The private sector is an indispensable force for upholding and developing socialism with Chinese characteristics, playing a vital role in advancing China’s socialist market economy. In the new era, as we embark on a new journey and strive for new achievements, the state has, in recent years, successively introduced policies, initiatives, and measures to optimize the business environment for the private sector and foster its growth and strengthening, sending a strong signal of commitment to making the private economy bigger, better, and more robust.

Adhere to the “Three Nos” and the “Four Musts.”

A Brief Discussion on the Survival Strategies of Private Construction Enterprises

Over the past four decades of reform and opening-up, private construction enterprises in our country have grown from scratch to become a rapidly expanding and indispensable pillar of China’s construction sector. At the same time, these enterprises have achieved robust development of their own, making significant contributions to urban and rural development nationwide.

However, in recent years, under the influence of various factors, private construction firms have faced significant challenges: their order volumes have shrunk year after year, project profit margins have steadily eroded—often to the point of virtually disappearing—while project risks have risen sharply. Consequently, the author believes that, for many private construction companies today, the top priority and most pressing task is to find ways to survive, to keep operating, and to bide their time until conditions improve. To summarize, the author would like to emphasize three “no’s” and four “musts.”

Let me first talk about three “no’s.”

One “no”: Not seeking size, but seeking strength.

We know that the macroeconomy evolves in a wave-like pattern. At the peak of the cycle, it’s possible to aim for greater scale. To use an analogy, if someone can carry 100 jin, you might try asking them to take 120 jin at that moment. But during an economic trough, the priority should not be size; instead, focus on strengthening resilience. For that same person who can carry 100 jin, it’s sufficient to have them carry 80 jin—never push them to 100 jin, and certainly don’t force them to handle 120 jin. Leave room for maneuver and maintain a reserve capacity.

Therefore, at this juncture, private construction firms should conduct a self-assessment to determine whether their current capabilities and resources are aligned with the scale and scope of their business. If they are not, adjustments must be made promptly—indeed, the sooner and more decisively, the better. In my view, most companies today likely find themselves out of alignment, because even if they were previously well‑matched, the external environment has undergone substantial changes. Such shifts in the external landscape inevitably trigger corresponding changes within the organization, potentially rendering the firm’s size and capabilities mismatched.

Generally speaking, during cyclical economic downturns, we should scale down our operations, with survival as our primary objective.

The second “no”: Don’t strive for perfection—aim for specialization.

Excessive diversification and overly long industrial chains are common characteristics of China’s private construction firms today. These traits stem from the expansionary impulses of entrepreneurs during previous economic booms, but they have now become ill‑suited to the current environment. For small and medium‑sized enterprises, specialization is the key to success—this is both a fundamental principle and a requirement of the present macroeconomic context, one that we cannot afford to ignore.

We must resolutely divest or shut down those businesses that are unprofitable or have extremely low returns on investment; if they can’t be sold, we’ll close them. We’ll streamline the company’s operations, focusing exclusively on revenue‑generating, positive‑cash‑flow‑producing, and high‑return‑on‑investment lines of business. By retaining only cash‑flow‑positive operations and elevating them to our core business, we will transform the company into a highly specialized enterprise—specialization is key. The more focused we are, the stronger our competitive edge, the greater our resilience, and the more profitable we become.

I would also like to emphasize that if your company encounters difficulties in a particular business line—such as incurring substantial losses—it is advisable not to attempt to bail out that struggling unit by siphoning cash from other operations. Doing so could backfire: the troubled business may fail to recover, while the entire enterprise risks being dragged into an even deeper quagmire.

Three “no’s”: seeking profit rather than fame.

Reputation brings profit; only with a good name can one reap benefits, gain respect, and find entrepreneurship truly rewarding—this is a fairly common mindset among entrepreneurs. But at this juncture, I would advise everyone to set aside the pursuit of fame—for now, at least—to some extent, and instead prioritize making money, channeling your energy into generating revenue and maximizing profits.

Let me elaborate on the four “musts.”

One “must”: Seek efficiency through technology.

This may be a bit of an old cliché. In good times, you could make money even without technology, but today, if your company possesses a unique technological edge, it can help you survive.

It is an undeniable fact that, in terms of technology, private‑sector construction firms lag far behind their state‑owned counterparts. The reasons for this situation are multifaceted. Consequently, it is unrealistic for private enterprises to attempt to match the technological prowess of central and state‑owned enterprises head‑on. However, I believe that, through dedicated effort, private firms can indeed develop a highly specialized, albeit very niche, technological capability—no matter how small or unique it may be. Once such a distinctive, finely honed skill is mastered, a private firm can establish a unique competitive edge, one that may deliver unexpected advantages and substantial benefits.

Two “Musts”: Achieve Efficiency Through Management

This, too, sounds like a well-worn cliché. Likewise, when times are good, even somewhat sloppy management can still enable a company to turn a profit and grow. But now that conditions have turned sour, such lax management has become a death knell.

Due to historical reasons, private construction firms generally fall far short of the required level of management sophistication; both at the corporate and project levels, management remains rudimentary. Many managers of small and medium-sized enterprises tend to feel daunted by the prospect of achieving finer‑grained management. In reality, inadequate precision in management often stems from insufficient dedication; and that lack of focus, in turn, usually arises from a diffuse allocation of resources—meaning the firm’s overall capabilities are weaker than what its industry demands, leaving little energy for meticulous, focused efforts. As a result, management ends up being coarse and superficial. Therefore, by pulling back the front lines, concentrating talent, and first honing and deepening operations before expanding outward, management will naturally become more refined and precise.

Three “Musts”: Drive Performance Through Reputation

Having spent more than thirty years in management, one of my key insights is this: the tougher the times, the more crucial it is to safeguard your company’s reputation. In such moments, you can’t predict where or how many problems will arise, nor can you gauge their severity. A strong reputation can make all the difference in addressing and resolving those challenges. Sometimes, to protect that reputation, it’s worth making a small sacrifice—so long as it helps preserve your standing.

Four “Musts”: Seek Benefits from Culture

Some may disagree with this view, arguing, “With companies already facing such severe challenges—uncertain even about how long they can survive—what’s the point of talking about culture?” Yet my experience and perspective suggest just the opposite: the tougher the times, the more crucial it is to emphasize culture. If you’ve visited Jinggangshan, Yan’an, or Xibei Po, you’ll likely share this view.

The more challenging times a company faces, the more it needs to unite its people, foster a strong sense of belonging and loyalty among employees, and nurture confidence—more precious than gold. Above all, it must remain steadfast in its core values, all of which rely on a robust corporate culture for support.

One more thing: please ensure that Party-building work is carried out effectively. In private enterprises, Party-building is truly a treasure!

Finally, it is crucial to emphasize that “cash is king.”

At this juncture, maintaining a healthy cash reserve is paramount. We must do everything possible to safeguard a cash cushion for the company—this is the lifeline that will see us through tough times, and the “green mountains” that ensure we have fuel to keep going in the days ahead.

We must minimize accounts receivable and strive to bring every last penny home; businesses that generate profits but rely heavily on receivables should be avoided. We should minimize—or eliminate—any activities that fail to generate cash flow. Some things, as long as we’re still here, will present plenty of opportunities down the road.

When the fields yielded no crops, our family still had surplus grain; when the land was frozen and covered in snow, we still had enough money to buy each member of the household a warm cotton coat; and when spring returned, we still had funds to purchase seeds and fertilizer.

Let us remain steadfast and focus on doing our best in the present! (Source: Architectural Times, Mao Chenyang)