In recent years, the Chinese real estate market has faced significant changes due to stringent regulations and a slowdown in urbanization. Amid these challenges, a groundbreaking study has shed light on the dynamics of cooperation and competition between Urban Investment and Construction Companies (UICCs) and Real Estate Enterprises (REEs). This research introduces a dual-layer heterogeneous network model to better understand the complex interactions that characterize these relationships under the agent construction system.
With UICCs acquiring over 50% of the national land sold via auctions in 2022, their role has become increasingly prominent. Yet, the actual project commencement rate for these companies has plummeted to a mere 8%. This juxtaposition illustrates the glaring pressure on UICCs, which are grappling with project development and the financial strains that come with it. This study emphasizes the critical need for transformation within the real estate sector to adapt to evolving market needs and pressures.
The agent construction system model has emerged as a viable innovation within this competitive landscape. It allows clients to entrust projects to capable proxies, combining resources for mutual benefit. The collaboration between UICCs and REEs represents a duality; both entities compete for land and profits while also seizing opportunities for cooperative project development. UICCs rely on their strengths in land acquisition and funding, whereas REEs bring specialized project development expertise to the table.
The interplay between competition and cooperation is complex and multidimensional. The study utilizes complex network theory to depict the relationships and strategies of UICCs and REEs, constructing a dual-layer subnetwork for both entities. By simulating various scenarios, the researchers were able to identify how initial cooperation willingness and network connectivity significantly foster cooperative behaviors among these enterprises. The data suggests that REEs are particularly sensitive to changes in cooperation rates, highlighting their nuanced responses to market dynamics.
As the researchers note, "Synergistic enhancements in network connectivity and initial cooperation willingness significantly promote the deep diffusion of cooperative behaviors.” This highlights the critical role of robust networks in fostering collaborative efforts in the competitive landscape. However, the study also identifies a nonlinear relationship between agency fees and project premium rates, showing that REEs exhibit a preference for independent development when brand advantages are in play. This poses a strategic challenge for UICCs in retaining collaborative alliances.
By applying prospect theory (PT) and mental accounting (MA), the research demonstrates how psychological factors influence decision-making, particularly in uncertain environments. These theories provide insight into the behaviors of UICCs and REEs in navigating risks associated with competition and cooperation. The findings emphasize that UICCs often have lower risk preferences, focusing more on long-term stability owing to government backing, while REEs prioritize profitability and market responsiveness, displaying higher aversion to risk.
This innovative approach to understanding the coopetition between UICCs and REEs contributes valuable insights to the existing literature. It not only helps clarify the intricacies of corporate decision-making but also provides practical implications for improving policies in the real estate sector. The research underlines the importance of optimizing asset structures and innovating business models to discover new growth areas amid regulatory and market pressures.
In summary, the interplay of cooperation and competition between UICCs and REEs reveals essential dynamics for navigating the contemporary real estate landscape in China. The findings underscore the necessity of collaborative frameworks to encourage beneficial partnerships that can alleviate the pressure both entities face. As the study concludes, adjusting cooperation strategies based on initial willingness among firms and enhancing network connectivity will be pivotal in securing a successful path forward.