The construction sector generates a large percentage of China’s Gross Domestic Product (GDP) and continues to be dominated by Chinese state owned enterprises. Foreign companies can be found in the technology and quality spectrum, usually being responsible for implementing new technologies. Setting up a company in the construction sector in China can be a very profitable business decision due to the policy changes adopted by the government and the accelerating pace of the industry. The continuous urbanization of China and an affordable workforce add to the advantages of starting a business in the construction sector. Detailed information about the construction legislation can be offered to you by our attorneys in China.
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The construction market in China
A wide range of products and services categories are included in the construction sector in China. It can be defined in three broad areas:
• Construction – project management and building by contractor companies. Chinese companies involved in this area are usually responsible with the complete fulfillment of a project or take part in one of the construction stages (subcontractor);
• Services – companies that produce drawings, designs and calculations and manage supervision, sales and advice are included in this area;
• Materials – companies that provide construction sites with building materials and equipment to help builders are covered here. There is a distinction between primary materials (steel, concrete, and glass), downstream products (steel frames, windows) and complete systems (air conditioning, security, elevators).
All activities related to the construction market in China are regulated by a specific legal framework. The Construction Law, Contract Law and Tendering Law provide the regulations and procedures relating to the qualification of constructors, codes and standards for constructions and competitive tendering. Our lawyers in China can give you more details about the legal requirements of the construction sector if you are interested in setting up a company in this domain.
The typology of construction companies according to their ownership
If you want to set up a company in the construction sector in China you need to get acquainted with the types of construction enterprises available in this country. There are eight distinct types of companies in the construction sector, according to their ownership:
– state owned enterprises,
– urban collectives,
– rural collectives,
– private firms,
– Hong Kong contractors,
– Macao contractors,
– Taiwan contractors.
Recently, the central government has facilitated the denationalization of small and medium state owned enterprises. Most of them changed their type into companies with individual shareholders. Please contact our law firm in China for advice on the legal aspects of setting up a company in the construction sector in the country.