Construction News
- High debt rate, price war haunt China's construction industry
Date: 21-Mar-2007 Sources: (Xinhua Online)
High levels of debt and intense pricing competition has severely threatened the development of China's construction industry, according to a research report released here Tuesday.
The research, conducted by the Construction Enterprise Management Association and the National Development and Reform Commission, showed that domestic construction enterprises had maintained a profit rate of 2-3 percent in recent years while enduring a debt rate of 65 percent.
'What this means is that construction companies hardly have any money to develop new technologies and consequently they cannot increase their competitiveness', the research concluded.
The number of private construction companies has grown at an average rate of 40 percent a year between 1995 and 2005, which has led to throat-cutting competition on pricing.
But the construction industry, which employs some 40 million people, serves as a major stabilizer for Chinese society since an estimated 200 million migrant workers have moved to the cities, a considerable number of whom enter this line of work.
The price war and low salaries will be 'difficult to overturn in the short term', the report said.
Private enterprises account for 74.5 percent of the total number of construction companies, the report showed.
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