Chongqing Construction Market Strongly Carved Up by "Outside Monks"
2014-04-23
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Chongqing Construction Market Strongly Carved Up by “Outside Monks”
How Can Local Enterprises Break Through?
With the rapid development of the economy and society, Chongqing's construction industry is also showing a thriving momentum. At the Chongqing Construction Industry Conference held on April 17, the Chongqing Urban and Rural Construction Commission released the 2013 Chongqing Construction Industry Development Report. The reporter noted that last year, local enterprises in Chongqing completed construction output accounting for 45.5% of the city's total investment in construction and installation projects, which means that more than half of the construction investment was completed by non-local enterprises. Why are these construction enterprises favoring the Chongqing market, and what are their advantages? How should local enterprises make their efforts?
Outside Enterprises
Win More Than Half of Construction Volume
According to statistics from the 2013 Chongqing Construction Industry Development Report, last year non-local construction enterprises won 510 projects through bidding at the Chongqing Engineering Construction Bidding and Trading Center, accounting for 30.74% of the total number of construction-type housing and municipal engineering project transactions, with a winning bid amount of 43.244 billion yuan, accounting for 40.85% of the transaction amount for construction-type housing and municipal engineering.
A more intuitive figure is: in 2013, local enterprises in Chongqing completed construction output of 370.966 billion yuan, accounting for 45.5% of the city's total investment in construction and installation projects, a year-on-year decrease of 1.65 percentage points in share. This also means that more than half of the city's construction and installation project investment was completed by non-local enterprises.
Taking airport construction as an example, among the 25 airport construction projects for the year, 15 projects were won and undertaken by non-local enterprises, accounting for 60%, with a winning bid amount of 3.395 billion yuan, accounting for 57.45%.
In this regard, a relevant person in charge of the Chongqing Urban and Rural Construction Commission said that high-end projects in the city such as rail transit, large bridges, and railways are still occupied by a large number of non-local enterprises, and local enterprises face fierce competition and severe challenges. “Many landmark large buildings in Chongqing were completed by outside enterprises taking the lead alone, such as the Chongqing Grand Theatre, whose designer was German and whose constructor was from Hunan.”
Construction Enterprises in Chongqing
104 Outside Special-Grade vs. Only 2 Local
Why can't Chongqing's local construction enterprises blossom where they stand? A set of data from the report may explain some of the problems.
Although the total number of construction enterprises in Chongqing is large, their qualification levels are not high. There are only 2 special-grade enterprises; first-grade and above construction enterprises account for 5%, second-grade qualification enterprises account for 16.6%, and third-grade qualification enterprises and labor service enterprises account for 78.4%.
In contrast, in 2013 a total of 1,292 non-local construction enterprises entered Chongqing, accounting for 16.4% of the total number of local construction enterprises in Chongqing. It is worth noting that among the construction enterprises entering Chongqing, there were 104 special-grade enterprises and 799 first-grade enterprises, accounting for 8.9% and 68.3% of the total number of construction enterprises entering Chongqing, respectively; the supervision enterprises, cost consulting enterprises, and bidding agency institutions entering Chongqing all held Grade A qualifications.
“Low enterprise qualification levels, weak technical equipment levels, and small production scales mean that some large projects cannot be competitively bid for, which undoubtedly restricts the faster development of Chongqing's construction industry.” A relevant person in charge of the Chongqing Urban and Rural Construction Commission said that the Chongqing construction market cake being carved up by highly competitive outside enterprises will inevitably affect the survival and development of Chongqing's construction enterprises.
Why Are Outside Enterprises Eager for the Chongqing Market?
For the Chongqing construction market, outside enterprises all seem to be rushing to get a share. What exactly is the reason?
Xu Yuming, an expert at the Urban Construction and Management Research Institute of the Chongqing Academy of Social Sciences, said that Chongqing's urban construction is fast and large in scale, ranking among the forefront nationwide. “For example, the large-scale development of Chongqing's Liangjiang New Area, such a large main market, will inevitably attract more outside construction enterprises to compete.”
“Another important reason is that in the construction industry, Chongqing has no exclusion policy.” Xu Yuming told the reporter that Chongqing puts quality and standards first in construction. Therefore, when the overall level of local construction enterprises is relatively weak, high-quality outside enterprises often win more opportunities.
How to Solve It?
Focus on Cultivating Advantageous Enterprises
Facing the strong offensive of the “outside monks,” Chongqing's local enterprises are also planning to break through the encirclement. It is reported that in 2013, Chongqing construction enterprises actively explored markets outside the city, the number of out-of-city projects increased year by year, and the annual output completed outside the city was 102.222 billion yuan, a year-on-year increase of 22.7%, with the output share gradually increasing.
At the same time, last year a total of 800 construction enterprises in Chongqing had total output value exceeding 100 million yuan, with cumulative completed construction output value of 427.928 billion yuan, an increase of 107 enterprises and 77.2 billion yuan respectively over the previous year. “This shows that enterprise scale is expanding and industrial concentration has improved somewhat.” said a relevant person from the Chongqing Urban and Rural Construction Commission.
“Local construction enterprises should strengthen the training of their own construction teams and go out as much as possible.” Xu Yuming said.
The person in charge of the Chongqing Urban and Rural Construction Commission said that this year it will further cultivate advantageous enterprises, actively support enterprises in the urban functional core area, urban functional expansion area, and new urban development area to become bigger and stronger, strive to cultivate new special-grade qualification enterprises, and form a group of large construction enterprise groups with strong market competitiveness, advanced management, high technical content, and large asset scale.
In addition, it will also support enterprises in northeastern and southeastern Chongqing to follow a “specialized, refined, and distinctive” development path, help enterprises form core competitiveness based on professional technology advantages, continue to expand the scale of output to other places, and expand markets outside the city.
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