Banks, companies need to cooperate to go global

A reasonable and sustainable banking model

Xu said his company won’t go to the United States or Europe as these regions do not need construction companies. He added that his company mainly invests in Asia, Africa and South America, where infrastructure is inadequate for local people.

However, underdeveloped countries not only lack infrastructure, but also capital.

“It’s quite necessary for Chinese banks and companies to cooperate when investing overseas.”

He suggested that the government grant banks more discretion so that they can give higher credit lines when they feel necessary. He added that China should lower interest rates, following the example of some other countries that allow banks to loan to companies investing overseas at interest rates three percentage points lower than Chinese banks.

The earlier, the better

He said the earlier companies go overseas, the more advantages they will have.

By the end of 2012, China Tiesiju Civil Engineering Group had projects under construction in seven countries including Ethiopia, Angola, Mauritania, Venezuela, Ecuador, Oman and Nepal, with a total contract value of $4.9 billion.

Xu’s company undertook a railway line renovation project in western Venezuela in 2004 and got the chance to build a railway in the country’s northern plains six years later.

The company finished construction and decoration of 424 buildings in Angola on Oct 31, 2012, passing all inspections. As a result, Angolan President Jose Eduardo met Xu twice and thanked him for bringing high-quality housing to his people.

He believes that if a company enters an overseas market early, it can gain recognition initially with a single good project. In this way, the enterprise can learn more about the country and its people and gradually create a strong foothold. If it company arrives too late, it will meet head-on competition similar to China’s domestic environment.

Going global helps restructuring

Xu said overseas revenue accounts for a quarter of its entire revenue and will quickly account for one-third in the future.

He said the company’s core business, construction, will account for another third. Investment business related to construction will comprise the final third, resulting in a reasonable and balanced corporate structure.