Overseas boom for builders

Foreign deals see double-digit rise for China's international contractors

Overseas business by Chinese contractors registered double-digit growth in 2012, with the total value of their new contracts reaching $156.5 billion (120.5 billion euros) despite sluggish global market demand, the China International Contractors Association says.

Last year's growth was 4.1 percentage points higher than in 2011.

"Last year, we saw a 10 percent increase in the number of new overseas contracts signed by Chinese international contractors," association spokeswoman Zhang Xiang says, adding that the industry is recovering, thanks to policy stimulus in overseas construction sectors.

By the end of 2012, Chinese construction groups signed overseas deals cumulatively worth $998.2 billion, of which 66.7 percent have been completed, according to the association.

In 2012, China's offshore construction contractors branched out from their traditionally strong sectors of housing construction, transportation and power generation to electronic communications, petrochemicals, water supply and drainage, and mining construction, according to the association.

Nigeria, Angola, Venezuela, and Ethiopia were among the top countries in which Chinese international contractors had significant business growth.

"The African and Asian markets remain the focus of Chinese construction contractors' overseas presence, accounting for 81 percent of their total contracting value last year," Zhang says.

"However, big jumps came from the Latin American and European markets, in which Chinese companies' contracts surged by more than 40 and 50 percent respectively."

Mo Wenhe, general manager of China Harbor Engineering Co Ltd, says: "Latin America is one of our key overseas markets and we are now strengthening our construction standards while accelerating business expansion there."

Mo's company has seen robust business growth in Latin America and the Caribbean since it entered the markets there in 2011, including Venezuela and the Bahamas, where the company's construction projects include bridges, airports, power stations, energy and sewage disposal.

"The eurozone debt crisis has also created opportunities for Chinese enterprises to enter European markets," says the association.

To improve European competitiveness and stimulate its economy, the European Union decided last year to assign 230 million euros ($297 million) as start-up capital to finance infrastructure investment in transportation and energy.

China announced a $10 billion credit plan last year for joint investment projects in infrastructure and technology in eastern Europe.

"However, there is still a big gap between the EU and Chinese construction industries, so it's not easy to expand business in developed markets like the EU," says Zhang from the association.

According to the European Union Chamber of Commerce in China, the European Commission is drawing up legislation limiting the participation of non-EU companies in government purchasing projects.

"If the legislation is passed, Chinese companies will lose the opportunity to build large infrastructure projects in areas including railways and water utilities in the EU," says China State Construction Engineering Corp Chairman Yi Jun.

In 2010, government purchasing projects within the EU open to non-EU enterprises were worth 352 billion euros, accounting for 85 percent of the total market.

"Intensified national and regional political risks, local nationalism and trade protectionism are challenges Chinese international contractors are facing this year," the association says.

During its news conference on Thursday, the association also released its 2012 social responsibility report for Chinese international contractors.

Wu Yue, vice-president of China National Machinery Import and Export Corp, says: "While improving business efficiency abroad, we also attach great importance to the promotion of social benefits in overseas markets through great efforts in environmental protection, providing job opportunities and offering training to local workers."

baochang@chinadaily.com.cn