eyeing overseas market
Tsuyoshi Ito / Yomiuri Shimbun Staff Writer
an effort to cope with shrinking orders for domestic public
works projects, Japanese general contractors have been looking
overseas to generate the orders necessary to survive.
According to the Japan Federation of Construction Contractors,
54 domestic general contractors that are members of the
federation, received a total of about 700 billion yen in orders
from foreign countries in the first half of fiscal 2006--about
twice as much as for the same period the previous year.
Many of these orders have come from the Middle East, much of the
cost of which is being met with petrodollars, prompting
contractors to set up offices there.
One such project is a 68-story, 360-meter-tall office building
under development in Dubai.
Taisei Corp. began construction of the Almas Tower in 2005. When
completed, the building is expected to be a draw for tourists,
and is one of a number of projects in the United Arab Emirates
aimed at allowing Dubai to diversify into the tourism industry
in an effort to ease its dependence on oil money.
According to the Overseas Construction Association of Japan,
Japanese construction firms received 194.3 billion yen of orders
from the Middle East in fiscal 2005, just behind North America
with 209.3 billion yen, with the rest of Asia securing 630.4
In fiscal 2006, Kajima Corp. and Taisei won a 540 billion yen
order for the construction of a highway in Algeria, while
Shimizu Corp. received a 54 billion yen order for a project to
build a luxury condominium in Dubai.
Japanese construction firms have been eager to establish bases
Taisei's efforts began about four years ago, with the firm
setting up sales offices in India, Russia and Libya as part of
its efforts to increase its presence in the Middle East, North
Africa and Eastern Europe.
Obayashi Corp. established Obayashi Vietnam Corp. in Hanoi in
July 2006 and an office in Dubai.
These moves overseas have been largely spurred by a sharp
decrease in orders for domestic public works projects.
Orders for public works projects peaked at 4.33 trillion yen in
the second half of fiscal 1995, but only reached 971 billion yen
in the first half of fiscal 2006, falling below 1 trillion yen
on a half-year basis for the first time.
However, firms involved in overseas construction ventures are
not immune to risk. Between 1996 and 1999, the Asian currency
crisis halved orders received from overseas by Japanese general
These firms have therefore tried to reduce such risks by
strengthening ties with local contractors to gain a better
understanding of local labor management practices and to make it
easier for them to participate in bidding for projects.
Kanji Hayama, president of Taisei, which has jointly worked on
the Almas Tower project with a local construction firm, said,
"We want to work with other foreign firms on [overseas]
In July 2005, Obayashi, Kajima and a Turkish construction firm
formed a joint venture to construct a new transport system in
But despite some early successes for major Japanese construction
firms abroad, many smaller companies dependent on domestic
public works projects have failed to make a breakthrough
According to the Research Institute of Construction and
Economy's analysis of 41 general contractors' half-year earnings
reports for the fiscal period that ended in September, overseas
success helped the five biggest firms, including Kajima and
Taisei, to increase orders by 4.9 percent from the same period
in 2005, while those for the next five also increased, by 1.3
However, those outside the top 10 all received fewer orders from
overseas compared to the same period the previous year.
The aggressive sales drive overseas by major domestic firms is
expected to further widen the differences between domestic