Hello, kiki888-ga!
I believe I have found sufficient information to allow you to paint a
fairly accurate picture of the construction markets in Taiwan, China
and Japan. The information I have compiled for each country comes in
bits and pieces. Being unable to translate foreign publications leaves
me at the mercy of statistics that have been published in English. If
you would like more detailed information, there are several market
research reports that can be purchased for each country that will
provide in-depth information on the construction industry. They are
quite costly, however!
======
TAIWAN
======
Construction industry information for Taiwan is particularly scarce,
unless you are willing to pay for an industry report. An example -
the Taiwan Forecast Report (for $535USD) will give you all the current
data if you are willing to pay the price!
( http://www.businessmonitor.com/taiwanforecast.html )
==
I have found small bits of "reasonably current" information focusing
on the Taiwan construction industry.
According to the statistics I have found, the construction industry
is not particularly robust. This fact ties in with several years of a
faltering economy.
"In the past year, there has been reduced economic growth and
increased unemployment, but these troubles have actually been
developing for an extended period of time. Taiwan's peak economic
growth of 12.7 percent was reached in 1987, and the growth rate has
subsequently been declining (7.6 percent in 1991, 6.1 percent in 1996,
and 5.9 percent in 2000). The unemployment rate has increased from 1.5
percent in 1991 to 2.6 percent in 1996 to 3.0 percent in 2000."
Read "Deeply Cultivating Taiwan with a Global Perspective." Government
Information Office (2001)
http://www.roc-taiwan.org.za/taiwan/5-gp/economy/bse_3.htm
CONSTRUCTION INDUSTRY STATISTICS
--------------------------------
(FROM 1999)
"The Construction & Planning Administration (CPA) recently published
statistics regarding the 1999 business operating condition of
contractors in Taiwan.
* The total revenue generated by the industry last year is estimated
at NT$755.4 billion (US$24.4 billion) while the total expenditure was
NT$682.2 (US$22.0 billion), this results in an average profit margin
of 9.7%.
* The total value of self-executed construction last year, not
including work subcontracted to others, is estimated at NT$603.0
billion (US$19.5 billion).
"Contractors' business operations statistics for 1999 released."
Taiwan News Briefs. (Nov. 2000)
http://www.washingtonstate.org.tw/English/news-events/news-briefs/news-briefs-building-materials.htm
==
SEE FOLLOWING CHART for 1991-2001:
----------------------------------
See section on "Index of Building Construction (Annual Rate of Change
of Industrial Production Indices)
(FROM 1991-2001)
** The declining numbers do not depict a thriving construction
industry for that decade! **
From "Major Economic and Financial Statistics in Taiwan.
http://www.cbc.gov.tw/EngHome/Eeconomic/Publications/Year2001/PDF%5CF91-95.pdf
(Make sure you magnify the chart to about 150 for better viewing!)
==
STATISTICS FROM 1994 THROUGH 2003
---------------------------------
See following chart which depicts an up and down Construction Industry
in terms of GDP.
"Table 3 Rates of Increase in Real GDP by Kind of Activity."
http://www.stat.gov.tw/bs4/news/table166/t03.htm
(linked from Taiwanese Economy)
http://www.geoinvestor.com/statistics/taiwan/economicdata.htm
==
THE NATURE OF THE CONSTRUCTION INDUSTRY
----------------------------------------
According to 2001 Statistics:
"The industry is largely dominated by small, state-owned construction
companies."
"As of 2001, there were "8,352 construction companies in Taiwan, 90%
of which are relatively small with fixed assets of less than NT$10m (1
pound sterling = ca54 NT$). Only 16 companies have assets greater than
of NT$100m and only two private companies, Cathay Construction and
Pacific Construction have assets exceeding NT$10b. The two largest,
Ret-Ser Engineering (which is state-owned) and BES (now privatised)
have assets of NT$35b and BT$20b respectively."
"Construction companies are graded into three classes : A (1,683
licences issued to date), B (1,323), and C (5,346) based on registered
capital, qualified personnel, and experience, with only Class A
licences allowed to undertake substantial projects. The figures are
misleading as although licences may have been issued, the large
majority are not used and it is estimated, for example, that there are
only about 50 Class A licences that are active."
From "Construction in Taiwan." British Trade and Cultural Office
(2001)
http://216.239.57.104/search?q=cache:YJfJrl_PGkAJ:www.taiwan-britain.com/SITE/UPLOAD/DOCUMENT/CONSTRUCTION_IN_TAIWAN.doc+taiwan+AND+construction+market&hl=en&ie=UTF-8
==
GOVERNMENT EXPENDITURES AND PRIVATE OWNERSHIP HELP FUEL CONSTRUCTION
----------------------------------------------------------------------
"The world's fourteenth largest trading nation, Taiwan is one of the
few Asian countries to have survived the Asia Financial Crisis.
Coupled with massive government expenditure on public works
programmes, this has resulted in considerable expansion of the
Taiwanese construction industry, particularly since 1993."
** "With the increasing trend towards house/city office ownership
rather than rental, the real estate and construction sectors are
flourishing in Taiwan." **
"Building, Construction & Property Services Market in Taiwan." Trade
Partners UK http://www.tradepartners.gov.uk/building/taiwan/profile/overview.shtml
SHOPPING MALLS STILL GO UP DESPITE ECONOMIC SLUMP!
--------------------------------------------------
"Taiwan got off to a late start with its shopping center industry and
has been hurrying to catch up for the past three years with a flurry
of mall building. A substantial economic slump in the past year,
however, indicates that some challenging times may lie ahead for the
country’s existing and future shopping centers."
"Part of Taiwan’s late start on mall development can be blamed on
zoning restrictions. While Indonesia, Malaysia, the Philippines and
Thailand acquired shiny new shopping centers in the 1980s and 1990s,
Taiwan’s 22 million inhabitants had to do without. But changes to
Taiwan’s land-use laws in 1996 gave a green light to mall
construction, and the sector multiplied from one shopping center in
1998 to seven at the present time, with an additional 10 in the
pipeline. The total is much higher if one counts department store
shopping centers, in which all the retail spaces are owned by the
department store."
"This rapid progress, however, is taking place against a background of
economic troubles. The U.S. economic slowdown and the implosion of the
information technology industry have greatly reduced world demand for
the high-tech products such as computers and conductors that are
Taiwan’s specialty and make up more than 60 percent of its exports.
The national economy slowed sharply in the first quarter of 2001 and
continued to deteriorate, especially after the Sept. 11 attacks on the
United States, said Calvin Wang, a managing director of Jones Lang
LaSalle, Taipei. Major corporations have begun to lay off workers, and
unemployment has climbed from just under 3 percent in 2000 to 5.2
percent in January 2002, a nearly record high, Jones Lang LaSalle
figures show."
(Read further..)
"TAIWAN’S ECONOMY SLUMPS-But mall building continues apace. Will it
end in tears?" By Susan Thorne. Around the Globe. (May 2002)
http://www.icsc.org/srch/sct/sct0502/page167.html
FOREIGN INVESTMENT
------------------
"Local private sector companies, who have been restricted in
developing and expanding by the favoured state-owned construction
companies, are increasingly interested in working with foreign
companies who can bring with them the skills and equipment needed for
larger infrastructure projects. Furthermore, there are regular
statements from Government bodies on the need to attract international
contractors, and raise construction standards to international
levels."
"Since the sector was opened to foreign firms in 1986, around 30
companies have established themselves in the country. Whilst the
Japanese have led the way, US and European companies are now also
being drawn to Taiwan. Competition in the building materials sector
comes mainly from the USA, Japan, Australia, Germany, Italy and, for
some specific quality products (e.g. stainless steel) from elsewhere
in Europe. Although Taiwan imports almost all of its construction
equipment requirements, the competition is fierce, with Japan and the
USA dominant, and Germany the main European supplier."
"Building, Construction & Property Services Market in Taiwan." Trade
Partners UK. http://www.tradepartners.gov.uk/building/taiwan/profile/overview.shtml
TAIWAN IS STILL A DIFFICULT MARKET TO PENETRATE
-----------------------------------------------
Although the construction industry could benefit from foreign
expertise, there are numerous barriers that make foreign business
entry difficult.
Some examples:
"Government standard terms for construction contracts are generally
considered archaic, inequitable, and do not meet with international
standards. Foreign contractors are asked to undertake an excessive
share of risk, and have to inflate their prices accordingly making
them uncompetitive to local bidders, who are much more prepared to
"run the risks". The ceiling price for Government projects is often
set artificially low and fails to reflect the quality and level of
expertise required by the technical specifications or the standard
costs incurred by foreign contractors for such projects."
"Labour shortages too have been a serious problem for contractors
since 1990. It is estimated that a labour force of more than
1,300,000 is required for the major infrastructure projects, but as of
November 1997, only 889,000 were employed in the construction sector,
with the trend being for workers to switch jobs from that sector
because of earlier project delays etc. To counter this, the Taiwanese
authorities are relaxing certain restrictions governing the
importation of foreign labourers, though there is criticism that these
measures do not go far enough."
EMPLOYMENT STATISTICS IN CONSTRUCTION INDUSTRY
----------------------------------------------
The number of employees in the Taiwanese Construction Industry has
seen a greater decrease over the past several years than any other
major industry except Mining.
"Table 5. Employed Persons by Industry in Taiwan Area."
http://www.dgbas.gov.tw/census~n/four/e4423.htm
==
Year 2001:
"Meanwhile, based on tallies released by the Directorate General of
Budget, Accounting & Statistics, Taiwan's construction industry posted
a jobless rate of 7.98 percent in February, with the number of jobless
construction workers hitting a high of 67,000 that month."
"Foreign labor barred from major construction projects." The Taiwan
Economic News. (May 9, 2001)
http://www.taiwanheadlines.gov.tw/20010510/20010510b1.html
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
=====
CHINA
=====
FASTEST GROWING CONSTRUCTION INDUSTRY IN THE WORLD
--------------------------------------------------
"China has the fastest growing Construction Industry in the world and
a major opportunity for foreign firms with construction industry
products and services. In 2002 the 400 billion USD construction
industry represented 7% of the China GDP. The industry continues to
develop in both the public and private sector. The expanding Chinese
economy, foreign investment, the 2008 Olympic Games, changing laws,
privatization, and China's entry into the World Trade Organization all
impact the construction market. Construction is concentrated in the
residential, infrastructure, industrial, office, transport and
utilities sectors in major cities. Construction companies now number
in the thousands."
From "Peoples Republic of China". ASIA BUSINESS TRENDS. May 2003
http://www.businessinternational.bz/asiabiztrends-ch.html
==
CHINA CONSTRUCTION MARKET EXPECTED TO BE NUMBER ONE BY 2015
-----------------------------------------------------------
"The Chinese construction industry is presently the world's 2nd
largest after the US, with total output value of US$151 billion.
Internal estimates indicate China's construction output to increase to
about US$700 billion by 2015, overtaking the US construction market to
become world's No 1."
"The building construction sector, being the largest segment of
China's construction industry, presents ample business opportunities
with strong demand for housing, as well as office and industrial
buildings."
From "Industry Study Series - China: Building & Construction
Engineering (Launched in April 2002)"
http://ieshop.iesingapore.gov.sg/shop/research/productdesc.asp?pid=21
==
NEW HOUSING PROJECTS EXPECTED TO INCREASE 10 PERCENT PER YEAR:
---------------------------------------------------------------
"After decades of virtually no housing starts - and no income with
which to refurbish existing structures - the trillion-dollar Chinese
economy is poised to enter a new era where private market forces will
direct and shape the newly released purchasing power of China’s middle
class."
"Construction companies now number in the thousands, while panel,
furniture and interior products manufacturers are in the tens of
thousands. According to China’s Ministry of Construction, China plans
to start work on 380 million square meters (4.1 billion square feet)
of new housing projects in 2000, with 5 billion more square meters (53
billion square feet) to be built with government funding by the year
2005."
"The scale and scope of China’s multi-billion-dollar housing boom is
expected to increase at rates approaching 10 percent a year for the
next five years, according to China’s Ministry of Construction."
From "China’s Construction Market: A New Star in the East", by
Roseanne Freese. FAS Online.
http://www.fas.usda.gov/info/agexporter/2001/jan/China.htm
===
OLYMPIC GAMES, WTO AND LIBERALIZATION OF HOUSING MARKET BOOST
CONSTRUCTION
-------------------------------------------------------------------------------
2003:
"Currently, China's total building projects account for approximately
one-fourth of the world's total. Despite the boost to the construction
industry in China, the country still has the world's greatest
potential building material market. With China’s accession to the
World Trade Organization, the liberalization of the residential
housing market, Western Region Development and the Beijing 2008
Olympic Games, China’s construction market appears set for a further
boom".
From "Construction Material Industry in China - 2003 Edition." China
Knowledge Press
http://www.researchandmarkets.com/reportinfo.asp?cat_id=9&report_id=29405
===
The following excerpts from "Construction" are from the Lehman, Lee &
Xu Lawfirm Website:
http://www.lehmanlaw.com/FAQ/faq/CLaw.htm
"China's construction industry has experienced a building boom. A
rapidly industrializing economy, rural migration to the cities,
intensive infrastructure development and the replacement of many
obsolete buildings has fueled construction growth....Continued massive
infrastructure investment by the Chinese government, high economic
growth rates, rapid urbanization and the awarding of the 2008 Summer
Olympics to Beijing all promise to foster continued growth in urban
construction for years to come."
FOREIGN INVESTMENT IN CHINA
---------------------------
What major issues affect foreign investors in China's construction
industry?
----------------------------------------------------------------------------
"In spite of the various legislative measures taken by the Chinese
Government to improve construction quality and procedures related to
government project bidding and tendering, there is still significant
room for improvement. While China has agreed to many WTO provisions
that will benefit the construction and real estate industries, few
industry-specific measures are on the agenda to which would cause an
immediate improvement in China's construction sector."
"New tendering and bidding regulations have not been widely adopted
and lack enforcement power. Many organizations are resisting the
implementation of the new tendering and bidding regulations, and as a
result, corruption remains a significant problem due to the continued
lack of transparency in the current tendering and bidding procedures.
Foreign contractors face severe partnering and bidding restrictions.
They are hindered by numerous obscure or unpublished restrictions and
procedures that result in costly delays. Many Chinese contractors
routinely subcontract entire projects to other contractors without
notifying project owners or representatives. Communication and
contract problems ensue, and situations where the contractor actually
doing the work has insufficient knowledge of the project requirements,
or lacks the compensation needed to perform the work in a professional
manner".
How can foreign contractors deal with such situations?
------------------------------------------------------
"For foreign investors who would like to invest in China's
construction industry, our advice is that they should, at first
instance, consult with a local agency or hire a local lawyer
specializing in this area and who is able to handle all of these
issues. Later, when they have become familiar with the local
practices, they themselves, maybe able to handle the issue that
arise".
"However, the good news is that the awarding of the 2008 Summer
Olympics to Beijing has served as an effective catalyst in modernizing
China's construction standards and practices. The Beijing Municipal
Government and the Central Government have committed more than US $20
billion to prepare for the Olympics and to improve Beijing's
environmental quality, public transportation systems and
infrastructure. The city can serve as a model for urban development,
and China as a whole will benefit from the improvements and investment
associated with the Games".
(Read more for foreign investment issues if interested)
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
=====
JAPAN
=====
The construction industry in Japan is clearly in a serious slump!
STATE OF THE DECLINING CONSTRUCTION INDUSTRY IN 2003
----------------------------------------------------
"Construction is one of the core industries in Japan."
* In fiscal 2002, construction investment amounted to approximately
56.5 trillion yen, which is equivalent to about 11.3 percent of
Japan's gross domestic product.
* It also employed 6.19 million people, which is approximately 10
percent of the nation's total work force.
* However, the construction industry is currently facing serious
business conditions as a result of the slow pace of investments and
great structural changes in the market.
"Construction investment in fiscal 2002 showed a nominal decline of
7.1 percent over the previous fiscal year and a real decline of 6.5
percent. Construction investment (nominal) followed an uptrend from
fiscal 1984 to its peak in fiscal 1992 when it reached 84 trillion yen
and then entered a period of decline. The fiscal 2002 construction
investment (nominal) has dropped 32.7 percent from the fiscal 1992
level. Construction investment in the building construction sector
showed a nominal decline of 5.3 percent, whereas in the civil
engineering sector, the investment showed a nominal decline of 8.9
percent, both compared with the previous fiscal year. Public
investment in construction posted a nominal decrease of 10.2 percent
in fiscal 2002 compared with the previous fiscal year, while private
investment posted a nominal decline of 4.4 percent. The government
accounted for 44.1 percent of total construction investment in fiscal
2002, while the private sector accounted for 55.9 percent. The
proportion of the construction investment in Japan's GDP declined
until fiscal 1985, when it accounted for 15.1 percent. The trend
reversed, however, reaching a peak of 18.0 percent in fiscal 1990 and
followed a downtrend thereafter falling to 11.3 percent in fiscal
2002."
"In fiscal 2002, building starts totaled 171 million square meters of
floor area, marking a decline of 4.4 percent compared with the
previous fiscal year. There were 1.15 million new housing starts,
representing a decline of 2.4 percent from the previous fiscal year.
This was the second successive year that new housing starts were below
1.2 million."
"The background to the situation is a weak consumer demand for houses
caused by such factors as a gloomy labor market and a stagnant income
situation, and also the difficulty in selling old houses and buying
new ones due to the long-term downward trend of the real estate
market."
(See chart included in article)
From "Construction." Chapter 6: Manufacturing and Construction.
Statistical Handbook of Japan. (2003)
http://www.stat.go.jp/english/data/handbook/c06cont.htm#cha6_7
A DECLINING INDUSTRY (See chart in article)
-------------------------------------------
"Japan’s once-proud construction industry is painfully realizing its
glory days are gone. Construction was once a pillar of the Japanese
economy, accounting for nearly a fifth of GDP and employing nearly 7
million people. But after a decade in which the economy has hovered
near zero growth, private sector spending has dropped precipitously.
And a new government promises a tougher stance toward the public works
spending that has kept a floor under the construction market."
"Perhaps more importantly, the industry has largely lost the
admiration of the public. Young people are avoiding construction
careers. The heavy debts of the contractors and wasteful public works
spending are now seen as hindering the nation's economic recovery.
"The future of Japan's construction industry is not very rosy,"
understates Hajime Suzuki, executive director of the Research
Institute of Construction and Economy, a government-affiliated think
tank."
"The clearest sign of the tough times is the trend in total
construction investment. After peaking at $700 billion in 1992 it has
dropped to an estimated $586 billion in the fiscal year through March
2001 and is projected to decline even further this year, according to
the Ministry of Land, Infrastructure and Transport, recently formed by
the merger of the former ministries of Construction and Transport.
Even while total construction investment was dropping, construction
employment and the number of registered construction companies
increased through the mid-1990s as the government poured $550 billion
into public works through supplemental spending packages to generate
jobs for those laid off in other industries. Partly as a result of
this and other deficit spending, however, combined national and local
governmental debt totals $5.56 trillion, which is 128.5% of the
nation's gross domestic product, by far the highest ratio of any
industrialized nation."
DEBT:
"Declining demand is only one of the industry’s problems. Japan’s
largest general contractors "owe money most wouldn’t be able to pay
back even in a couple centuries," says Etsusuke Masuda, construction
sector analyst for HSBC Securities (Japan) Ltd., in Tokyo. HSBC
estimates that $11.6 billion worth of bad debt, or roughly 11% of the
non-performing loans on the books of Japan’s 16 biggest banks, is owed
by construction companies."
OTHER REASONS BEHIND THE DECLINE:
"Things are expected to get tougher before getting better. RICE’s
Suzuki says private sector nonresidential work has probably hit
bottom. But even economic recovery is not likely to provide a big
lift. In major cities office vacancy rates are currently high and a
significant amount of new office space is already under construction.
And Suzuki notes that the nature of industrial work has changed. In
the era of heavy manufacturing, construction costs accounted for a
healthy percentage of investment in new facilities. For today’s
high-tech manufacturing, construction costs are a fraction of the
total, with most of the money going into equipment. And with Japan’s
rapidly aging population and low rate of new household creation,
Suzuki says, "Housing won't be a growth sector."
THERE IS HOPE!
"The bottom line is that Japan's construction industry faces a painful
period of consolidation. HSBC’s Masuda says that some "innovative
contractors" are using information technologies to get a handle on
costs, which have previously been obscured by the predominance of
lump-sum contracts with fat risk premiums. Contractors who learn to
control costs, "will be the winning group," he says. With their
world-class technology and new-found cost-control skills, the
survivors are likely to be tough competitors both at home and abroad."
From "Japan Wrestles with Construction," by Dennis Normile with Tamami
Shimegi. McGraw Hill Construction. (6/4/2001)
http://enr.construction.com/features/international/archives/010604.asp
===
RESIDENTIAL CONSTRUCTION - PROBLEMS AFFECTING GROWTH (2000)
-----------------------------------------------------------
"The overall productivity of the sector is estimated at 45 percent of
the U.S. level. Productivity in single-family housing (SFH) is at 33
percent of the U.S. level, compared to multifamily housing (MFH) at 60
percent.
"The main sources of the productivity gaps across all segments are the
lack of large-scale developments and the lack of standard designs,
methods, and materials. The comparatively lower productivity in SFH is
due primarily to poor organization of functions and tasks (OFT),
particularly in the traditional "post and beam" segment, which
accounts for 80 percent of employment in SFH. In addition, most SFH
uses very inefficient sales techniques. For MFH land acquisition is
slow and difficult."
"The residential construction industry in Japan is very static, with
little change in market share across construction types or players.
Companies are reasonably profitable and wages are relatively high, so
there has been little pressure to change. There have been very few
new, productive, successful, entrants - either foreign or domestic.
Price competition is quite limited; instead, firms compete on
customization and reputation."
"The lack of price-based competition and the lack of standardization
of construction materials and methods are the main causes of low
productivity. The lack of price-based competition is the result of a
missing secondary housing market, the small proportion of large-scale
developments, and the lack of suitable MFH. The key factors
restricting growth of these markets are the lack of public transaction
information, the Government Housing Loan Corporation's lending
policies (which favor new housing), the tax system (which increases
the cost of transacting in the housing market and decreases the cost
of holding land), and the zoning codes (which hinder development of
MFH)."
From "Residential Construction." MGI Report: Why the Japanese Economy
is Not Growing. McKinsey & Company (July 2000)
http://www.mckinsey.com/knowledge/mgi/Japan/cases/resconstruct.asp
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
WHICH OF THESE THREE COUNTRIES MAKES THE BEST CHOICE FOR MARKET ENTRY?
======================================================================
China is clearly the frontrunner right now for a viable construction
market. The Chinese government is backing construction growth. The
frenzy fueled by the impending Olympics in 2008 is one very strong
reason for increased activity in the construction industry. The
Chinese economy is thriving. The entry of Japan into the World Trade
Organization has removed privatisation constraints from the
construction industry. Foreign investors have already moved in and are
continuing to expand their business interests in China.
At present, China's economy and receptiveness to new construction and
foreign investment make it the best choose for market entry.
ADDITIONAL REFERENCES:
Picture of the World Construction Market in 1988
http://www.cnw21.com/maindoc/english/chinamarket/marketpic/
=========
This has been an interesting and extensive search. I hope you can
make good use of the data. Thank you for your patience while I
compiled the information.
It took a bit longer than I expected!
Sincerely,
umiat-ga
Search Strategy
Taiwan AND construction market
Taiwan construction industry
construction statistics taiwan
building industry in taiwan
China Construction Trends
China AND construction market
China construction industry
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Japan AND construction industry
construction Japan 2003 |
