1 Performance analysis of Chinese contractors in the international market

1.1 Market performance analysis

As can be seen from Table 1, from 1980 to 1999 , the contract value of Chinese contractors increased from US$185 million in 1980 to US$6.027 billion in 1994, and the turnover increased from US$170 million in 1981 to US$6.098 billion in 1999, an increase of nearly 35 times. On the one hand, it shows The ability of Chinese contractors to develop the international contracting market has been greatly improved. On the other hand, it shows that the strength of Chinese contractors has been greatly improved. From 1980 to 1993, the turnover growth rate of Chinese contractors was not high. From 1993 to 1999, both its growth rate and total turnover increased significantly. This stage can be called a development period. Looking back on the development history of Chinese contractors' foreign markets in the past two decades, it can be divided into the market cultivation period from 1980 to 1987, the growth period from 1987 to 1993, and the rapid development period from 1993 to 1999.

1.2 The number of contractors entering the top 225

The U.S. Engineering News Record (ENR) is based on the number of contracts or turnover obtained by contractors from various countries in the foreign contracting market. To rank them (see Table 2), the statistics before 1990 are the top 250, and the statistics after 1990 are the top 225. The situation of these top 225 (or 250) contractors generally reflects the size of the international contracting market. and level. Therefore, the number of 225 (or 250) contractors also reflects the competitiveness of a country's international contracting market. The number of contractors has been hovering between low values. The number of contractors in that year was 9. From 1993 to 1999, the number of contractors entered The number grew rapidly and reached 33 by 1999. Second only to the United States in number, the number of Chinese contractors that entered the top 100 largest contractors in that year reached 13. Compared with the turnover and the maximum number of 225 contractors before 1993, the number of Chinese contractors entering 225 from 1993 to 1999 and the contract value increased significantly, indicating that the Chinese contractor market expanded during this period. Ability and own strength have been greatly improved.

1.3 Analysis of regional market competitiveness

After nearly two decades of development, Chinese contractors have opened up many markets. By convention, the international contracting market is divided into six major markets: European market, Asian market, Middle East market, African market, North American market, and Latin America. The share of Chinese contractors in these markets in 1990/1994/1999 is shown in Table 3.

As can be seen from Table 3, Chinese contractors have certain competitiveness in the African, Asian, and Middle Eastern markets. Compared with other regions, their market share is higher, and the Asian market share is nearly It has been on an upward trend for several years; the market share in Africa is on the rise; the market share of Chinese contractors in Latin America, Europe, and North America has always been low, and there is no obvious development trend. Through analysis, it can be seen that the market share of Chinese contractors in Asia and Africa is growing rapidly. Since the European and American markets have higher requirements for the comprehensive quality of contractors and the technical content of projects is higher, the comprehensive strength of Chinese contractors is not strong and is still low-level and labor-intensive. Therefore, they are unable to occupy a higher share of the contracting market. North American and European markets that have strict requirements on comprehensive business quality.

1.4 Market contribution rate analysis

Market contribution rate refers to the ratio of the target market’s turnover to the total market turnover, reflecting the degree of contribution of the target market to the contractor’s turnover. Table 4 shows the regional market turnover and market contribution rate of Chinese contractors in 1990/1994/1999.

From Table 4, we can see that the Asia/Middle East region has the largest market contribution, and the turnover of Chinese contractors in this region has risen rapidly, reaching US$1.236 billion in 1990 and US$1.236 billion in 1994. 2.24 billion U.S. dollars, reaching 4.075 billion U.S. dollars by 1999. This regional market plays a great role for Chinese contractors. Therefore, our country's contractors should continue to maintain their market share in this regional market, continue to improve their own strength, and strive for more market share. The market contribution rate of the African region ranks second. From 1994 to 1999, the turnover and contribution rate of this market increased rapidly. The market role in this region has increased, and Chinese contractors can further develop. The market contribution rate of Europe, North America and other regions has always been low, with low turnover and low growth rate. The market in this region needs to be further developed.

1.5 Industry Distribution Analysis

International projects are mainly distributed in the fields of general construction, machinery, electricity, water treatment, petroleum, transportation, hazardous treatment, etc. The business engaged in by Chinese contractors is mainly concentrated In the fields of general construction, petroleum, chemical industry, and transportation, taking 1998 as an example (see Table 5), the turnover in the fields of housing construction, petrochemicals, and transportation accounted for 84.9% of the total, and housing construction accounted for 26% of the international market, while China Accounting for 5.9%, it can be seen that Chinese contractors have strong competitiveness in this field; in the transportation field, Chinese contractors account for 3.6% of the total international market share of 20.9%, indicating that Chinese contractors have certain competitiveness in this field. Competitiveness.

In comparison, Chinese contractors have a smaller market share in the fields of machinery, electricity, water treatment, petroleum, and hazardous treatment, because these fields require contractors to have strong professional construction and installation skills, as well as multi-disciplinary skills. In terms of comprehensive technical capabilities, Chinese contractors do not have these advantages, so they are less competitive in the above fields.

2 Comparative Study of Chinese and Foreign Contractors

It has been 20 years since Chinese contractors entered the international contracting market in 1980. After these 20 years of development, Chinese contractors It has a certain degree of competitiveness, but compared with contractors in developed countries, there are still many shortcomings. The following will conduct a comparative study on Chinese and foreign contractors.

2.1 Comparison of operating conditions

As can be seen from Table 6, the average turnover of Chinese contractors from 1996 to 1999 only accounted for 4.05% of the total average turnover of international contractors. market share is low. The countries with more than 10% market share are the United States, Japan, France, and Germany. These are all developed countries. The reason why they can occupy such a high market share is mainly because these contracting companies have technological advantages, financial advantages, and talent advantages. These These are all things that Chinese contractors lack.

The average number of Chinese contractors entering the top 225 international contractors is 29, which is three times that of France and four times that of the United Kingdom. However, its international market share is only 30% of France’s. 42% of the UK; the average international turnover of Chinese contractor companies is US$170 million, which is 10% of France, 22% of Japan, and 10% of the UK; the average turnover of Chinese contractor companies is US$170 million, much smaller than the international average level ($803 million). Through the above data analysis, as well as the generally large number of contracting companies in my country, it shows that the labor productivity of my country's international contracting companies is much lower than that of contracting companies in developed countries. Western developed countries adopt advanced construction methods, technologies, equipment, machinery and advanced management ideas and methods, and their labor productivity is bound to be higher than that of our country's contracting enterprises. These enterprises are technology- and capital-intensive enterprises, and our country's contracting enterprises are basically labor-intensive. Enterprises, due to low labor costs, have certain competitiveness in Africa and Asia, but their competitiveness is lower in North America and Europe, and they lack competitiveness in industries with relatively high technical requirements and large capital requirements.

As can be seen from Table 7, in 1999, Chinese contractors accounted for 5.10% of the international contracting market share, which was far smaller than the international contracting market share of American contractors and European contractors. In the North American and European markets The total turnover is only US$309 million, accounting for only 0.7% of the market share in the region. American contractors and European contractors have a high market share in the region. Compared with American contractors and European contractors, Chinese contractors do not have an advantage in any regional market.

2.2 Company comparison

1) Average number of people in a company

According to data from the "China Construction Industry Statistical Yearbook", the average number of large and medium-sized construction companies in my country in 1995 The number was 621, 513 in 1996, and 477 in 1997. During the same period, the average number of employees in American companies was about 10, and companies with less than 20 people accounted for nearly 90% of the total. The average number of Japanese companies was 10. The above data shows that our country's contractors are still labor-intensive enterprises.

2) Company economic benefits

After nearly 20 years of international market development, the management level and economic benefits of our country’s contractors have been greatly improved, but contracting with foreign developed countries has However, there is a big gap when compared with other companies. Take the China State Construction Corporation, which has relatively good domestic economic benefits, as an example. Its turnover in 1996 was US$4.96 billion, but its per capita turnover was only US$20,000/person, its profit was US$20 million, and its per capita profit was only US$80/person. In that year, the turnover of Japan's Dacheng Construction was US$13.62 billion, the per capita turnover was US$1.047 million, the profit was US$230 million, and the per capita profit was US$17,700 per person. The gap is so huge that it cannot help but be thought-provoking. The main reason is that the business of our country's contractors is mainly concentrated in traditional industries such as housing construction and transportation, and their technical content is not high. The current gap in economic benefits mainly comes from the scale and technical difficulty of the project. In other words, only projects with large scale and high technical content can obtain high returns. In this regard, Chinese contractors have obvious shortcomings.

3) The company’s internal organizational structure

The organizational structure is closely related to the company’s business scope, business strategy, advantageous functions, etc. Compared with foreign contractors, there are many differences in the organizational structure of Chinese contractors. Chinese contractors generally only engage in construction-type contracting projects, and rarely engage in design-construction contracting projects. In its organizational structure, generally only construction-related departments are set up. Many foreign contractors are often engaged in the whole life cycle of the project, that is, the business integrating project planning, feasibility study, financing, design, construction, and operation management. This kind of organizational structure is in line with the conditions and development trends of the international contracting market. It is also a reflection of the company's business strategy and also represents the strength of foreign companies. It can be seen from the organizational structure of Chinese contractors that Chinese companies are not strong, mainly in terms of technology, financing, management, equipment, etc. There are many gaps with foreign contractors.

4) Comparison of regional market shares (Figure 1)

As can be seen from Figure 1, European contractors are the most competitive, with a market share of 27.10% in Asia , ranking first in the regional market, and its market share in other regional markets also ranks first, and all exceed 40%. American contractors have a relatively balanced market share in various regions. As far as a single country is concerned, its contractors are the most competitive. Chinese contractors have certain competitiveness in the Asian and African markets, but are less competitive in Europe, Latin America, and North America. The total amount of international projects in these regions accounts for about half of the total global international projects; Europe, North America The regional economy is developed and the political situation is stable, so project risks are relatively small. Because they are too concentrated in Asian and African markets, it is not conducive to risk dispersion. It can also be seen from the figure that Chinese and Japanese contractors, who both belong to Asia, are relatively weak in the markets of Europe, North America, and Latin America. This is an issue worth discussing.

5) Comparative study on industry distribution

The industry distribution of the international turnover of 225 international engineering contractors in 1998 is shown in Table 8. Table 9 shows the industry distribution of China's largest 15 contractors.

Comparing the above two tables, we can see that: housing construction accounts for 26% of international projects, and the international income-to-person ratio of Chinese contractors in this field is 45%, which is much higher than 26%. %, in the field of transportation, its international revenue ratio is basically similar to the international market share, while in other projects, the Chinese contractor's turnover only accounts for 1.9% of the global market share, and the international revenue ratio is far smaller than the international market share of 27.1%. This shows that the industry structure of Chinese contractors is unreasonable, and their business is too concentrated in traditional industries, and there are very few Chinese contractors who can be involved in several industries. Many foreign contractors can be involved in several industries at the same time, and the business structure tends to be It is reasonable and avoids market risks to a certain extent. With the rise of high-tech, communications, and environmental protection projects, they will become investment hot spots in the near future, and their market share will also become larger and larger. For Chinese contractors, adjusting their income structure is an important step. is a top priority.

3 Analysis of the development trends of the international engineering contracting market

3.1 Regional market review and outlook

With the recovery of the Southeast Asian economy and the easing of regional shocks, the world economy has recently It has maintained good growth momentum for several years. According to statistics, the global economic growth rate in 1999 was about 3% [(31) Economic growth will lead to an increase in investment, and an increase in investment will bring more international engineering projects; at the same time, in order to adapt to the global economy, many countries The trend of integration, as well as the stimulation of further development of the country's economy through investment, have increased investment in infrastructure, energy, power and other industries; in addition, due to economic growth and the improvement of people's living standards, the residential industry will be promoted. The further development of commercial construction. Therefore, the international engineering contracting market will develop well in the next few years. The following is a detailed analysis of the current situation and development trends of the major regional markets.

1) Asia

In the international engineering contracting market, the Asian region has always occupied a relatively high share. In 1998, the Asian region accounted for 29% of the entire international engineering contracting market that year. In 1999, the Asian region accounted for 26% of the international market share. This regional market has always been It is one of the hot spots for international contractors to compete, and Chinese contractors have certain competitiveness in this area. In the past few years, affected by the economic crisis in Southeast Asia; the market in this region was affected to a certain extent, and the world's financial institutions significantly reduced their loans to projects in the region; in 1998, due to the deepening of the financial crisis, the Asian economy experienced a major downturn, and the region's The economic growth rate was only 2.6%. In 1999, the economy gradually recovered and stabilized, with the economic growth rate reaching 5%. It is estimated that the economic growth rate in 2000 will be between 5% and 6%. Japan's economic situation has been deteriorating since April 1997, and its GDP has been in negative growth for two years (-0.4% in 1997 and -1.9% in 1998). By 1999, the economic situation improved. In order to stimulate economic growth, the government increased investment in public institutions, residential industries and other fields. Investment in public institutions reached 42.3 trillion yen. Entering 2000, Japan's economic authority predicted that GDP growth would be around 0.5%, and its domestic construction market growth rate could reach 2.3%'''. ASEAN countries, China, South Korea and other countries believe that expanding domestic demand and increasing consumption are the main driving forces for economic recovery and development, so many countries have increased investment in public undertakings. In 1999, China invested 300 () billion to improve infrastructure, becoming the third largest construction market after the United States and Japan. In March 1999, the Thai government introduced a package totaling 130 billion Thai plants (about 37 plants worth 1 US dollar). , used for engineering construction and providing employment opportunities.

In the future, if the Japanese economy in the region maintains a recovery trend, the Chinese economy grows steadily, the U.S. economy does not undergo major changes, and the global economy is on an upward trend, the region will maintain a good growth momentum and its construction market It will also rise steadily.

2) Africa

The African market is a market with great potential.

In 1998, the African economy withstood the severe test of the impact of global financial turmoil, the impact of weak primary product prices on the international market, and the increase in conflicts caused by political unrest in some parts of the continent, achieving its fourth sustained growth since 1995, with a growth rate of In 1999, Africa's economic growth was 3.1%. In 2000, according to a report released by the International Monetary Fund on June 10, 1999, with the economic recovery of some Asian and Latin American countries troubled by the financial crisis, Africa's economic growth momentum will further accelerate, with the average growth rate reaching 5.1% in 2000[4].

The above data shows that Africa’s economic development has been good in recent years, and its future development trend is good. To a certain extent, regional economic growth provides a foundation for the development of the engineering contracting market. From 1998 to 1999, the economic adjustment and reform of African countries encountered some setbacks. However, at present, the reform of African countries has deepened to the second stage, that is, emphasizing the Improve the macroeconomic environment and establish a flexible and pragmatic African economic integration market. One of the main contents of improving the macroeconomic environment is to strengthen the construction of infrastructure, improve the investment environment, attract domestic and foreign investment, and strengthen the construction of education, health and other facilities. These activities will inevitably lead to the development of the project contracting market [3]. In the late 1990s, most African countries realized that only by strengthening economic cooperation and economic integration among African countries can they develop together. Therefore, they proposed African economic integration through reforms in infrastructure, production and markets. **With planning and coordination to promote the integration of trade and production, for example, in July 1998, the road construction project of the Development Corridor Project connecting Gauteng Province, the industrial center of South Africa, and Maputo, the capital of Mozambique, started.

Through several data analyses, it is shown that the African market is a market with great potential, and the engineering contracting market has developed well in recent years. However, the market in this region is a high-risk market, and there are many unfavorable factors in the future. First, the huge foreign debt will restrict the development of the region's economy. Second, the future international economic conditions and environment are not conducive to the growth of the African economy. Mainly refers to the agricultural The general downward trend in by-product prices has intensified, and regional conflicts have increased. For example, from 1998 to 1999, more than 20 of the 45 countries in sub-Saharan Africa were involved in conflicts or were directly affected by conflicts. These factors are bound to affect the engineering contracting market, so the future market prospects in this region are not optimistic.

3) Middle East market

The Middle East has always been a traditional market that international contractors compete for. According to statistics in 1998, 118 of the world's 225 national contractors entered the market, creating a 14.283 billion US dollars. Economic growth in the region has been at a low level since 1998. It was 3.2% in 1998, 1.8% in 1999, and is expected to be 2.5% in 2000. The future trend will be better. Oil prices have been rising in 1998, and peace in the Middle East has further accelerated. The engineering contracting market in this region will develop well in the future. .

4) European Region

Countries in Central and Eastern Europe have implemented economic transition since 1990 and have formed three categories. The first category is Poland, Hungary and other countries whose economic conditions have returned to At the level of the early 1990s, its engineering contracting market is dynamic and its future prospects are promising. The second category of countries has not yet established a normal market economic track. The third category of countries is the countries in the former Yugoslavia that are in a state of being built after the war. The project contracting markets of the latter two categories of countries either have a small market capacity or a large funding gap. The market prospects are not promising in the near future [14]. In Western Europe, the economic development situation has improved in recent years. The economy has turned to recovery since the second half of 1999. The market in this region has remained stable; the market size is also large, among which the German market will maintain high capacity and high growth rate in the near future. momentum, the French market will also maintain a high growth rate in the near future.

5) North America

Since 1997, people have been worried that the U.S. economy will fall into recession due to the sudden collapse of the bubble economy. But this is not the case. In 1998, its GDP growth was 3.5%, in 1999, its GDP growth was 3.4%, and its growth is expected to be about 2.51% in 2000. Economic growth has slowed down, but it has not collapsed, and since 1992, the United States The economy has been growing continuously for 9 years [4]. From 1992 to 1999, fixed asset investment in the United States has been growing, and the construction market is booming. For example, in 1998, 63 of the 225 contractors entered the U.S. market, and their businesses amounted to US$12.693 billion. In 1999, the growth rate of investment in the construction industry fell sharply, and residents' investment dropped sharply. However, due to the large growth rate in the past, the construction market still maintained a growth rate of 9% in that year. In that year, the turnover of 225 international contractors in North America reached $20.6 billion. The Canadian economy's GDP growth has remained between 3.0% and 4.0% in recent years, and the economic growth rate is good[4]. The international contracting market has a certain capacity. There will be no big ups and downs in the trend in the next few years. To sum up, the North American market will maintain a low growth rate in the next few years, and the market capacity will not change much. Due to its large base, it will still be one of the important markets for international contractors to compete for. Due to the developed economy of the region , the development trend is good, and the political situation is stable, so the risks are relatively small, and it is a must-have for powerful contractors.

6) Latin America

Since the second half of 1998, Latin American economic growth has begun to slow down. At the beginning of 1999, the financial crisis broke out in Brazil. Affected by it, the overall Latin American economy entered a stage of recession and adjustment. The economy showed a slight negative growth that year. It is estimated that the economy will recover and rebound in the next few years. As countries are still tightening finances and raising interest rates, The stage of slowing down investment and economic growth in order to stabilize the economies of various countries, so the international contracting market has developed very smoothly in recent years. For example, in 1997, the turnover of 225 contractors in the region was US$10 billion, and in 1998 it was US$10.6 billion. , which was US$10.8 billion in 1999. It is estimated that in the next few years, with the acceleration of private investment and economic recovery in the region, the international engineering market will have greater room for development.

3.2 New trends in the development of the international engineering contracting market

In recent years, the international engineering contracting market has undergone major changes, specifically the following points:

1) Asset restructuring and corporate mergers and acquisitions are on the rise

As the scale of international engineering projects becomes larger and larger, the technical requirements become more and more complex, requiring the integration of multiple technologies. At the same time, due to changes in contracting models, the risk of projects The growth and competition intensify, posing new challenges to the original international contracting enterprises. Therefore, many international contractors have adapted to this changing trend through asset reorganization. Through horizontal asset reorganization and corporate mergers and acquisitions, the business scale and scale effect of the enterprise can be expanded, that is, the business scale and asset scale of the contracting enterprise have rapidly expanded; in recent years, it has been representative The radical reorganization and mergers and acquisitions resulted in the U.S. company URS merging with D&M, thus becoming a large engineering design company and improving its competitiveness in the engineering design market. Business scope can be expanded through vertical reorganization and mergers and acquisitions.

2) Changes in project contracting models

Looking at the international contracting market in recent years, it can be found that owners tend to want contractors to engage in services throughout the project life cycle, that is, from the beginning of the project Planning, feasibility studies, financing, design, construction, to operations management. The owner hopes to combine design and construction. The traditional contracting model - parallel contracting, and general construction contracting will gradually be abandoned by the owner. For project general contracting, the CM model will also have a certain market. However, this model has higher requirements for owners. Owners need to have certain project planning, organization, and operation management capabilities. Since owners are increasingly inclined to simply obtain the final construction product like purchasing other products, the international market Several types of contracting models have emerged to adapt to the needs of owners. Specifically:

(1) D+D+B (Development+Design+Build)

That is, the contractor is responsible for early project planning and decision-making, project design, and project construction.

(2) F+P+D+B+PM (Finance+Procurement+Design+Build+Property Management)

That is, financing, procurement, design, construction, and property management.

Contractor services range from project financing, procurement, design, construction, to final property management. The asset reorganization, mergers and acquisitions of international contractors in recent years have implemented vertical reorganization to meet the needs of this model. Contractors will not just be construction contractors, but will be involved in project planning, design, and even financing and operation management processes. .

3) New developments in project financing

Project financing was first used in national public undertakings, mainly in the fields of transportation, energy, water supply, electricity and other infrastructure. Now it is also Expand to chemical industry, communications and other industries. Project financing specifically refers to certain project financing activities that require huge funds, and loans are often used as the main source of funds. Project financing does not use the credit of the project owner or the value of the tangible assets of the project as a guarantee to obtain funds. Instead, it uses the good operating performance after the completion of the project and the amount of cash it generates as the source of funds to repay debts. The assets of the project only serve as borrowers. Mortgage of funds[1].

Project financing is mainly engaged in financing by project owners, who can be project sponsors or private investors. The bot and BOOT that emerged in the 1980s mainly involved contractors in project financing. In recent years, the trend of private investment projects being leased, operated, and managed by the government has accelerated significantly, especially in Latin America and Africa, where the private investment process has developed rapidly. soon.

4) Increased technical complexity

In recent years, the technical complexity of projects has continued to increase. Due to the development of new building materials and construction technologies, the rise of comprehensive projects requires contracting The contractor can provide a high level of construction technology and installation level, requiring the contractor to have almost all professional skills. Contractors with only a certain expertise or a few specialized technologies will find it difficult to meet this requirement. International contractors in my country have always been only engaged in traditional industries such as general housing construction and transportation. In projects with high technical requirements and the integration of multiple technologies, such as water treatment, environmental protection and other fields, the share is very small, which shows that my country's international contractors have not been able to adapt to projects with high technical complexity. Nowadays, multiple contractors in the international contracting market are bidding together, on the one hand, to reduce project risks and improve competitiveness, and on the other hand, to complement each other's advantages and adapt to this trend of high technical complexity requirements.

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