1. Executive Summary 2
2. Introduction 3
3. Background 4
3.1 Environmental Sustainability 4
3.2 Competitiveness of Chinese construction industry 5
3.3 Relationship-Based Business Culture 5
3.4 Insufficient Law and Regulation 6
4. Discussion of the Issues 7
4.1 Chinese Cultures 7
4.2 Cultural Impacts 8
4.3 Sustainable Development 8
5.0 Conclusion and Recommendations 9
6.0 Reference 11
1. Executive Summary
It is in the best interest for Leighton Holdings to understand the Chinese cultures to avoid missing any business opportunities in China.
In the recent years, the construction industry has been playing a leading role in the Chinese rapid economic development. The increase in economic activity has resulted in a heavy demand for construction, providing Leighton Holdings a good opportunity to expand its construction business in China.
However, China’s incomplete regulatory system, cultural differences, as well as a relationship-based business culture were among the factors identified as making China a challenging project environment. This is due to the national culture of Confucius, which affects the way the Chinese people doing business. Some of the salient principles of Confucius are highlighted below: * Submitting to authority; * Respecting the concept of “big family” * “middle way” to preserve harmony in one community; and * Maintaining harmonious relationships with neighbours.
Based on the identified issues, some recommendations are provided for Leighton Holdings to expand its business in China: * Make the right connections in China and hold implementation plan workshops and follow-up sessions with Chinese team members to establish and maintain trust and respect at the start of the project; * Develop a clear and appropriate plan and well defined a project’s scope and design before agreements or contracts are signed to avoid cultural misunderstanding or future disputes; * Employ people who have educational and working experience in both Australia and China to be the communication channel; * Establish price competitiveness by sourcing environmental-friendly resources globally to meet the Chinese demand for sustainable construction; * Cooperate with international association such as World Trade Organization and Asia Pacific Economic Cooperation to lobby the Chinese government for policy changes and to call for the transparency during the bidding process.
Leighton Holdings is one of Australian’s largest construction firms and one of the world’s largest contract mining companies. It operates with a number of subsidiaries in Australia including Thiess, John Holland Group and Leighton International, providing a wide range of construction operations in heavy industry, engineering and commercial construction (IBISWorld, 2013).
With the goal of being renowned for excellence across the construction, mining, and operations and maintenance markets, Leighton Holdings is committed to the achievement of high quality standards, and strives for integrating environmental, social and governance factors into decision making to create short and long term shareholder value, pursuing sustainability of its business (Leighton Holdings, 2013 a; Leighton Holdings, 2013 c; Leighton Holdings, 2013 d).
In recent years, the rapid increase of the world’s population, in addition to the expansion in global economic activity and falling trade barriers, has led to massive increases in demand for construction around the world, especially in Asia where large amounts of social commercial infrastructure are being developed (Ochieng, Price & Moore, 2013). According to the Global Construction Report (2011), China surpassed Japan as the world’s largest construction market in 2003, and it will overtake the US as the world’s largest construction sector in 2018. These indicate a great opportunity for Leighton Holdings to export its construction