Sharpening Competitive Edge through Procurement Innovation: Perspectives from Chinese International Construction Companies

Abstract

The international construction business is witnessing a trend toward the delivery of projects through the adoption of innovative procurement systems that allow companies to gain competitive advantages and to potentially deliver enhanced value to society. Notably, Chinese companies are making steady inroads into the international construction market by enhancing competitiveness. However, little is known about how Chinese international construction companies (CICCs) perceive procurement innovation and how this factor may relate to their recent success. This research aims to fill the void based on interviews with nine CICC key decision makers and experts in this area. It is found that CICCs are gradually adopting procurement innovation as a competitive strategy. Although procurement innovation leads to competitive advantage in the long run, CICCs must pay the cost of entering a new market. Thus a “wait-and-see” attitude exists with respect to a long-term vision. Unlike the traditional win-lose competitive bidding system, competing through procurement innovation can lead to a larger, more suitable market presence. By succinctly describing the CICC story on the international market, this research not only provides CICCs themselves with insights into current procurement innovations existing within the construction sector but also enables other companies to understand the nature of CICCs with which they might compete or collaborate in the near future.