What Do Chinese Enterprises Bring to the World?

By staff reporter AN XINZHU

THE 6th International Infrastructure Investment and Construction Forum （IIICF）， co-organized by China International Contractors Association and Macao Economic Services， opened in Macao on June 4， 2015. The two-day forum aimed at providing an international platform to exchange ideas， provide information， discover opportunities， and seek cooperation.

The contribution that Chinese enterprises have made to the world was highly commended by statesmen and international financing institutions at the forum， particularly when the topic focused on Chinas globalization in the field of infrastructure investment.

National Projects Cooperating with China

“The Asian Infrastructure Investment Bank （AIIB） is soildly supported by the Chinese government. China attaches great importance to infrastructure connectivity when launching special loan projects， which is in my eyes a timely solution，” said Lim Sidenine， secretary of the State Ministry of Public Works and Transport of Cambodia. Lim expects Cambodia to cooperate with Chinese engineering companies and so increase production values.

Minister of Mines， Energy， and Water Development of Zambia Christopher Yaluma praised the time-honored coop- eration between China and Zambia. “In the 1970s， China assisted the construction of the Tanzania-Zambia Railway，”the minister said. The railway runs over 1，700 kilometers. Although it has endured nearly four decades of exposure to the elements， this railway is still a major line linking the two countries.

According to Yaluma， infrastructure construction has been set as the key priority in Zambia since 2011. At present， this sector contributes 56.5 percent of the countrys GDP. In 2012， the Link Zambia 8000 project was launched， aiming at facilitating economic exchanges between the southern part of the country and other African countries via road construction. The first and second stages are expected to be completed in eight years.

“The project is budgeted at US $5.6 billion. But we are faced with a big financial challenge，” the minister said. So the Chinese government is lending a hand again. “Ninety-five percent of the projects contractors are Chinese companies and most proportions of the capital come from the Export-Import Bank of China. Now， we are working closely with Chinese contractors，” the minister said.

Chinese enterprises have undertaken a good number of infrastructure projects in Africa， which have boosted local socio-economic development. In 2014， China and African countries signed new contracts valued at US $75 billion， US$53 billion of which have been achieved. In the next period， China will build partnerships with African countries in transnational and transregional infrastructure constructions.

“China has invested far more than any other country in infrastructure constructions，” said Hans Schulz， vice president for the Private Sector and Non-Sovereign Guaranteed Operation of the Inter-American Development Bank， “We have seen that Chinese engineering and construction companies have been enhanced with the capabilities to undertake global infrastructure projects.” For instance， China has a good partnership with Latin American and Caribbean states. Since 2010， it has become the second largest destination of Latin Americas exports. At the same time， it is an important trading partner of Latin America.

Angie Toral Hidalgo， Ecuadors coordinating minister for strategic sectors， raised several power source infrastructure projects that have been launched jointly by China and Ecuador. “Take Coca Codo Sinclair hydroelectric facility for example. Jointly developed with Chinese contractors， this 1，500 MW project is the largest of its kind in our history and is expected to double the countrys generating capacity.”

According to Hidalgo， Ecuador plans to increase the countrys generating capacity to 8，000 MW by 2016. As 90 percent of it will be generated by hydro power， it is estimated to decrease carbon dioxide emissions by seven million tons. She expressed hope that the countrys energy and electric power development will be enhanced by cooperation with China.

The Nestor Kirchner Hydropower Station and the Jorge Saipan Nick Hydropower Station are key projects jointly constructed by China and Argentina. Liscia Sergio from Argentinas Ministry of Federal Planning， Public Investment and Services revealed that with the investment of US $7.4 billion， the generating capacity of the two stations will reach 1，740 MW. It is doubtless the most successful hydropower project in Argentina and will generate about 7，000 job opportunities.

Taking on Responsibilities

When carrying out projects， Chinese enterprises assume their social responsibilities. Vice President of China Metallurgical Group Corporation Xu Xiangchun gave an instance of how one project comprehensively improved local infrastructure.

“It was in 1991 when we started to build a copper and gold mine in Pakistan. The locals lived a tough life – no access to clean water and electricity. Therefore， we first constructed a water treatment plant and a diesel power station in that area. Living conditions were greatly improved. Electric lights replaced oil lamps and drinking water became safe.”

“On top of that， we built a hospital on finding that there were no health care facilities in that area. It not only benefits our Chinese workers， but also the local people. On average， about 1，000 persontimes of locals come to the hospital every year，” Xu continued. “We also encourage the villagers to venture into businesses that are relevant to our project including setting up lime factories and aggregate plants， which can on the one hand provide us with materials， and on the other， generate revenues for them. Moreover， in anticipation of hiring local workers， we built primary schools and vocational schools to train future workers.”

In addition to job opportunities， many countries look forward to the prospect of China providing more technology transfers. “Technology transfer has a deep significance to building our capacity and boosting the countrys economic development，” said Nonofo E. Molefi， minister of Infrastructure， Science and Technology of Botswana， “We hope technology transfer can be one part of infrastructure investments.”

In fact， some Chinese companies have also realized demands of this kind – they can do much more than simply undertake projects.

Du Fei， vice president of China Road and Bridge Corporation， confirmed that his company has sponsored about 200 students from several countries to study in China. They first learn Chinese for one year and study professional knowledge and techniques over the next few years.“Furthermore， we have established laboratories at some of our construction sites abroad and set up experimental bases with local universities that offer engineering programs.”

Chinese enterprises have always attached great importance to construction quality and occupational safety.

In the last two years， Shanghai Construction Group （SCG） assisted Trinidad and Tobago in building a childrens hospital that is the largest and the best in the entire Caribbean. American construction standards were adopted in the project and a top supervision company from the U.S. was invited to the construction site. According to SCGs Vice President Bian Jiajun， the company not only completed the buildings construction， but also provided all its equipment – advanced Nuclear Magnetic Resonance （NMR） apparatus， scalpels， stationery， etc. “Doctors and nurses can simply get down to work once they step in the hospital.”

When China Nonferrous Metal Industrys Foreign Engineering and Construction Co.， Ltd undertook projects in Kazakhstan， it strictly followed high standards relating to occupational safety. P6， the highest level engineering management software used in Western countries， was adopted by the Chinese company in Kazakhstan and is expected to be widely used in all the companys overseas projects.

Responsibility also implies that one must put his/her business in order no matter what. Song Dongsheng， president of Sinohydro Corporation Limited， gave an example in this regard. When the company undertook a hydropower station project in Felou， Mali， the staff experienced the civil war in 2012 and 2013. Though all engineers from Western countries left Mali， Chinese staff stayed and continued working with local workers. “We did not stop the project for one single day. This shows weve taken on our biggest social responsibility.”

Localized Management

“Philanthropy is not the only way to fulfil ones social responsibility. Localization is an alternative，” Sun Ziyu， vice president of China Communications Construction Company Limited， believes. In the past， when venturing in emerging markets abroad， Chinese enterprises usually followed the modes theyve adopted in China. However， they cannot go further in the investment destinations unless localized models are formed. In Latin America， for instance， public goods and infrastructure must fit the local demands. Meanwhile， cooperation with local enterprises and employ- ing locals are encouraged. Localization is an important way to keep Chinas footing in the region.

When Chinas international contractors first entered the global market some 30 years ago， most of them did not have clear targets and depended on random opportunities. But today， the first step of a company going abroad is localization. Chinese entrepreneurs have realized that good localization is a premise of going global. Vice President of Beijing Construction Engineering Group Ma Tieshan pointed out： “Over the decades， production materials for projects abroad were always purchased from China. But this trend is decreasing.” If some materials are not accessible in the regions where the projects are carried out， global procurement is encouraged. “Especially for building materials like doors and windows， we make the best use of local products. Cooperating with local companies guarantees their business in the local market.”

This opinion is shared by Du Fei：“Whether in an investment project or a construction project， for every RMB 100 we invest abroad， 40 percent is spent on local procurement including the salary of local staff.” Du was a project manager in Kenya several years ago. He said at that time， the number of Chinese staff was just ten percent of the whole team.

When talking about localization culture， Ding Zhengguo， head of the Overseas Business Unit of Power Construction Corporation of China， revealed：“We encourage our staff to see the investment destinations as their hometowns. Besides， they are advised to fully communicate with local governments so as to get a better understanding to the market.” In Dings company， localization development is embodied in the companys system and policies. Furthermore， the companys development strategy is closely combined with the infrastructure constructions and economic development plans in the investment destinations.

Ding believes that as business structure transforms， the dimensions of and perspectives on localization must accordingly also change. Entering a market in Africa， or anywhere else， is a strategic process. Instead of engineering contracting as in the past， Chinese companies now integrate fund financing and investing in various business models into their management.

Many Chinese entrepreneurs think even bigger. Wang Hongqian， general manager of China Nonferrous Metal Industrys Foreign Engineering and Construction Co.， Ltd.， raised the question，“Bridges and roads are built. But what do local workers do after the projects are finished and we have left？ We must help those places to achieve sustainable development.” China Nonferrous Metal Industrys Foreign Engineering and Construction Co.， Ltd. is a listed company. Profits generated in the overseas market take up 60 to 70 percent of the companys revenue. Hence， the company strives to achieve mutual benefits and win-win results with its investment destinations.“We are working hard to practice Premier Li Keqiangs proposal of capacity cooperation by innovating conventional contracting modes. For instance， our mining projects now welcome investment in capital， products， exclusive sales， and subcontracting of product management. The subcontractors hire local workers， which will generate job opportunities in the same way as we do.”