Gyeonggi Province to Crack Down on Construction Industry "Paper Companies" Using Big Data

Province Selects Priority Targets for Investigation of Suspected Unfair Trading Companies
Analysis of Recidivism Rates for Relevant Laws Among Specialized Construction Firms in 31 Cities and Counties
Advancing the Analysis System and Enhancing Soundness in the Construction Industry

Gyeonggi Province announced on May 28 that it has selected priority targets for investigation among specialized construction companies registered in the province's 31 cities and counties, using its big data analysis system (Gyeonggi Data Analysis Portal), as part of an effort to investigate the operation of "unfair trading companies (paper companies)."

Exterior view of Gyeonggi Northern Provincial Government Building. Provided by Gyeonggi Province

This investigation is part of the "Comprehensive Measures to Eradicate Paper Companies in the Construction Industry of Gyeonggi Province," which was established and implemented in 2019, and is being carried out alongside public bidding investigations at provincial and affiliated public institutions.

By last year, on-site inspections had been conducted on 425 suspected companies, uncovering violations at 147 of them. Among these, 36 companies were found to be typical paper companies with no actual offices, and procedures for deregistration and closure were initiated.

Gyeonggi Province's construction industry big data analysis system integrates public data (such as construction company information, administrative disposition history, and contract status on the national procurement system) with private data and applies a machine learning-based random forest classification algorithm. This system comprehensively analyzes the types and frequency of violations by construction companies, details of construction contract awards (changes in revenue), and whether notifications for construction project ledgers have been made.

In particular, this year, the province used "score modeling," which assigns weights to each item by analyzing the recidivism rate for each type of administrative disposition under relevant laws, in order to prioritize companies with high recidivism rates for investigation.

On-site inspections of the companies selected through this process will be conducted simultaneously across all 31 cities and counties in the province starting in June. The results of the investigation will be reflected in the "2025 City and County Comprehensive Evaluation," a key indicator of provincial policy, to encourage active participation by local governments. In addition, the types of violations identified during the on-site inspections will be used to continuously enhance the analysis model.

Kang Sungseub, Director of the Construction Bureau of Gyeonggi Province, stated, "Through this investigation, it will become possible to systematically manage and supervise fraudulent construction companies," adding, "We expect this to make a significant contribution to establishing a sound and transparent culture in the construction industry."