Chinese construction firms in reform

Since the economic reforms that began 20 years ago, and especially with the enterprise reforms in recent years, ownership of Chinese construction firms has evolved from traditional state and collective ownership towards a mixed economy characterised by diversified ownership forms. Based on a questionnaire survey and personal interviews with individuals from firms representing four types of ownership, it has been determined that the majority of Chinese construction firms have already embraced commercial objectives and behaviour patterns similar to those of typical firms in developed market economies. Nevertheless, despite the important progress that the reforms have made, this study indicated that various construction firms during this transition are suffering serious difficulties caused by the former planned system and underdeveloped market mechanisms. Unfair practices were found to be quite serious in the construction market. Major problems stem from clients' abnormal behaviour in forcing the price down, asking contractors to finance a project wholly or partially during its construction, and delays in payment; these actions have caused severe financial difficulties to Chinese firms and seriously disrupted the normal order of market stability.