State and determinants of inter-regional market entry practices in the Chinese construction industry: evidence from national quality award projects

Abstract

PurposeDue to the lack of industrywide data, now there is only perceptual knowledge, through survey data, that construction firms may face great challenges in geographical diversification. The article aims to provide an objective description on the state of interregional market entry practices in the Chinese construction industry. How these practices are influenced by related set of regional and industry-related factors is further studied.Design/methodology/approachDescription analysis of the practices is first performed based on a first-hand industrial data set including 1,020 projects and 404 construction firms. Combining provincial panel data in the National Bureau of Statistics of China, related regional and industry-related factors on these practices are further analyzed through hierarchical regression models.Findings(1) Interregional market entry practices are not quite prevalent during the past two decades, only involving 271 projects and 111 firms which accounts for 26.57% and 27.47% of the analyzed subjects respectively; (2) Large, state-owned and experienced firms are more frequently involved in the practices; (3) A number of regional factors such as local market protection and industry scale also significantly impact the practices.Research limitations/implicationsThe empirical analysis of this study was conducted using the specific dataset from the National Quality Award Projects where firms tend to be national, which may limit the generalizability of the findings to the whole industry contexts.Originality/valueWhile most of the research on market entry practices in the project-based construction industry is undertaken at project or firm level based on survey data, this research represents an exploratory effort of using objective data to provide a macro overview of the practices at the industry level. The findings could contribute to a deepened understanding of how these practices are impacted by related regional- and industry-level factors.

Determinants of Housing Construction in Ukraine

“…3, 2022 extended by Just and Levinger (2021).These researchers determined that the growth in demand on the housing construction market is fueled by an increase of consumer income, the number of urban residents and better access of potential investors to capital. Wang et al (2020) analyzed regional and branch factors influencing the development of the construction industry in China. Studying the housing construction market in China, Zhai et al (2014) identified 6 factors, influencing its development, namely "constructability implementation", "social climate and attitudes", "architectural performance", "costs", "supply chain" and "preparatory stage".…”

Market Commonality and Competition in Communities—An Empirical Study Based on Bidding Data of the Construction Market

“…In the Canadian construction market, studies have shown that the number of bids and contracts fluctuates seasonally, and the smaller the project amount, the more fellows [19]. In China, sizeable state-owned construction enterprises dominate the market competition, which is reflected in the ratio of the quantity and proportion of contracts [20]. On the contrary, in Australia [21], Portugal [22], and the United States, small and medium-sized construction enterprises have a much broader survival space.…”

“…In the construction industry, where information is scarce and times are competitive, it is difficult for businesses to accurately identify and forecast competitor behavior [6]. However, the similarity between customer demand and business resources enables enterprises to address these issues [20,42]. Additionally, the construction market's overall characteristics imply the existence and influence of market commonality.…”

“…This kind of competitive relationship with nearly complete information guides enterprises who are looking for bids to form object dependence [42]. Except for a few large and experienced enterprises, most construction enterprises can only compete within a settled community [20]. Within the community, competitors may also come to an invisible consensus that a particular competitor is preempted to win the bid, creating a competitive illusion [50].…”

“…On the other hand, it demonstrates that the barrier between these three areas cannot prevent all businesses from operating, and contractors motivated by self-interest may overcome the barrier to cross-border operation. Large, seasoned construction firms are more likely to compete internationally [20]. For instance, Shanghai Construction Group, as a large state-owned construction enterprise, can compete in construction, design, engineering consulting, and other businesses concurrently.…”