Breaking into China's design and construction market

Abstract

PurposeThe aims of this research are to identify the opportunities and risks and develop effective business strategies for foreign design and construction management companies to penetrate into the Chinese market.Design/methodology/approachTen interviews with directors of design, construction and engineering firms who are operating in China were carried out. It also include a literature review.FindingsThe results show that the interviewees were very optimistic about the China market and believed that establishing wholly foreign‐owned enterprises was the most effective entry mode. The research also found that “differentiation strategy by providing niche or superior products or services” is the fundamental and best strategy for penetrating into China market. In addition, the research found that the foreign companies must cultivate a network of contacts (i.e. Guanxi) and be culturally adaptive to have a competitive advantage in China.Originality/valuethis paper is original in that it provides insight from the first hand face‐to‐face interviews who have been operating successfully in the Chinese market. With the entry to the World Trade Organisation (WTO) and its rapid economy growth, China presents the world enormous opportunities virtually in every industry sector including the design, and construction industry. Due to the complex and dynamic nature of the Chinese market, there are risks associated with these opportunities. The foreign companies entering into China market must develop capability to assess the opportunities, analyse the risks, and make informed decisions concerning market entry mode and business development strategies.