Termites in China’s Construction Industry

August 10th, 2011

My wife recently told me an uncle of hers in Hefei, Anhui Province, is set to make a lot of money constructing a five-story residential building. He and his partners will sell the units on for a total of 50 million RMB, and he’ll pick up 20 million RMB. The fellow has no experience in the construction industry. My wife qualified her story with, “That sounds like too much money to make; the quality of the place can’t be good.”

A friend – an insider in the construction industry in the Yangtze River Delta – has been shedding a bit of light  for me the past few months on the inner-workings of China’s construction industry. My friend – I’ll call him Ralph – has been working for a privately owned, government-invested construction company. As oxymoronic as that sounds, that’s actually how the business is structured. My friend is charged with making sure that money properly passes hands from local government representatives to construction bosses and back again in a dizzying play of guanxi. He is well compensated for his work, which also involves getting groups of workers to work together when they typically just quibble with one another and point fingers when the going gets tough.

Ralph himself finds a colored plastic bag of money on his desk once a week. Business has been good in the city in which the company builds, and he is steadily taking on more responsibility, so the contents of the bag are growing. I’m not really sure if Ralph deposits the money in a bank account or not.

Ralph has four bosses, none of whom do much more than smoke cigarettes in their offices, drink tea with friends who pass buy, and drive home and back to work in their BMWs and Mercedes. Ralph is sure the manager to whom he most directly reports is illiterate. He has to go to great lengths to explain documents and spreadsheets to the boss, who is in his late fifties and filthy rich.

For the most part Ralph – a high-energy, Type-A soul – enjoys the work. He gets to bash heads together to get things done and his bosses like him. The local government likes him, too, because he is good with working with the Western customers the local government enticed to the area and manages their high expectations for transparency, accountability and transparency of operations. Not all Ralph’s challenges involve people, though.

His most recent adventure involved the walls and ceiling of the offices in which he worked literally melting in the torrential rains we’ve been having here in the Yangtze River Delta. I can only suppose the construction company did not mix the cement well enough or did not allow it to set or some other technical reason I have no clue about.

Still, the incident does make one wonder about the rest of the structures the construction industry here in China has built in such a money-soaked frenzy. Just how built-to-last is modern Chinese society?

 

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