chapter  7
19 Pages

Globalization

ByS. PING HO

Although the construction industry is ‘local’ by its nature in terms of many factors such as regulatory, political, social, and procurement conditions (Ofori 2003), the globalization of construction is becoming an inevitable reality under today’s globalization movement. From the supply side, more firms will join the global market because the construction industry shares similar traits with other industries that facilitate globalization, such as the reduced costs of communication, transportation and funds. From the demand side, the breakdown of trade barriers has created more opportunities for firms with competitive advantages. For example, as more multinational enterprises (MNEs) move out of their domestic markets because of the growth of multinational operations, these MNEs may demand their suppliers, including constructors, to continue working with them in foreign markets (Ngowi et al. 2005). As a result of global competition, staying domestic is no longer safe from competition and, maybe, the best strategy for firms to survive the increasingly intensive competition is to grow and become internationals. In the past decade, we have observed several important developments and trends in international construction as predicted by various scholars. For example, according to Ofori (2003), many scholars predicted that the share of demand for large projects would increasingly move towards Asia-Pacific, Africa, and South America. Among the countries in these areas, China, Vietnam, Malaysia, India and Russia would have the fastest growing construction markets (Bon and Crosthwaite 2001). We have also observed that the number of international firms from middle-income and developing countries has been increasing. As such, there are increasing concerns and studies on the emerging forces/MNEs from countries such as China and Korea and on the emerging markets such as China, India, and Vietnam. However, as predicted by Ofori (2003), construction firms from Western Europe and North America would continue to have competitive advantage in highly specialized services.