Types of collaboration between foreign contractors and their Chinese partners

Abstract

With China's accession to the World Trade Organization, more foreign contractors have been venturing into the Chinese construction market. Most of them collaborate with Chinese design institutes or construction enterprises as their preferred business strategy, however, the relationship between collaboration and competition is often unclear. In this paper, the contradiction of collaboration and competition is analysed. Based on a pilot study and the current Chinese regulations, the paper identifies the possible types of collaboration for foreign contractors in China, namely mergers and acquisitions, joint ventures, project-based collaboration, and strategic alliances. The paper then compares the features of the various types of collaboration and recommends the most appropriate collaborative form, which appears to be the strategic alliance. The current Chinese regulations relating to foreign contractors are reviewed so that implications for this form of alliance can be identified. The pilot study reveals that foreign contractors tend to collaborate with their Chinese partners in the form of strategic alliances but that Chinese design institutes and construction enterprises would be willing to collaborate with foreign contractors on the basis of international joint ventures, project-based collaboration, or strategic alliances.