The Internationalisation of the Japanese Construction Industry: The Rise and Rise of Kumagai Gumi

Abstract

The internationalisation of the Japanese construction industry is inextricably caught up with the rise and rise of one company, Kumagai Gumi. Between 1955 and 1983 it accounted for more than 10% of all contracts awarded to the fifty-seven members of the Overseas Construction Association of Japan, a figure that outranked the ‘Big Five’ domestic giants—Kajima, Ohbayashi, Shimizu, Taisei, and Takenaka Komuten. Any scepticism about the choice of Kumagai Gumi as the international pacesetter should be swept away as it captured more than one-third of all overseas contracts won by Japanese construction contractors in 1985 and 1986. Nevertheless, the discussion of Kumagai Gumi's meteoric rise must be seen against the broader international picture. In 1978, only ten Japanese firms were ranked in the ‘top two-hundred’ construction contractors worldwide—a hierarchy dominated by sixty US contractors. By 1985, thirty-four Japanese firms were ranked in the ‘top two-hundred’ firms—the same number as from the United States. Why had this remarkable change occurred? Conventional answers are sought in terms of economic forces and bureaucratic power. Rather than follow this logic we speculate that changes in the nature of Japanese construction exports are correlated with variations on foreign policy, which in turn reflect changes in the dominant factions within the ruling Liberal Democratic Party—an emphasis in accord with Japanese scholars who suggest that since the early 1970s politicians have wrested control over decisionmaking from the bureaucrats. Consequently, attention is focused on overseas contracts won by construction firms, and by Kumagai Gumi in particular, to gauge if the changes in their distribution reflected marked shifts in foreign policy directions associated with three key prime ministers—Tanaka, Fukuda, and Nakasone.