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Chinese construction firm entered US mainstream market
www.chinanews.cn 2005-12-08 10:19:35
South Carolina's Nation Ford High School, the first American school built
by a Chinese construction company, was completed and put into use for the
new semester. The school with an area of 30,000 square meters was
undertaken and constructed by China Construction America Inc.
Chinanews, Washington, Nov. 29 (By Yu Donghui) - Bob Volkmann, who has
been working in the US construction industry for much of his life, began
to work for China Construction America, Inc., a division of China State
Construction Engineering Corporation (CSCEC), as vice general manager of
its South Carolina Branch at the age of 56. Asked for the reason he chose
to work in a China-funded company, Bob said he felt this company was
ready for long-term development in the local market and had a good
reputation, and he was willing to share his experience with his new
employer.
When Bob decided to change his job, China Construction America, Inc. just
obtained its first general construction contract in the American
mainstream market - to build the Nation Ford High School in South
Carolina. At present, more than 1,000 American students have moved into
the first school built by a Chinese construction firm. China Construction
America won honor and trust for this project, and the local market began
to open its door to this company, giving it contracts for 7 schools in
the state in three years.
Recalling these, China Construction America vice president Wei Yan felt
like the company has gone through a rebirth of sorts. Initially, the
company had to beg for a contract, but nowadays, it wins one contract
after another. The company has finally secured a foothold in the American
mainstream market.
This year, China Construction America won US$115 million contracts in the
US. As most foreign construction firms felt powerless and frustrated in
face of difficulties in entering the US market, the Wall Street Journal
marveled at the unexpected surge of China Construction America. The paper
wondered how a Chinese construction company could compete with its US
counterparts. Wei believes that for a Chinese construction firm to secure
a foothold in the US, it has to adopt a localization strategy and build
up its reputation as it expands in the mainstream market.
As China's largest construction project contractor in overseas markets,
China Construction America, Inc. ranks 16th among international project
contractors around the world and 7th among global building constructors.
The company's main market used to be Africa and Asia, and its projects in
the US were mainly embassies and consulates and China-funded projects,
including the new Chinese Embassy currently under construction.
The US construction market has an annual business volume of US$1
trillion, the highest in the world. However, this vast market is almost
100% controlled by local construction magnates. Foreign construction
firms are covetous of this big pie but owing to the country's foreign
labor certification and labor laws, they cannot bring their advantage in
labor cost into full play Moreover, it takes a long time to establish a
reputation in the US, and US society is not so open to foreign
construction companies. Therefore, few wholly foreign-funded builders can
keep their footing in the US mainstream market, and collectively they
only have a 0.05% market share.
China Construction America, Inc. has been established for two decades but
only started exploring the US mainstream market five years ago. The
company made the first step in building a factory for Haier Group in
South Carolina. Every inch ahead was paved with thorns. South Carolina is
a traditional base of the textile industry in the US with under-developed
economy and high unemployment rate, which create a perfect breeding
ground for protectionism and xenophobia. China Construction America had
to give up tendering for a contract of building a sanatorium for veterans
of the Vietnam War as a result of protests by some local citizens. Many
also questioned the bidding for the Nation Ford High School construction
project. After the company won the bid, a local newspaper asked
caustically whether it was because Cuba's quote was too high or that
North Korea and Iran were too busy with developing nuclear weapons to
bother fighting for the project.
Bob said, "The only way out was to talk with all opposing parties.
Whatever the company does was for business, and we had only to produce
better performance to trump all these political factors. Luckily we had a
great team."
The team Bob referred to is on its way to becoming "localized." At
present, local employees take up half of the company's management posts.
Local leaders enabled this China-funded company to operate in the mode of
a local company, get acquainted with the rules of the local market in a
short period of time, and establish a network of relationships and
resources. The entire construction team is composed of local people. The
seven projects in South Carolina alone have created about 500 new jobs
for Americans. In the future, the proportion of local employees in the
company's management team will rise to 80%.
After securing a foothold in South Carolina, China Construction America
turns its eyes to New York, New Jersey and Connecticut where it expects
to find more developed local economies and more business opportunities.
Wei revealed that after obtaining the contracts for Marriott Hotel in
Manhattan and subway stations in Brooklyn last year, the company expects
to make greater progress in private projects and infrastructure projects
next year. Right now, the company is preparing for tendering of the
renovation project of Tappan Zee Bridge, a vital communication line north
of New York.
According to plan, China Construction America will strive for US$700
million worth of contracts and US$500 million of revenue by 2010 and
become a top 100 construction company in the US. There are three channels
to realize this goal, namely development and expansion of the company,
infrastructure, and merger and acquisition, each constituting one-third.
By then, Bob will be 63 years old. He said he hopes to work in this
company until he has to retire. Maybe the company will be even more
"American" by that time. However, there is one thing Bob, a golf
enthusiast, likes to "complain." His Chinese partners are professional
and dedicated to their work but are disinterested in golf. Bob laughingly
said that was not American. In the US, many deals are put together on the
putting green.
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