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Value chain supply procurement strategies in international construction: cases of foreign constructors in China

Martek, Igor and Chen, Chuan 2016, Value chain supply procurement strategies in international construction: cases of foreign constructors in China, Management decision, vol. 54, no. 2, pp. 501-521, doi: 10.1108/MD-01-2015-0018.

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Title Value chain supply procurement strategies in international construction: cases of foreign constructors in China
Author(s) Martek, Igor
Chen, Chuan
Journal name Management decision
Volume number 54
Issue number 2
Start page 501
End page 521
Total pages 21
Publisher Emerald
Place of publication Bingley, Eng.
Publication date 2016-03-21
ISSN 0025-1747
1758-6070
Keyword(s) China
supply chain
procurement
construction
value chain
international construction
Social Sciences
Business
Management
Business & Economics
CAPABILITY
Summary Purpose – Firms compete using a variety of strategies. Typically they aim to provide something different, to be better, or simply cheaper. In the construction industry, the performance characteristics, quality and cost of the final delivered project will be the outcome of the interplay of capabilities of all the firms involved in the project. Consequently, in order to improve competitiveness, firms must pay attention to not only their own competitive advantage but to those of the firms, both up-stream and down-stream, on whom they depend in delivering their projects. For foreign constructors in China, those competitive considerations will be informed by circumstances different from home. How then do foreign constructors adapt themselves to the problem of sourcing competitively when located within a China-based supply chain? The paper aims to discuss these issues.

Design/methodology/approach
– In this study 60 foreign enterprises operating within the Chinese construction sector were investigated by using a comparative case study approach.

Findings
– Four generic procurement strategies were identified. First, firms adapt themselves in the search for optimal supply sources by replicating home-based suppliers, controlling local suppliers, or by remaining agile and non-aligned. Second, firms develop niche supply monopolies through market dominance, uniquely differentiated offerings, or by integration with down-stream providers. Third, firms find opportunities to bring in off-shore technology intensive procurements, where that technology is either protected, improved upon, or sold. Finally, firms also seek to transit to China as a procurement base in order to reduce local supply cost, service world-wide operations, or as part of a total strategy of China relocation.

Originality/value
– The identification of this rich range of procurement approaches will be of interest to internationalization strategists, as well as to industry practitioners looking to find appropriate business models for off-shore operations.
Language eng
DOI 10.1108/MD-01-2015-0018
Field of Research 120201 Building Construction Management and Project Planning
Socio Economic Objective 970112 Expanding Knowledge in Built Environment and Design
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Emerald Group Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30085725

Document type: Journal Article
Collection: School of Architecture and Built Environment
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