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Business / Industries

Building on success in overseas markets

By Wei Tian (China Daily) Updated: 2014-07-18 07:17

"Our primary overseas market, however, will be Europe. I will retrieve the reputation of Chinese companies which was thrown away by State-owned enterprises," Yan said, adding that "the ultimate goal of Pacific Construction is to construct across the Pacific Ocean".

Building projects in overseas markets is not that easy as it seems, said a top official of a Pacific Construction project team on condition of anonymity. "There are completely different set of rules and very tough supervision, especially in the European market. It is also the reason why the bigger SOEs could not establish their presence," he said.

One example often mentioned as Chinese companies' failure in overseas infrastructure market is the A2 Highway project connecting Berlin and Warsaw. Three Chinese SOEs won the bid with a low price but eventually dropped out due to miscalculated costs, which resulted in a $271 million compensation claim and a three-year ban on their bidding for projects in Poland.

However, the failure of the SOEs has not deterred entrepreneurs like Yan. Experiences in the domestic market have shown that SOEs are not necessarily a match for Pacific Construction when it comes to building roads and bridges.

One of Yan's favorite stories was how he pulled off his very first infrastructure project.

After his career as a school teacher and manager of small SOEs, Yan formed his own company in 1995. His first contract was a subcontracted highway project from the Nanjing government, for just 300,000 yuan ($48,340). Even so, Yan found that his company would suffer a loss of 50,000 yuan if it built the project as per budget, or lose 80,000 yuan if it decided to use advanced technologies.

"If we're doomed to lose money, we might as well lose more," Yan said. It later became his most-repeated quote.

Having delivered the project in high standard and in half the stipulated time, Yan's 80,000-yuan losses soon turned into a profit of 8 million yuan, as the officials started awarding him more projects.

Building on success in overseas markets Building on success in overseas markets
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