CIB W107 Construction in Developing Countries International Symposium

Construction in Developing Economies: New Issues and Challenges

18-20 January 2006, Santiago, Chile.





A Comparative Study of Market Structure in the Chinese Construction
Industry


D. Wang
1
, R. J. Krizek
2
, and A. Hadavi
3

1
Swinerton Inc., San Francisco, CA, USA. dawang@swinerton.com
2
Department of Civil and Environmental Engineering, Northwestern University, Evanston, IL,
USA.
3
Department of Civil and Environmental Engineering, Northwestern University, Evanston, IL,
USA.




Abstract:
The Chinese construction industry has developed over the past two decades within the framework
of a socialist market system. Nevertheless, the poor industry performance indicates an inefficient
and ineffective market. This study investigates the market structure of the Chinese construction
industry in terms of firm size distribution, the Lorenz Curve and the associated Gini coefficient, and
the proportion of specialty contractors, and the results for the Chinese construction industry are
compared with those for the United States, United Kingdom, and J apan. This comparative analysis
indicates that the current market structure in the Chinese construction industry is inappropriate for
its further development, and this is an important factor contributing to its poor performance.
Chinese firms are generally much larger than firms in developed countries, and they are quite
similar among themselves in terms of business volume and services provided. Stated alternately,
the Chinese market is not as fragmented as other construction markets. Because of their similarity,
many comparable contractors compete with each other in the market, leading to fierce rivalry. The
high barriers for firms to exit from the industry make the situation even worse. Several policies are
suggested for the government to improve the development of the Chinese construction market.

Keywords
Market structure, comparative analysis, chinese construction industry, firm size
distribution, specialty contractors


INTRODUCTION

Ever since China launched its far-reaching reform of its national economic system in 1978, there
has been a process of transformation from a centrally planned economy to a socialist market
economy (Flanagan and Li, 1997; Chan et al. 1999; Han and Ofori, 2001). The Chinese
construction industry was one of the first industries in the nation to be reformed. The goal of the
industry-wide reform was to shift from the old assignment system to a system in which the survival
of a construction business is determined by the competitive market. As a result of reduced central
control over state-owned enterprises and the introduction of competition and incentives for people

2
to make and share in profits, the Chinese construction industry has been growing rapidly (Flanagan
and Li, 1997).

Nevertheless, despite the industrys great achievements, such as a high annual growth rate and an
increasing contribution to the GDP, its development over the past decade or so suggests that it faces
serious difficulties during its transition to a market-oriented system. In particular, the profit rate
declined during the transformation and has now reached low levels. The percentage of unprofitable
firms in the industry has been rising since the early 1990s and remains high today. Furthermore,
construction firms compete fiercely in a market that is not fully developed and remains quite
different in structure from that seen in well-established market economies.


METHODOLOGY

Market structure determines the degree of competition and is a major determinant in the behavior
and performance of firms (Carlton and Perloff, 1994). Therefore, the analysis of market structure is
the first step towards a study of the industry. The structure of the market is defined in terms of the
number and size distribution of competing firms (Bain, 1968). In this study, the details of which
have been addressed more comprehensively by Wang(2004), the market structure is examined in
terms of firm size distribution by employment, the Lorenz Curve, and the associated Gini
coefficient, and the results for the Chinese construction industry are compared with those for the
US, UK, and J apan. In addition, issues of specialty contractors and subcontracting, as well as
conditions of market entry and exit, that affect the market structure in the Chinese construction
industry are investigated. China has been switching to a global market economy and the Chinese
construction market has been adopting common international practices. Chinas entry into the
World Trade Organization is accelerating the transformation process. Comparison with the well
established American, British, and J apanese construction markets will assist in understanding the
practices that could help the future development of the Chinese construction industry in this
transitional period.


FIRM SIZE DISTRIBUTION BY EMPLOYMENT

The size distributions of contractors by employment size class in the US, UK, and J apan have the
following characteristics (see Tables A1 to A4 in the Appendix):
(a) The number of contractors is large in these developed countries. In the US, there were
656,448 construction establishments in 1997 (Construction statistics in the US are based on
establishments, rather than firms, and one firm may be comprised of multiple
establishments. However, the vast majority of US construction firms are small and
localized, there were more than half a million construction firms in the United States
(Barrie and Paulson, 1992)). In the UK in 2000, there were 163,426 construction firms. The
size of the J apanese construction industry is similar to that in the US. In 1996, there were
647,356 construction establishments in J apan.
(b) Most contactors are very small. More than 90% of all contractors in the US had fewer than
20 employees. About 98% of the total construction firms in the UK had fewer than 24
employees. In J apan, about 95% of the total contractors had fewer than 20 employees.
(c) The average size is less than 10 employees per construction establishment or firm.

3
(d) Large builders have a market share advantage over the small ones. Less than 1% of the total
contractors in the US had more than 100 employees, but they represented about 27% of the
total output. There were 518 firms that had over 115 employees in the UK; although
accounting only for 0.32% of all contractors, these firms accomplished more than one-third
of the total output. The largest firm group in J apan made up only 0.06% of all contractors,
but produced 23% of all output.

Unlike the three well-developed market economies, the Chinese construction statistics do not
categorize construction firms by employment size. Instead, China publishes construction statistics
based on a qualification class system that was established by the Ministry of Construction. Table 1
shows the number of firms, gross output value, employment, and average employees per firm for
each qualification class in the Chinese construction industry in 2000. Qualification Class One was
the highest class and its holders usually have thousands of employees. The size of the construction
firms in the lower qualification classes is smaller to varying degrees, depending on the class. In
general, higher qualification class firms employ more people than lower class firms. Therefore,
qualification class is used to classify construction firms to analyze the size distribution of firms in
the Chinese construction industry, assuming that higher class firms are larger than lower class firms
in terms of the number of employees, and Qualification Class Four firms are larger than firms
without a qualification class.

Table 1. Employment Size Distribution of Contractors by Qualification Class in China, 2000
Contractors Output

Qualifica
tion class
Number
of firms
Percent
age of
total
(%)
Cumulative
percentage
(%)
Output
(billion
RMB)
Percentage
of total
(%)
Cumulative
percentage
(%)

Total
employment
(1,000)

Average
employees
per firm
Without 49,745 51.14 51.14 428.34 25.53 25.53 6,434.7 129.4
Class 17,562 18.06 69.20 104.88 6.25 31.78 2,870.1 163.4
Class 19,228 19.77 88.97 249.89 14.89 46.67 5,844.1 303.9
Class 8,307 8.54 97.51 347.29 20.70 67.36 6,321.1 760.9
Class 2,421 2.49 100 547.69 32.64 100 5,939.0 2453.1
Total 97,263 100 - 1678.0 - - 27,409.0 281.8
Source: State Statistic Bureau (2001): China Statistical Yearbook; State Statistical Bureau (2001):
China Statistical Yearbook on Construction

Compared to the three developed countries, there are far fewer construction firms in China, the firm
size is much larger, and a big difference exists between the firm size distribution in China and the
other countries. In 2000, there were 97,263 Chinese construction firms. The average number of
employees per firms was 282, about 30 times that of the US and J apan and 50 times that of the UK.
In addition, the larger contractors in China produced a smaller percentage of the total output than
their counterparts in the well-developed countries. Class One firms that averaged 2453 employees
per firm accounted for 2.5% of the total firms and one-third of the total output.

Since employment size is classified differently for each of the four countries, the average number of
employees per firm for each firm size and the measure of this firm size as a percentage of all
contractors are used in Figure 1 to compare in one column chart the approximate firm size
distributions by employment for the four countries (see Table 1 and Tables A1 to A3 in the
Appendix for the source data).

4

Figure 1 demonstrates clearly the characteristics of construction firm size distributions in China and
the other three countries. As can be seen, the distributions are similar in the US, UK, and J apan;
most of contractors are very small, the range of firm sizes is very wide, and the number of
contractors decreases drastically when firm employment size increases. The contractors in the three
countries that have more than 20 people account for less than 10% of total. The proportion of the
contractors that employ more than 100 people is less than 1%. In contrast, most construction firms
in China have more than 100 employees. The range of firm size is narrower, and the distribution is
much more even than in the three developed countries. This indicates that Chinese contractors are
more similar with a higher proportion of larger firms.

Based on the above analysis, the size of Chinese contractors is seen to be much larger than those in
developed countries and the overall distribution of the number of firms is much more biased toward
medium and large firms, although medium and large firms account for a smaller percentage of the
overall construction work.

Figure 1. Size Distributions of Construction Firms By Employment (Wang, 2004)
0%
10%
20%
30%
40%
50%
60%
1
,
9
2
,
1
2
,
3
2
,
9
6
,
4
6
,
6
7
,
0
1
2
,
0
1
3
,
3
2
1
,
2
2
3
,
6
2
9
,
6
3
3
,
5
3
7
,
2
4
8
,
4
6
6
,
4
6
7
,
6
7
7
,
2
1
0
7
,
7
1
2
9
,
4
1
3
2
,
6
1
4
5
,
9
1
6
3
,
4
2
0
1
,
8
2
4
0
,
0
3
0
3
,
9
3
3
4
,
8
4
8
2
,
4
6
1
4
,
4
6
6
1
,
7
7
6
0
,
9
9
8
8
,
2
1
9
6
7
2
1
7
1
2
4
5
3
Average employees per firm
P
e
r
c
e
n
t
a
g
e

o
f

t
o
t
a
l

f
i
r
m
s
China
US
UK
J apan


LORENZ CURVE AND GINI COEFFICIENT

The Lorenz curve and its associated Gini coefficient indicate the degree of competition in a market
by measuring inequality in the size distribution of firms (Hart and Prais, 1956). The Gini coefficient
is a statistical measure derived from the Lorenz curve, which relates the cumulative share of the
total value of any variable (output, revenue, number of employees, etc.) to the number or percentage
of firms in the industry arranged in increasing size. If the curve is a straight line, all firms are of
equal size. A diagonal would suggest that all the firms are of equal size and the industry may be
viewed as completely unconcentrated, indicating fierce competition in the market. In general,
however, firms are not of equal size in any given industry and the greater the deviation of the
Lorenz curve from the diagonal, the greater the inequality in firm sizes and the higher the market

5
concentration. Alternatively, the closer to the diagonal, the more evenly distributed and more
unconcentrated are the firms. The Gini coefficient is defined as the ratio of the area between the
diagonal and the actual curve to the area of the total triangle beneath the diagonal. Its maximum and
minimum values are one and zero, representing total inequality and total equality, respectively.

The Lorenz curves in Figure 2 illustrate the size distributions of the construction firms in terms of
the construction value in the four countries (see Table 1 and Tables A1, A2, and A4 in the
Appendix for the source data). The horizontal axis represents the percentage of all contractors
cumulated from small to large, while the vertical axis represents the cumulative share of the total
value of construction work for the contractors in the four countries. The diagonal line represents
equality in the size distribution. Figure 2 shows clearly that the Lorenz curve of Chinese contractors
is much closer to the diagonal than the other three curves. The Gini coefficient for Chinese
contractors is 0.47, while the Gini coefficients for the US, UK, and J apan are 0.70, 0.74, and 0.67,
respectively. The Lorenz curves for the US, UK, and J apan are nearly congruent, deviating much
farther from the diagonal, and rising steeply near the end of the curve. The figure shows that most
contractors are small and that inequality in firm size is greater in the three developed countries. By
contrast, the size of the Chinese contractors is more equally distributed. In China, the small
contractors are relatively bigger and the large ones are relatively smaller in terms of production. The
more equal size distribution in China indicates that (a) the market is less concentrated compared
with the US, UK, and J apan and (b) there are many comparable construction firms competing,
implying intense competition in the market.

Figure 2. Lorenz Curves of Contractors in China, the US, UK, and J apan(Wang, 2004)
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
Percentage of fi rms, cumul ated from the smal l est
C
u
m
u
l
a
t
i
v
e

p
e
r
c
e
n
t
a
g
e

o
f

t
o
t
a
l

c
o
n
s
t
r
u
c
t
i
o
n

w
o
r
k
Diagonal China US UK J apan



SPECIALTY CONTRACTORS AND SUBCONTRACTING


6
Specialty contractors and subcontracting, which has benefited construction by utilizing the
work force more efficiently, increasing labor productivity, and promoting the use of new
materials, methods, equipment, and so forth, is the result of the development of the
construction industry. With advancing technology and improved equipment and materials,
construction projects become more complex and the scope of these projects requires a
tremendous work force of trade specialists in many disciplines. Few companies could keep
a large work force steadily employed year-round. As a result, the general contractor
dispensed a large work force and parceled out most of this type of work to specialty
contractors. Specialty contractors, whose output is usually only a part of the entire as-built
product, typically enter the contracting system as subcontractors. Subcontractors can keep
themselves fully employed by working for several builders. Furthermore, the subcontractor
has the special training and experience to evaluate and supervise the work of a particular
trade most effectively, a skill not necessarily possessed by the builder. Hence, the
subcontracting system contributes to the economical utilization of those skills used
infrequently by each of many builders.

In developed construction markets, the majority of construction work is subcontracted to
subcontractors (Hillebrandt, 2000). There is a large number of specialty firms in the industry, and
most of them are very small. According to the U.S. Census Bureau (2000), 63% of all contractors
were specialty trade contractors in the industry in 1997. The average size of a specialty trade
contractor is about 8 employees. Specialty trades include plumbing, heating and air conditioning,
carpentry, concrete work, painting and paper hanging, electrical work, etc. In the UK there were
163,426 firms in the industry in 2000, and 63% of them were specialist trade contractors
(Department of Trade and Industry, 2001). The average size of a specialist trade contractor is about
5 employees. Specialist trade contractors in the UK are similar to specialty trade contractors in the
US. In J apan, specialty trade contractors accounted for about 70% of the total firms in the industry
in 2003 (Ministry of Land, Infrastructure and Transport, 2004).

The current contracting practice came to the Chinese construction industry in the early 1980s when
a competitive bidding system was introduced into the industry. Under the former planning system,
the government assigned projects to construction firms that were accessories to government
organizations. Most Chinese firms were large and established to provide comprehensive services,
including laborers in a range of specialties. During the reform, Chinese firms have been
transforming to individual business entities similar to typical firms in developed countries.
However, the contracting system in China is underdeveloped, and the current construction market
structure, affected by the former system, is not as fragmented and specialized as in developed
markets. In fact, the majority of firms compete in the general contracting market, and they only go
to the subcontracting market when they have no alternatives. The number of specialty contractors in
China is small and their development is ignored. In 2000, specialty contractors accounted for 26%
of the total construction firms (State Statistical Bureau: China Statistical Yearbook on Construction,
2001). Furthermore, there are currently many restraints on subcontracting, which hinder the
development of the number, quality, and size of specialty firms. For example, the Peoples Republic
of China Construction Law stipulates that a general contractor must finish the principal part of the
project and he may only subcontract minor and unimportant work to subcontractors. A given
subcontractor is not allowed to further subcontract his work. Because of their inferior position in the
industry, specialty firms often have to accept harsh and unfair contract terms. The small number of
specialty firms is one of the important reasons that the number of small firms in China is low.

7



MARKET ENTRY AND EXIT

Ease of entry and exit is important in determining market structure and the subsequent performance
of firms (Carlton and Perloff, 1994). Firms will tend to enter the market if they think they can make
at least normal profits in the market. The entry of new firms produces competition that acts quickly
to reduce prices and profits. Meanwhile, a firm will leave the industry if it is not making normal
profits. Construction is thought to have easy entry and exit (Buzzelli, 2001). In the construction
markets in the US, UK, and J apan, entry barriers (including absolute cost advantage, economies of
scale, and product differentiation) and the cost incurred by a firm to exit the industry are generally
low, especially when compared with the production factors needed in other industries.

In contrast, while the overall barrier for entry into the construction market is low in China, the
barriers for Chinese firms to exit the industry are high. The major barriers include settlement costs,
debt, social responsibility, and government regulations and intervention. Chinese construction
firms, especially state-owned firms, are responsible for arranging for their employees if they exit the
industry, leading to significant settlement costs. The debt ratio for most Chinese firms is high, so
firms cannot easily exit the market. Furthermore, firms social responsibility, such as the burden of
retired employees, makes it difficult for firms to exit. Moreover, government organizations
sometimes are reluctant to support the exit of state-owned firms, because the firms offer necessary
benefits and local stability. Finally, firms are limited from using bankruptcy and other forms of
liquidation to exit from the market because of the underdeveloped laws and relevant facilities.
Many inefficient firms have to stay in the industry and continue to bear a heavy burden of debt,
social responsibility, and loss. Due to their lack of competitiveness, these firms tend to secure
projects by cutting price and other abnormal means of competition, thus disrupting the order of the
market and lowering the industry performance.


DISCUSSIONS

The nature of construction projects and the construction process encourages a pyramidal
distribution for firm size (Li et al. 2001). The contracting aspect of production involves many
disciplines, which result in the assembly of a large variety of materials and components. The
structure of the construction industry is highly specialized and layered with a few large contractors
that have advantages of capital, technology, and management skills, and these provide
comprehensive service at the top of the pyramid. A large number of small contractors that have
functional flexibility and generally a high degree of specialization form the bottom. Due to the
variety of different size construction projects and the abundant opportunities for subcontractors with
different specializations, the market is fragmented in such a way that different segments sustain
firms of different sizes. Much distinguishes small, medium, and large firms from each other in
terms of gross output, employment size, and services. Small, medium, and large firms all have an
important role to play in an integrated construction system. Normally a small number of large firms
serve as a general contractor on large or complex projects in national or global markets, while small
and medium-sized contractors, many of whom have specialized trade expertise, serve as
subcontractors or undertake small projects in local markets. Instead of competing actively with each

8
other, small, medium, and large contractors complement each other and cooperate among
themselves on construction projects.

The foregoing study demonstrates a similar pyramidal pattern in construction firm size distributions
in the US, UK, and J apan. There is a large number of contractors in the construction market. Small
contractors dominate in number, and there are only a few large contractors. The difference between
firms of small and large size is significant. Furthermore, there is a large proportion of specialty
firms in the industry. Firms of different sizes have their own niches within the market. Moreover,
firms enter and exit the market easily. The construction markets in these three countries are well
established. Their market structures remain stable and their construction statistics in recent years
confirm consistent firm size distributions and the proportions of contractors in various trades. This
stability implies that the pattern of their market structures, shaped by long-term market
development, is appropriate to the industry and is thereby efficient and effective.

In contrast, the market structure in the Chinese construction industry is still affected by the old
system and is quite different from that in market-oriented countries. With fewer firms in the market,
the industry is less concentrated, meaning that firms experience more intense competition. The
Chinese firms are much larger in terms of employment and are quite similar in terms of size and the
services they provide. The percentage of small firms is relatively low, thus causing a trapezoidal
structure for the industry. However, these small firms are not small in terms of employment and
they are not really specialized compared to the small firms in developed construction markets. The
Chinese market is not as fragmented as other construction markets. Most Chinese firms are general
contractors, regardless of size. Because of their similarity in size and services, many comparable
contractors compete with each other in the market, leading to fierce rivalry. Meanwhile, new
similar-scale entrants have largely concentrated in markets where the barriers to entry are very low
(housing, in particular), intensifying market structure problems in the industry. The high barriers for
Chinese firms to exit the industry make the situation even worse. Many inefficient firms have to
stay in the industry and continue to bear a heavy burden of debt, social responsibility, and loss. Due
to lack of competitiveness, these firms tend to secure projects by cutting price and other abnormal
means of competition, thus disrupting the order of the market and lowering the industry
performance.



9
CONCLUSIONS

This comparative analysis suggests that the current market structure in the Chinese construction
industry is inappropriate to its further development, and this is an important factor for the poor
industry performance. The Chinese construction market has been in a state of evolution for more
than a decade. During this period it has been continually improving, increasingly accepting
international practices, and moving in the direction of a mature construction market. With time, the
market structure will undoubtedly evolve in the direction prevalent in the three mature construction
markets. Because Chinese contractors have been exposed to the free market system only a short
time ago, they are not yet strategically sophisticated and still depend on the government.
Furthermore, because the market system is still developing and market mechanisms have not been
functioning well in China, the Chinese government must promulgate effective industrial policies to
improve market structure to enhance the performance of the construction industry. This is necessary
for the healthy development of the market and industry, especially throughout this transition period,
and it is imperative because of Chinas entry into the World Trade Organization.

Suggested industrial policies for the government to enhance further development in the Chinese
construction market include (a) support and develop specialty firms by reducing the restraints on
subcontracting and extending the subcontracting scope and encouraging the rapid development of
specialty firms by transforming or disintegrating existing contractors in further enterprise reform
programs; (b) improve management of the qualification class system by establishing limits for the
scope of different qualification classes to encourage firms of different sizes to work in their niches
within the market; (c) develop small firms by establishing specific organizations to serve small
firms; (d) foster and develop the largest firms by supporting them with capital; and (e) facilitate the
exit of unprofitable firms from the industry.


REFERENCES

Bain, J .S. (1968) Industrial Organization, J ohn Wiley & Sons, New York.
Barrie, D. S. and Paulson, B. C. (1992) Professional Construction Management: Including CM,
Design-Construct and General Contracting, 3rd Edn. McGraw-Hill Book Company, New
York.
Buzzelli, M. (2001) Firm Size Structure in North American Housebuilding: Persistent
Deconcentration, 1945-98. Environment & Planning A, Vol.33, No.3, pp.533-551.
Carlton, D.W. and Perloff, J . M. (1994) Modern Industrial Organization, 2nd Edn. Harper Collins
College Publishers, New York.
Chan, W. K. L., Wong, F. K. W. and Scott, D. (1999) Managing Construction Projects in China -
the Transitional Period in the Millennium. International Journal of Project Management,
Vol.17, No.4, pp.257-263.
Department of Trade and Industry (2001) Construction Statistics Annual:2001 Edition, Department
of Trade and Industry, London.
Flanagan, R. and Li, S. (1997) International Construction: a Perspective of China, The University
of Reading, Reading.
Han, S. S. and G. Ofori (2001) Construction Industry in Chinas Regional Economy, 1990-1998.
Construction Management and Economics, Vol.19, No.2, pp.189-205.
Hart, P.E. and Prais, S.J . (1956) The Analysis of Business Concentration: A Statistical Approach.
Journal of the Royal Statistical Society, Vol.119, No.2, pp.150-191.

10
Hillebrandt, P. M. (2000) Economic Theory and the Construction Industry, 3rd Edn. Macmillan
Press Ltd, London.
Li, X., Guang, K. and Li, Z. (2001) Empirical Analysis on Concentration in the Chinese
Construction Industry. Construction Economics, Vol.224, No.6, pp.3-5, Beijing.
Ministry of Land, Infrastructure and Transport (2004)
http://www.mlit.go.jp/sogoseisaku/const/kengyo/kyokaol.html.
State Statistical Bureau (2001) China Statistical Yearbook, State Statistic Bureau Press, Beijing.
State Statistical Bureau (2001) China Statistical Yearbook on Construction, State Statistic Bureau
Press, Beijing.
Statistics Bureau/Statistical Research and Training Institute (2002) Japan Statistical Yearbook,
Tokyo, Ministry of Public Management, Home Affairs, Posts and Telecommunications.
U.S. Census Bureau (2000) 1997 Economic Census: Construction, Economics and Statistics
Administration, U.S. Department of Commerce.
Wang, D. (2004) The Chinese Construction Industry from the Perspective of Industrial
Organization, Dissertation, Northwestern University, Evanston.


APPENDIX

Table A1. Employment Size Distribution of Contractors in the US, 1997
Contractors Value of construction work
Size class

Numbera Percent
age of
total
(%)
Cumulative
percentage
(%)
Value
(million
US$)
Percent
age of
total
(%)
Cumulative
percentage
(%)

Total
employ
ment
(1,000)

Average
employees
per firm
1-4 409,256

62.34
62.34
105,143.
9
12.44 12.44

762.2
1.9
5-9 123,389

18.80
81.14

95,321.2
11.27 23.71

789.9
6.4
10-19 67,093

10.22
91.36
116,063.
8
13.73 37.44

890.5
13.3
20-49 39,806

6.06
97.42
173,513.
9
20.52 57.96

1,179.1
29.6
50-99 10,958

1.67
99.09
124,349.
2
14.71 72.66

741.3
67.6
100-249 4,717

0.72
99.81
125,648.
2
14.86 87.52

688.2
145.9
250-499 914

0.14
99.95

55,121.6
6.52 94.04

306.0
334.8
500-999 242

0.04
99.99

31,044.4
3.67 97.71

160.1
661.7
1000and
over
75

0.01
100.00

19,337.3
2.29 100.00

147.5
1967.1
Total 656,448 100 -
845,543.
6
100 -

5,654.9
8.6

11
Source: U.S. Census Bureau (2000).
a
This is the number of construction establishments in the US. A construction establishment is
defined as a relatively permanent office or other place of business where the usual business
activities related to construction are conducted.















Table A2. Employment Size Distribution of Contractors in the UK, 2000
Contractors Value of construction work
Employ
ment size
class
(employe
es)
Number
of firms
Percentage
of total
(%)
Cumulative
percentage
(%)
Value
(million
)
Percentage
of total
(%)
Cumulative
percentage
(%)

Total
employ
ment
(1,000)

Average
employees
per firm
1 87,712 53.67 53.67 1,415.
4
10.10 10.10 185.9 2.1
2-3 48,773 29.84 83.51 1,798.
8
12.84 22.94 142.8 2.9
4-7 16,584 10.15 93.66 1,281.
4
9.15 32.09 116.0 7.0
8-13 3,790 2.32 95.98 604.9 4.32 36.41 45.3 12.0
14-24 3,104 1.90 97.88 881.5 6.29 42.70 65.7 21.2
25-34 3,201 0.73 98.62 767.3 5.48 48.17 40.2 33.5
35-59 1,109 0.68 99.29 1,080.
8
7.71 55.89 53.7 48.4
60-79 364 0.22 99.52 618.5 4.41 60.30 28.1 77.2
80-114 271 0.17 99.68 693.9 4.95 65.26 29.2 107.7
115-299 341 0.21 99.89 1,503.5 10.73 75.99 68.8 201.8
300-599 91 0.06 99.95 960.7 6.86 82.85 43.9 482.4
600-1199 51 0.03 99.98 1,280.0 9.14 91.98 50.4 988.2
1200and
over
35 0.02 100.00 1,123.3 8.02 100.00 76.0 2171.4
Total 163,426 100 - 14,010.
1
100 - 945.9 5.8

12
Source: Department of Trade and Industry (2001).

Table A3. Employment Size Distribution of Contractors in J apan, 1996
Contractors
Employment size class
(employees)
Number
a
Percentage
of total
(%)
Cumulative
percentage
(%)

Total employment
(1,000)

Average
employees
per firm
1-4 321,044 49.59 49.59 742 2.3
5-9 166,814 25.77 75.36 1,104 6.6
10-19 100,517 15.53 90.89 1,336 13.3
20-29 29,092 4.49 95.38 688 23.6
30-49 18,163 2.81 98.19 676 37.2
50-99 8,524 1.32 99.51 566 66.4
100-199 2,375 0.37 99.87 315 132.6
200-299 425 0.07 99.94 102 240.0
300and over 402 0.06 100 247 614.4
Total 647,356 100 - 5,774 8.9
Source: Statistics Bureau/Statistical Research and Training Institute (2002).
a
This is the number of construction establishments in J apan.

Table A4. Size Distribution of Construction Corporations by Registration Capital in J apan, 1997
Contractors Value of construction work
Registration
capital
(thousand yen)
Number
of firms
Percentage
of total
(%)
Cumulative
percentage
(%)
Value
(million yen)
Percentage of
total
(%)
Cumulative
percentage
(%)
0-1,999 480 0.25 0.25 45,363 0.04 0.04
2,000-4,999 50,373 26.21 26.46 4,396,634 3.95 3.99
5,000-9,999 29,291 15.24 41.70 3,509,546 3.15 7.14
10,000-29,999 93,360 48.58 90.28 31,924,117 28.66 35.8
30,000-49,999 13,007 6.77 97.05 13,315,380 11.95 47.76
50,000-99,999 4,068 2.12 99.16 10,925,066 9.81 57.56
100,000-
999,999
1,315 0.68 99.85 13,736,942 12.33 69.90
1,000,000-
4,999,999
183 0.10 99.94 8,319,941 7.47 77.37
5,000,000and
over
111 0.06 100
25,209,676
22.63 100
Total 192,188 100 - 111,382,665 100 -
Source: Statistics Bureau/Statistical Research and Training Institute (2002).