Social risks for international players in the construction market: A China study

Implementing international projects in a foreign country is a high risk business activity. Research on this subject has tended to emphasize traditional risks. However, an emerging new type of “social risk” in the globalization era has been ignored. With the rapid urbanization progress in China, many international contractors have entered the Chinese construction market due to the huge demand in the market. However, the differences in the social, economic and cultural backgrounds among the international contractors and their partners have led to difficulties and occasional disputes among various participants. In particular, they are presented with various social risks in a new environment. This paper identifies the key social risk factors associated with international contractors from a questionnaire survey and case study. The social risks highlighted from the questionnaire survey include “local protectionism (for local projects)”, “risk of poor social relations between various parties in the local region”, “permit or license risk in dealing with land use and construction planning issues due to policy changes” and “dispute risk with local construction labor”. Several risk response strategies for international contractors are also illustrated by the case study from China. Suggestions developed in the case study can provide useful references to those international contractors who have entered or are planning to operate their businesses in China.

► A systematic method for identifying the social risks for international contractors is employed.
► The top social risk factors include “social relations risk with various parties in the local region”, “dispute risk with local construction labor” and “permit or license risk in dealing with land use and construction planning issues due to policy changes”.
► The impacts of these key social risk factors are significant to the international contractors who have entered to the Chinese construction market.