returns Build-Operate-Transfer agreements.
As a result, all companies that had signed fixed return BOTs at the time were left with worthless
contracts, and most were forced into arbitration to mitigate their losses. The legal framework is
even more perilous in light of the fact that there is no national law regarding PPP; as a result,
companies both foreign and domestic must depend on provincial governments (which are often
much less competent and have a paltry understanding of the nature of PPP agreements) in deter-
mining the relevant legal framework, which often consists of multiple laws that sometimes are in
17
conflict. An example of changing regulations due to political pressures happened in the con-
struction of the National Stadium as discussed earlier, and the recent 5
th
Ring Road in Beijing.
Although the initial PPP contract called for the road to be a toll road, after increasing discontent
among citizens within China and frequent traffic jams on the 4
th
Ring Road, the government de-
cided to renege on the contract and remove the toll
9
. Although the contracting parties were com-
pensated for the change, the terms were never made public, and thus this provides little solace to
those worried about the stability of Chinese regulations regarding construction projects.
Governmental regulations regarding the tendering of construction projects are also
largely inefficient. Unlike in most Western nations, in China, when evaluating bids for govern-
mental projects, points are deducted from bidders whose price falls below the established rea-
sonable price. Clearly, this method works against any bidder who is more efficient or innova-
tive, and as a result firms are encouraged to submit bids with costs that are greater than their ac-
tual needs, for in doing so these firms not only net themselves more money but also increase
their chances of winning the governmental contract. One more reasonable alternative to this
practice that has been proposed is to give extra points at a set scale for the amount they fall be-
low the reasonable price. The bidders who bid below that price can then be interviewed and
questioned as to how they derived their price, and be asked to prove that they are able to carry
out the work more efficiently than their competitors (Zou et al, 2007).
Another issue with the governments regulation of the tendering process relates to its as-
sessment of construction plans for its projects. In general, the time given to the governmental
experts to evaluate all private bid submissions, which consist primarily of construction plans, is

9
Beijing 5
th
-ring road stops collecting vehicle passing fee, December 30, 2003. Beijing Daily, available online (in
Chinese) at www.enviroinfo.org.cn/Environment_Protection/Government_Activities/
f123013_en.htm.
18
between half a day and a full day, with a small payment in the range of $50-200 RMB (Zou et al,
2007). However, half to one day is insufficient to assess four or more construction plans com-
prehensively, particularly in the case where the experts are not given any information regarding
the project nor the plan itself. This practice leads to shoddy, incomplete governmental evalua-
tions and makes it more likely that issues will be missed in the plan that will only complicate the
project at some point during its development.
Current laws regarding land ownership in China also undermine many opportunities in
the Chinese Construction market. First and foremost is the inability for anyone, public or pri-
vate, to actually own land within the nation (the only exception being commonly owned land,
which is a classification that is applied in rural areas to promote sustainable farming). Commer-
cial land can be leased for 50 years, and residential land for 70. Although the government has
made gestures toward property ownership more like the western world
10
such as recent legisla-
tion guaranteeing that residential leases will be automatically renewed (although possibly with
a fee) the differences in land ownership continue to effect both commercial and residential
construction market in China, especially for foreigners. For instance, Hong Kong continues to
be unable to turn a profit on its subway lines in Shenzhen, largely because it cannot own the
relevant land, while Chinese firms who are easily turning a profit on all other lines. Lastly with
respect to property ownership, the Chinese Construction Market suffers because most buildings
do not have one owner; instead, they are strata-owned, a system in which a different person
lays claim to each floor or group of floors in the building. This weakens the market for many
reasons, including the difficulty of high-name international firms (such as Ernst and Young) to

10
Property Rights in China: Chinas Next Revolution. The Economist, May 8, 2007. Available online at
http://economist.com/opinion/displaystory.cfm?story_id=8815075
19
buy large office buildings to meet their professional needs. Most of these firms are unwilling to
have to deal/negotiate with
many different owners (or to simply own a couple of floors in a building), and thus have a much
tougher time finding the types of accommodations that they need. In addition to making trans-
fers of entire buildings more difficult, strata-ownership leads to more rapid
depreciation of the value of each entire building, as different land owners are prone to care for
and manage their respective parts in widely varying ways, with widely varying results.




Figure 5: Recent Legal Changes in PPP-relevant Regulations









Source: Presentation by Wang ShouQing at IIEPM Conference, Beijing, July 17, 2007.

Latest PPP-Relevant Policies in China

1/9/2006, Beijing Municipal Govt:Tendering Regulations for Conces-
sion of Urban Infrastructure Projects in Beijing
1/3/2006, Beijing Municipal Government:Concession Regulations for
Urban Infrastructure Projects in Beijing
24/2/2005, State Council:Some Suggestions (36 clauses) on Develop-
ing Private Economyencouraging private investment in infrastructure
using project finance ...
7/2004, SDRC:Decisions on Investment Modes Reform various kinds
of financing vehicles including project finance considered ...
1/5/2004, MOC:Regulations on Developing Public Utilities Using Con-
cessionfor gas, water, heating, transportation, wastewater/waste
treatment, etc.
20
Many other weaknesses of the Chinese construction market and Chinese construction
firms stem from the relative immaturity of the market. Put simply, some Chinese people are not
accustomed to the way that the free market operates. For instance, in February 2007 when the
Chinese stock market saw its largest drop in a decade, many people who owned stocks went to
the stock market building to complain, as they believed it was a violation of their rights to lose
money on their investments. Also, landlords who own land are in the habit of continually raising
their rents, even in times in which their actual land values are dropping. This unclear under-
standing of the risks and benefits of investments in the free market throughout Chinese society
has important ripple effects for the market, not the least of which because of the real possibility
that the real estate market (and stock) will overheat in the near future, leading to dramatic losses
and possibly massive social unrest in the nation. The government, which does see a real estate
market overheat as a very serious problem (although they publicly state that the overheat will
definitely not happen and many others agree that it is unlikely
11
), has taken measures to make
this less likely, such as by limiting foreign investments in real estate and clamping down on in-
flation.
On the government side, regulatory policies and relative market immaturity also contrib-
ute to the weakness of the Chinese construction market and their firms competitiveness. Firstly,
government regulations and slow approval processes make PPP financing difficult. Since every
financial decision must be approved by the finance ministry and other governmental agencies
each of which is separate from each other department and engages in independent decision-
making complex financial agreements are difficult to implement. This is especially true of
those agreements that require financing over long periods of time, as personnel in each depart-

11
Economic Focus: Home Truths, The Economist, July 5, 2007. Available online at
http://economist.com/finance/displaystory.cfm?story_id=9440844.
21
ment will change, and each approval is another chance for the financing liquidity to be stopped.
Another result of the excessively intricate approval processes for government financing and
financing from government operated banks such as the China ExIm bank is that many of these
agencies are not considered reliable, which is also partly due to the fact that these institutions
have a high debt-to-asset ratio. Altogether, the poor creditworthiness of these main Chinese fi-
nanciers hurts not only PPP agreements and joint ventures with foreign private international
firms, but also their ability to provide loans to their own domestic construction firms to compete
both within the nation and internationally.
One last negative effect of the immaturity of the Chinese market on Chinese construction
firms is through the medium of currency fluctuations. The Yuan has rapidly appreciated in value
in the past couple of years, and with these rapid changes it becomes more difficult for interna-
tional firms to guarantee their returns, even in joint ventures with local firms or governments.
Yet, most believe that the Yuan will not wildly fluctuate in the near future, and most firms can
satisfactorily mitigate this risk through proper contract clauses (difficulties of enforcing contracts
aside) and currency hedges.
Other great weaknesses of Chinese construction firms relate more to their internal work-
ings than their environment. Firstly, the labor that man most of their projects are migrant work-
ers, both those that travel from their farms to work in less busy agricultural seasons and those
that are relocated to the city and give up their former work. Both of these groups of workers
are highly unskilled (and accident prone if not thoroughly trained), and the first groups contin-
ued reliance on farming leads to frequent labor shortages during peak harvest seasons. On the
higher level, there are few good project managers within Chinese construction firms, and as such
they are in very high demand. The lack of good managers is, among the other factors discussed
22
above, largely responsible for the prevalence of lagging, inefficient projects that are hugely over-
budget, in addition to poor communication between the firm and the client, unnecessary safety
mishaps and poor resource utilization. Lastly, Chinese construction firms face difficulties abroad
because their professional licenses are oftentimes not internationally recognized. One speaker
quipped that only about 10% of Chinas huge number of engineering graduates can obtain engi-
neering qualifications in the United States or Europe.
Next in our discussion of the weaknesses of Chinas Construction market and its firms,
we examine the issues that these firms are facing in their attempts to move into the international
scene. In many ways, these weaknesses can be seen as natural extensions of the weaknesses in
their own domestic market.
Probably the largest issue that Chinese firms face abroad is their lack of familiarity with
the regulations that much of the European Union and United States have in their construction
markets, especially with respect to environmental standards and the treatment of labor. We can
see Chinas lack of experience in relevant international standards through one example construc-
tion project, in which many of these issues arose: in 1997, China Communication Construction
Company (CCCC) prepared a bid for a project to do work on the Bay Bridge in San Francisco.
Their bid of 400 million was less than one-third of the bid that eventually one, 1.4 billion, from
Fru-Con. Yet, the real twist in this story is that Fru-Con never had to compete against the sig-
nificantly lower bid, because CCCC never even submitted it.
Why? CCCC representative Jianzhong Lu cited three reasons. First, CCCC was intimi-
dated by the environmental restrictions that were in place on the bridge construction. The project
specs informed CCC that their construction couldnt disturb the birds in the morning and
couldnt allow to rust to enter the water; CCCC, like most other Chinese construction firms
23
(Zeng, 2003), did not even know where to start in addressing these concerns, nor did they have
anyone on staff to help them. In China, to say the least, the environmental restrictions they had
confronted were far less stringent. A second concern of CCCC was their inability to deal with
labor unions in the United States. Lu noted that laborers in China are accustomed to working up
to three shifts a day, overtime every day including weekends. However, from what he had heard
such practices would not work in the U.S., and the visa processes were such that they could not
simply import all of their own labor. The last concern of CCCC, intricately connected to other
two, was the highly litigious nature of the United States. At least in his perception, any mistakes
in the U.S. could lead to costly and lengthy lawsuits, and the CCCC didnt have the personnel to
deal with this situation either. In his recollection, CCCC had never been taken to court in
China for any such reason.
Needless to say, Chinese firms greatest successes are highly concentrated in markets in
developing countries that more closely resemble their domestic scene, such as Africa
12
(See Fig-
ure 6). In such markets, they can often bring their own labor, work them as they please, and pay
about as much attention to environmental concerns as they are accustomed. Lastly, there is little
concern about being taken to court in these countries, especially as most of them are quite grate-
ful for the Chinese projects they receive, which are usually at a significantly lower economic cost
than other international bids, as evidenced by the Bay Bridge example, and by other reports that
Chinese firms typically undercut Western competitors in Africa by 40% or more. However, this
is also a weakness of the firms in the larger picture, as their investments are heavily concentrated

12
In addition, there has been some work suggesting that Chinese culture is particularly apt for joint ventures is cer-
tain Southeast nations. See Kwan, Ang Yee and Ofori, George (2001) 'Chinese culture and successful implementa-
tion of partnering in Singapore's construction industry', Construction Management and Economics, 19:6, 619 - 632.
24
in the most instable and volatile regions of the world, and their profit margins in these areas, if
they exist at all, are often well below 5%
13
.
One last weakness to note of Chinese firms attempting to do work abroad (and even
much of their work at home) is that, when faced with international competition on all fronts,
Chinese firms generally only win contracts that are focused on low-end work
14
. That is to say,
international projects and joint ventures in China are generally designed and managed by non-
Chinese and built by the Chinese. The strength on the labor side of projects connects with the
huge population boom in China, as noted earlier, and closely mirrors what is perceived as the
strength of Chinas economy in general (Lu and Wang, 2002). In addition, the weakness in
higher-end services ties into the issue discussed

Figure 6: Geographic Distribution of Chinese Overseas Investment in 2004


13
See generally Risk management framework for construction projects developing countries, Shou Qing Wang,
Mohammed Fadhil Dulaimi, Muhammad Yousuf Aguria, Construction Management and Economics (March 2004)
22, 237-252.
14
See Raftery, J., Pasadilla, B., Chiang, Y.H., Hui, E.C.M. and Tang, B.S. (1998) Globalization and construction
industry development: implications of recent developments in the construction sector in Asia, Construction Man-
agement and Economics, 16, 735, anticipating the difficulties of China moving into high value-added services al-
most 10 years ago.
ASIA 46.6%
AFRICA 21.8
EUROPE 8%
LATIN AMERICA 4.6%
NORTH AMERICA 1.4%
OCEANIA 0.5%
OTHERS 17.1 %
25
Source: Chinese Ministry of Commerce, 2007.

earlier regarding Class A office space: the majority of buildings that the Chinese have built and
designed in the past are created to meet the needs of their domestic firms. As a result, Chinese
firms are generally unfamiliar with the sorts of requirements that international corporations have
with respect to their office space and similarly with the sorts of buildings that are generally
sought after in the developed world.
One last challenge confronts Chinese construction firms as they attempt to increase their
involvement abroad: Chinese companies are relatively small when compared to their multina-
tional corporation competitors. Although when taken together the many separate Chinese corpo-
rations look huge, there is in fact no capital and human resource relationship between these cor-
porations, forming little firm basis for co-operation and collaboration. Even the biggest of
Chinas 104,297 firms has only 3,000-4,000 employees and approximately 3 million RMB con-
tract turnover each year.
46.6%
17.1%
0.5%
1.4%
4.6%
21.8%
8.0%


-

26
We will close this section by discussing some of the difficulties of international firms set-
ting up in China and participating in the Chinese construction market. Before starting however,
we must note that both the strength of the Chinese market and above-listed weaknesses of Chi-
nese firms would suggest that international opportunities abound in the country, and, if we judge
them based on their behavior, most multi-national corporations seem to agree.
Oddly enough, Chinas accession to the WTO has actually had the perverse effect of
radically decreasing the number of Foreign Investment Construction Enterprises (FICE) in
China, with foreign market share falling from about 6% to the current level of 3%. The primary
reason for this drop is the requirement of foreign enterprises officially registering within China.
The requirement for obtaining Class A status, the status with the most privileges and invest-
ment opportunities within China, are quite stringent, including high investments within the coun-
try and having at least 200 professionally registered Chinese engineers on staff. And even after
satisfying all of these requirements, Class A firms are still only able to invest a maximum of 50
million dollars in a project, which limits them to participating in projects with an overall value of
less than 250 million dollars USD. Given the large hurdles to obtaining the qualification and the
paltry rewards (at least for now), it is of little surprise that, of all of the FICE registered in China,
only 79 have Class A status (about 6.64% of the total FICEs in China), and over half of those are
form Hong Kong. Figure 7 summarizes the other challenges that foreign firms face in the Chi-
nese construction market, in addition to strengths and opportunities, as perceived by a project
manager at one of the largest construction firms in Hong Kong.
One researcher who has done extensive research on risk management by international
firms in China is Professor Wang ShouQing at Tsinghua University
15
. He has itemized the

15
Most recently, Analysis of political risks and opportunities in public private partnerships (PPP) in China and
selected Asian countries: Survey Results, Chinese Management Studies, Vol. 1. No. 2, 2007.
27
unique and critical risks faced by international firms in Chinas PPP Projects and the relative
success of various mitigating measures. His conclusions are presented in Figure 8. The boxes
on the left show the risks while the boxes on the right show the mitigating measures. The num-
bers in the boxes on the right indicate the relative efficacy of the mitigating measures, on a 1-5
scale.

Figure 7: SWOT Analysis
SWOT of Foreign Contractors Operating in China
Strengths
Technological Advanced
International Experience
Awareness on HS & E
Sustainability Sensitive
Project Management oriented
Foreign Client preferred
Weaknesses
No Local Network
Lack of Local Resources
High Cost
Not Familiar with Local
Statutory Regulation
Opportunities
Increasing Turnover
JV with Local Strong Contractor
PPP or PFI
Higher Return
Threats
Local Protectionism
Unforeseen Risk
Price / Currency Fluctuation
Local Contractors become more competi-
tive

Source: Gammon Construction Limited, 2004


Figure 8.
Unique/Critical Risks in Chinas PPP Projects and the relative success of various Mitigating
Measures (on a scale of 1-5)
28

Risk Measure 1 Measure 2 Measure 3
Change in
Law

Obtain governments
guarantees, e.g. adjust
tariff or extend
concession period.
(4.0)
Insurance for political
risk.
(3.0)
Maintain good rela-
tionship with
government authori-
ties especially
officers at state or
provincial level.
(2.2)
Corruption

Maintain good rela-
tionship with
government authori-
ties especially
officers at state or
provincial level.
(2.6)
Establish JV with lo-
cal partners
especially the central
government
agency or state-owned
enterprise.
(2.4)
Enter into contract to
prevent corruption.
(1.8)
Delay in
Approval

Establish JV with lo-
cal partners especially
the central govern-
ment
agencies or state-
owned enterprises.
(3.1)
Obtain governments
guarantees to
adjust tariff or extend
concession.
(3.1)
Maintain good rela-
tionship with govern-
ments.
(3.0)
Expropriation

Establish JV with lo-
cal partners
especially the central
government
agency or state-owned
enterprise.
(2.3)
Rely on a combination
of international
consortium and insur-
ance policies
(political insurance).
(3.4)
Obtain support of
sponsors
government, e.g. ex-
port credit.
(3.3)
Local Entities'
Reliability

Gain accurate finan-
cial & other informa-
tion about local enti-
ties and
choose the most capa-
ble ones.
(3.2)
Maintain good rela-
tionship with
government officers at
state or
provincial level.
(2.4)
Appoint independent
accountant to audit
the local entities.
(3.0)
Force
Majeure

Obtain governments
guarantees to adjust
tariff or extend con-
cession period.
(3.8)
Insure all insurable
Force Majeure
risks.
(3.8)
Obtain governments
guarantee to provide
finance help if
needed.
(3.1)
Exchange
Rate &
Convertibility



Obtain governments
guarantees of
exchange rate & con-
vertibility, e.g.
fixed rate or to adjust
tariff or to adjust tariff
Use dual-currency
contracts, with
certain portions to be
paid in RMB and
other transactions de-
nominated in foreign
Use hedging tools,
e.g. forward, swap.
(2.5)
29
or extend concession
to cover the cost.
(3.9)
currency.
(2.9)
Financial
Closing

Equity financing and
cooperation with gov-
ernment partners.
(2.8)
Adopt alternatives to
contract payment, e.g.
land development
rights.
(2.2)
Use Initial Public Of-
ferings on stock to
raise funds especially
equity finance.
(1.9)
Dispatch,
Transmission
Constraint

Enter into take-or-pay
power
purchase arrange-
ments with power
purchaser (govern-
ment).
(4.3)
Enter into dispatch
contracts with
government authori-
ties to dispatch
power plant at full
capacity for a mini-
mum number of hours
each year.
(3.8)
Government to guar-
antee that
transmission line will
be ready for
dispatch.
(3.6)
Tariff
Adjustment

Have a formula for
tariff adjustment that
can enable objective
calculation
of tariffs each year.
(4.2)
Maintain good rela-
tions with
government and a
positive public
image of the project.
(2.5)
Separate and re-define
tariff, e.g.
portions of tariff fixed
while portions
adjusted, or portions
paid in foreign $.
(3.2)



Chinese Construction Market and Firms Development Trajectory

The construction market has begun and will continue to change in the coming years. Ms.
Jihong Wang, managing partner at Beijing City Development Law Firm in the fields of urban
infrastructure, construction and real estate and government legal affairs, believes that interna-
tional ideas and practices are driving many of these changes. She lays out ten ways by which
such change is occurring:

1. Internationalization of Construction Ideas
30
Most fundamentally, Wang cites the growing influence of western ideas regarding project
management, government involvement and even environmental and safety procedures as shaping
the trajectory of Chinas Construction Market development..

2. Internationalization of Relevant Law and Regulations
The trend in recent changes in governmental regulations with respect to construction pro-
jects (including PPP) have moved toward more openness in the market and more transparency
from government. In addition, the government has attempted to address weaknesses in its fi-
nancing through advance disbursement policies and have put strict environmental protections on
the books. As Daniel Wu, a construction manager form Intel put it, Chinas government is mov-
ing from production to administration, from controller to service provider, and from central
planning to macro control. Step by sluggish step, governmental procedures becoming more
streamlined and predictable, and required governmental approvals are becoming easier to obtain
(although he himself acknowledges the process will take a very long time).
Li Shirong, deputy director of the chongqing foreign trade and economic relations com-
mission and former vice mayor responsible for urban development and construction, recom-
mends that the government should commission a bureau for public works to hire its own man-
agement team. That way, the project managers working on governmental projects will be inti-
mately familiar with governmental approval and finance mechanisms, which would be a large
improvement on the current situation, in which hired project managers generally incompetent
to begin with have to ask the public officials how to proceed at every stage of construction. Li
hastens to point out that other countries that are now developed had public bureaus to facilitate
31
the process of their development, at times in which they had a large number of government pro-
jects just like China presently does.

3. Internationalization of Project Management:
The Ministry of Construction of P.R.C., the National Development and Reform Commis-
sion and many private construction firms are advocating for and embracing multi-management
modes such as Engineering, Procurement and Construction (EPC) and other systems of develop-
ing/investing as a single, unified agent. In addition, to address the weaknesses of Chinese project
managers, many professional project management companies and consultant firms have been
established such as the Project Management Research Committee (PRMC), which has as its aim
to promote project management professionalism, and to facilitate dissemination and sharing of
professional information both on a domestic and international basis (Lu and Wang, 2004).
Professor Vaughn has tips for construction firms that he uses in his own practice to in-
crease the efficiency and quality of Chinese project management. First and foremost, Vaughn
encourages firms to give financial incentives to discourage changes from a projects initial plan.
In studies, he found that these types of incentives, such as when he would force the customer to
pay for any changes to the original plan or give project managers bonuses when the project was
completed without changes, he was able to decrease the number of modifications to a project by
up to 60%. In addition, Vaughn suggests that firms incorporate governmental approval in to the
process of the project as smoothly as possible. For instance, by integrating Subject Matter Ex-
pert (SME) review approval into the early stages of project development, he has been able to in-
crease the efficiency of his projects by 25%.

32
4. Internationalization of Contract Model
To address the problems that many firms see with contract formation and implementation
in China, the contract model provided by Ministry of Construction of P.R.C. has fully borrowed
the structure and specific clauses from the International Federation of Construction Engineers
(FIDIC), which attaches more importance on procedural specifications. Of course, the FIDIC is
not strictly followed; instead, it is gradually being modified and adapted to the practices of the
Chinese construction market, and more and more Chinese professionals are being trained on its
nuances (Lu and Wang, 2004).

5. Internationalization of Building Design Code
Traditional Chinese building design and construction technical code is increasingly fac-
ing challenges from innovative construction technologies from abroad, and many of the flaws of
the design code are being exposed as woefully inadequate by these international standards. In-
dustry and government insiders agree that the building technical code renewal is imperative and
claim that it will soon be coming.

6. Internationalization of Construction Materials and Construction Techniques
The participation of foreign designers and construction firms in the Chinese market has
introduced new building materials, environmentally friendly materials and novel techniques to
the Chinese market. This technological and skill transfer has resulted in such conceptually
groundbreaking projects as the "Respiratory Curtain Wall in the Water Cubic (in which water
events will be held in 2008 Olympics, located to the left of the National Stadium in Figure 4) and
the novel and breathtaking design of the new CCTV Site in Beijing.
33

7. Internationalization of Dispute Settlement Mechanism
As a means to deal with the weak and often undependable courts in China, arbitration is
becoming widely used, especially in the projects involving concession contracts. An inter-
mediation system is also forming.
Wang Shouqing believes that international firms ought to have learned many lessons
form their experiences in China that can help them avoid disputes in their future work
16
. Most
importantly, he feels that firms should never exploit the corruption of a particular governmental
official or a lack of knowledge on the governments part to extract an agreement with lopsided
terms that benefit the company. The corrupt official will eventually get caught, in the long-term,
and the firm will be penalized for its behavior. In addition, past projects show that when an in-
ternational firm make what are perceived as excessive profits, the government and angry citizens
are more likely to take adverse action. For instance, with the Hangzhou Wan bridge, when the
government saw the projects incredibly high rate of return, it awarded other construction firms
projects to build two bridges in the near vicinity of the Hangzhou. In addition, with the Qingdao
VEOLIA Wastewater treatment facility, the government forced renegotiation of its contract
when it realized that it was duped into an unfairly high off-take price. An example of the right
way of dealing with this issue is seen in the Laibin B Power plant, in which the private parties
reduced its tariff line because it was making a good profit, which kept government officials and
Chinese citizens satisfied with the project.

16
See inter alia Risk management framework for construction projects in developing countries, Shou Qing Wang,
Mohammed Fadhil Dulaimi and Muhammad Yousuf Aguria. Construction Management and Economics (2003) 21,
00-00.

34
Another suggestion that Wang has for both Chinese firms and their joint venture partners
is to limit the amount of governmental involvement in their projects. Although one always wants
to maintain good relations with the government, a good image of the project and close ties with
public officials, when the government is enmeshed in the details of a project, it is most likely to
lead to inefficiency, especially if continual governmental approvals are required or the govern-
ment believes it has the ability to make modifications to the project specs as the project pro-
gresses. In essence, its best to limit government involvement to the oversight of price, quality
and progress of the work.

8. Internationalization of Project Participants
Although certain Chinese regulations make it difficult for foreigners to enter the market,
the Chinese construction market is still attracting numerous foreign participants. This growing
number of participants is largely focused on high-end work, which brings elite foreign architects,
construction companies, project consulting companies and consulting firms to work in China and
share their expertise.

9. The Expansion of Chinese Construction Companies to Overseas Construction Market
The top ten Chinese Construction companies take a decent percentage of works in over-
seas construction market, from African Market to America, Europe, Hong Kong, Macau (Jianghe
Group, CSCEC). This percentage is likely to grow given the construction industrys size, capac-
ity for growth and need to keep its millions of employees working.
35
Lu Jianzhong has specific ideas about how his company, CCCC, and others will and
ought approach foreign investment in the future. Specifically, he urges Chinese firms to do the
following:
a) Do not go blindly and in a rush. Instead, before attempting to invest abroad, each firm
should conduct a thorough self-analysis and select a suitable market, preferably one with rich
resources, reliable sources of payment and a stable socio-economic situation. Moreover, it is
best if the barriers for foreign entry are low and Chinese labor is permitted to staff the project
and there are little to no security concerns.
b) Continue to focus on projects financed by the World Bank, Asian Development Bank,
and other aid institutions. Chinese firms are generally very competitive for these sorts of pro-
jects (as many are located in areas of the world with low barriers to entry), and the Chinese have
the ability through these projects to establish their presence in many developing markets for fu-
ture investments.
c) Get more support from government by means of favorable loans, commercial loans,
insurance and support funds.
d) Cooperate extensively with famous international contractors (to build a reputation),
with other Chinese contractors, with non-contracting firms, and with resource explorers/added-
value processors, in addition to local stake holders. This is to be done by means of PPP (such as
BOT and BT) and Joint Ventures.
e) Buy foreign companies in the U.S., Canada and Europe.
f) Hire better consultants, good HR people and more local staff.
g) Work hard to internationalize Chinese standards and better understand foreign ones.

36
10. The Diversification of Project Fields, Contractors Begin to Play as the Owners
Slowly but surely, the traditional business fields for China have been broken and firms
with diversified capabilities have been developed. In the construction field, more Chinese con-
tractors have stepped up from simply being involved in the construction phase of mega-projects
to being involved in the entire project design, development and delivery.

Conclusion

Given Chinas massive urbanization, constant industrialization and rapid economic ex-
pansion, it is almost assured that its GDP will continue to achieve impressive growth in the com-
ing years in all markets, especially construction. And yet, the evidence presented in this paper
shows that the Chinese construction industry faces many hurdles, Do-and-Fix approach to pro-
ject management, their lack of familiarity with international standards and high-end project
work (such as design), and their habits of not respecting schedules or budgets and wasting re-
sources. Other challenges highlighted include oscillations in labor supply, lack of skilled labor,
and lack of international accreditation of training programs to train skilled labor. Moreover,
many Chinese firms expect project specs to change throughout the life cycle of a project, which
can be a plus if workers face disruptions head on without being fazed, but a minus because if
workers dont make effort to develop detailed work schedules. Suggestions developed in part III
of this paper provide some insight into how to overcome of some of these challenges and how to
improve project and risk management practices in China.
There are also several key lessons in this paper for investors and developers looking for
capital investment opportunities in the region. Firstly, given Chinas unmistakable trend towards
37
urbanization, many municipalities will be in need of extra funding in order to provide public ser-
vices to their ever-increasing populations. In addition, peoples increased ability to choose their
own housing locations and amenities has led to a marked boom in the luxury market. Moreover,
investors have reason to be optimistic as China moves towards FIDIC standards in their contract
formulations and as they adopt internationally recognized dispute settlement mechanisms to cope
with lax contract enforcement. Of course, the market is a source of many concerns, not the least
of which being that individuals and corporations still cannot own land in China. Most buildings
in China are strata-owned, and those owners often dont charge market rents for their properties
as a result of their weak understanding of the market; whats more, many governmental projects
(especially those related to the Beijing 2008 games) are focused on political ends more than fi-
nancial ones. Most frustratingly, there are still strict limits on the amount that fully-owned inter-
national firms can invest in China and the sectors in which they can invest. Also worth noting
are concerns about rapid changes in relevant policies and a market over-heat followed by a dra-
matic correction. For all of these reasons, investors and developers should surely pay close at-
tention to Wang ShouQings research-supported advice about dispute avoidance and risk mitiga-
tion when contracting with Chinese governmental entities.
The present analysis suggests several areas of future research that may be fruitful for
scholars, educators and consultants involved in Chinese practice. Construction management ex-
perts ought think long and hard about the state of the Chinse industry to get a better understand-
ing of the manifold concerns it raises with international investors. They should also begin to
think about how they can educate and train Chinese contractors to work in Western markets,
which will necessitate new legal, environmental, safety and human rights sensitivities. Those
focusing on legal studies may want to examine how entrance into the WTO has simultaneously
38
expanded and limited foreign penetration into the Chinese construction market; for instance,
while investors have more protection and the government is de-regulating the market, many
measures have been put in place to protect domestic firms and keep Chinese citizens gainfully
employed. Moreover, legal scholars ought to look closely at contractual irregularities in China
and how the move towards FIDIC standards and changes in the jurisprudence of Chinese con-
tracting affect tendering practices and the levels and modes of corruption in the industry. For the
students of project finance, it would be useful to study how Chinas generous, but erratic, gov-
ernmental financing, highly complex approval system, high debt-to-equity ratio and general un-
reliability in upholding agreements leads to difficulties for complex real estate financing and PPP
projects. Its also worth noting that the consulting opportunities open to these practitioners are
broad, most specifically with respect to environmental and labor laws in foreign countries, for-
eign countries judicial practices and international standards regarding building specifications,
especially high-end office and other luxury professional spaces.
This paper has provided a helicopter-view of the state of the Chinese construction in-
dustry that addresses topics essential to anyone considering joint ventures, investments or re-
search in the region. Clearly, there are significant structural issues that the Chinese government
and private industry will need to address, but for those who understand the potential pitfalls,
there are huge opportunities in the region. Chinas present trends towards industrialization and
urbanization may be more dramatic than in any other society in the whole of human history, and
these macro-trends have undeniably positive implications for the construction market. We hope
that this paperby highlighting bottlenecks and mitigation measureswill benefit all parties as
they seek to situate themselves in advantageous positions to witness and take part in the spec-
39
tacular trajectory of Chinas construction industry, as skyscrapers continue to rise up from the
ground!







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