OVERVIEW OF THE CONSTRUCTION INDUSTRY IN CHINA 2001
The Chinese construction market has changed rapidly over the last ten years. Government policy initiatives including building affordable housing for ordinary citizens and encouraging individual home ownership are already having a significant effect and this is set to continue. However there is also a commercial property glut which has led to a decline in property rates. This overview covers the architecture, housing, commercial property and building materials sectors. There are separate overviews available for road and bridge infrastructure, airport, port, rail and environmental sectors in China.
The Ministry of Construction (MOC) is responsible for the overall administration of the construction sector in China. It has an extensive remit of construction policy, regulatory, planning functions. The MOC definition of construction includes engineering, urban, town and village planning and housing, the building and real estate industry, and water. The MOC's priorities for the Tenth Five-Year Plan period 2001-2005 are housing construction, infrastructure services development, urban infrastructure services, and infrastructure development in Western China.
Architecture
China has held some high profile design competitions for landmark projects such as the Grand National Theatre to be built in the centre of Beijing opposite the headquarters of central government in Tiananmen Square. At present foreign design companies do not have rights to bid independently for design projects, they must find domestic partner to do so. There are three top architectural institutes in China are the Architectural Design Institute, the Beijing Institute of Architectural Design and Research and the (contact details below). They all undertake a cross section of architectural work, from civic to commercial and employ architects, structural engineers and interior designers.
Housing
The Chinese Government’s new housing policy has led to some significant developments in the construction market. Economy housing projects – targeted at low to middle income families – are a big priority for future construction. The Government also aims to increase average living space in urban areas. Social and economic housing are generally built by local Chinese contractors and building materials will be sought locally where possible. However the Chinese government are very interested in adopting intelligent building and environmentally friendly technology and products and there may be opportunities for collaboration with foreign firms in this niche sector. The abolition of welfare housing - with a move towards home ownership with banks and financial institutions offering mortgage facilities - has also led to an increased interest by people in the interior decoration of their homes (see below).
Commercial property
Building of commercial property in major cities in China grew significantly in the 1990’s (eg office blocks and shopping malls) resulting in the current property glut and a consequent decline in property rates. In any event Chinese companies are generally well placed to execute any new projects of this type and foreign firms will face a domestic bias when the investor is Chinese. However China is a significant destination for direct foreign investment (factories, HQ offices) by companies eager to be well placed for the economic development set to occur in China. This type of development may provide opportunities for foreign project management, specialist materials, design, and quality testing.
Consultants
China's consultancy sector is at its beginning stage. It lacks a complete system. The sector will develop fast after China's accession to WTO. The Chinese government has committed to partly open the country's consultancy sector to the outside world within three years (first stage) and totally open the sector within five years ( second stage) after China's WTO accession.
At the first stage:
a) Foreign consultant companies are permitted to work together with a Chinese partner, undertaking concept design and providing technical consultancy;
b) Foreign consultant companies are permitted to set up a joint venture with Chinese consultant bodies;
c) With the approval from the both governments, registered individuals are permitted to undertake consultancy designing and will have the right to sign design document.
At the second stage:
a) Foreign consultant companies are permitted to set up a wholly owned venture;
b) Foreign consultant companies are permitted to set up a joint venture;
c) Foreign consultant companies are permitted to have a controlling share in the joint venture;
d) With the approval from the both governments, registered individuals are permitted to run consultancy business. MOC and MOFTEC are currently working on relevant legal document. (17/10/01)
Building materials
February 2001 saw the dismantling of the State Administration for Building Materials Industry (SABMI) in accordance with government restructuring. Responsibility for policy now lies with the State Economic and Trade Commission (SETC), while the newly established China Building Material Industrial Association takes on most of the remaining functions of the defunct SABMI.
The growth rate of China's building materials industry is expected to be 3 to 4 percent higher than that of the national economy in the next 10 years. The total output value will reach 1,212.6 billion yuan(US$146.10 billion) in 2010. A major factor contributing to the high growth will be the yearly building of over one billion square metres of housing floorage, which means there is an enormous market for building and decorating materials. (17/10/01)
Much emphasis is placed on the localisation of building materials, although some opportunities do exist for foreign companies. Opportunities for overseas companies in the building materials sector lie mainly in the upgrading of technology in existing plants in China and the production/export of high-tech new building materials.
Overseas investment is still encouraged in new building materials, processed products of non-metallic materials, inorganic non-metallic materials and building materials equipment. There is a high emphasis on environmental protection.
Recent housing reform has led to huge growth in the home decoration market as the Chinese start to take more interest in the appliances, sanitary ware etc in their homes and internal decoration. Spending by Chinese families on redecorating their homes has grown by an average annual rate of more than 30% in the last two decades. In Shanghai B&Q now has two highly successful operations in Shanghai and over fifty more stores planned for cities throughout China. IKEA operates in China in Shanghai and Beijing.
The Construction Export Promotion Materials Sponsorship Division of the Department of the Environment, Transport and the Regions has co-ordinated a detailed report on the Building Materials Sector in China. For further information on that report see contact details below.
British Centre for Building and Construction in China (BCBC)
Supported by British Trade International and managed by Sino Infrastructure Partnership (SIP), the BCBC has been established in Shanghai to provide a permanent exhibition site for British firms and is supported by the full range of market development services required for a entry into the China market. See below for contact details.
Useful contacts
Ministry of Construction
Zheng Shuling
Deputy Director-General
Department of International AffairsMinistry of Construction
9 Sanlihe Road
Beijing 100835
Tel 010 68394083
Fax 010 6831 3669
Pan Xiao
Director
Division of Europe and Africa
Department of International Affairs
Ministry of Construction
9 Sanlihe Road
Beijing 100835
Tel 010 68393038
Fax 010 68313669
Ms Song Xiuming
Officer, Ministry of Construction Information Centre
Ministry of Construction
9 Sanlihe Road
Beijing 100835
Tel: 010 68394215/68393575
Fax: 010 68393333
Nie Meisheng
(Professor)Science and Technology Committee
The Centre for Housing Industrialisation
Ministry of Construction
9 Sanlihe Road
Beijing 100835
Tel 010 68393411
Fax 010 68314697
Architectural Design Institute
Cui KaiVice President
Chief Architect
Architecture Design Institute,
No 19A,
Che Gong Zhuang St
Beijing 100044
Tel 0106836 0618
Fax 010 6834 7374
Beijing Institute of Architectural Design and Research
Shao Weiping
Deputy Chief Architect
BIADR62 Nan Lishi Rd,
Beijing 100045
Tel 010 6801 1155
Fax 010 6802 2803
Shanghai Modern Architectural Design (Group) Co., Ltd
Li Jiaping
Manager,
Business Management Department
Shanghai Modern Architectural Design (Group) Co., Ltd
258 Shimen Er Raod
Shanghai 200041
Tel: 021 6246 4274
Fax: 021 6246 4000
E-mail: smad@sh163a.sta.net.cn
Building Materials contacts:
Mr Zou Chuansheng (17/10/01)
Standing Vice-President
China Building Material Industrial Association
Bai Wan Zhuang
Beijing 100831
Tel: 010 68394706
Fax: 010 68332658
Mr Pan Donghui (17/10/01)
Director,
Foreign Affairs Office
China Building Material Industrial Association
Ban Wan Zhuang
Beijing 100831
Tel: 010 6831 1144 Ext.2261/2262
Fax: 010 6831 2191
British Centre for Building and Construction in China (BCBC)
Contact in China
Prof Chengde Chen
British Centre for Building and Construciton in China
Suite E05,
10/FShanghai Mart
No 2299 Yan An Rd (W)
Shanghai 200336
Tel 008621 6236 0979
Fax 0086621 6236 0977
Contact in UK
Nigel Chaldecott OBE
30 Orchard Way
Send
Woking
GU23 7HS
Tel 01483 225612
Fax 01483 223631
For the report on Building Materials contact:
Mona Shah
Construction Export Promotion Materials Sponsorship Division
3/J4 Eland House
Bressenden Place
London SW1E 5DU
Tel: 0207 890 5682
Fax: 0207 890 5669
Useful websites:
Chinese language only:
Ministry of Construction (MoC)
http://www.cin.gov.cn
State Development and Planning Commission (SDPC)
http://www.sdpc.gov.cn
Other
British Embassy: outlines commercial work of the UK missions in China, including some sector specific information
http://www.britishembassy.org.cn
Produced by the Commercial Section of the British Embassy, Beijing
October 2001
Every effort is made to ensure that the information given herein is accurate, but no legal responsibility is accepted for any errors, omissions or misleading statements in that information caused by negligence or otherwise and no responsibility is accepted in regard to the standing of any firms, companies or individuals mentioned.
