Building a business flexible and strong

A large Chinese company with years of international experience is finding new ways to prosper in Africa

A major Chinese overseas construction corporation plans to adjust its business plans in Africa to leverage its cooperation as well as investment with local partners.

China State Construction Engineering Corp, one of the largest Chinese construction contractors in Africa, allots much of its resources to the continent.

CSCEC was founded in 1957 as a state company. Early on the country had an international profile, building heavy industry and infrastructure in Asia, Africa and the Middle East, according to its website.

Now faced with national and global competition, China Construction officials say they feel a need to modify their business in Africa from building only residential and other structures to getting more involved in infrastructure projects. 

A look at the past three decades shows that Chinese companies' decisions have enabled them to develop a reputation for endurance, accountability and persistence while befriending the people of Africa through the houses, roads and trust they built. But they still have to adapt to present-day circumstances, says Li Jiqin, managing director of the company's overseas operations.

China Construction now has 24 overseas branches in Africa, including its oldest, in Algeria. Last year, China Construction Algeria signed contracts worth $1.63 billion, one third of its total in Africa, and had revenues of $1.13 billion in the country, half of its revenues for the entire continent.

While it is known for residential projects, China Construction Algeria has worked on other important projects, such as the massive Houari Boumediene Airport serving Algiers. It also is building the Great Mosque of Algiers, with a completion date of September 2015.

The mosque project, worth $1.5 billion, is a building of political, religious and cultural importance. "We feel that it reveals to us the trust that has come from the Algerian government," says Luo Bin, general manager assistant of the Algeria branch of China Construction, and general manager of the domestic business department.

But the business environment has changed exponentially in the past few years. In its early stages, the company was set up to complete foreign aid projects assigned to them. When the country was submerged in domestic turmoil in the 1990s, China Construction Algeria was the only foreign company that stayed in the country and finished their residential building projects, company officials say. 

At the current development stage, African countries are working to attract investment projects beyond construction. This presents challenges to companies working there, both internal and external.

China Construction and its African partners, working together on projects in construction, investment and management, often need three to five years to fully adapt to the pace and style of each other, company officials say.

There is competition, too. "It is an age of investment in the continent, the performance of the other companies reveals that China Construction has to catch up with them," Li says.

China Construction also competes with about 40 Chinese companies, state-owned or private.

For the coming year, China Construction plans to put 30 percent of its resources into the African infrastructure programs, an area many Chinese companies are now targeting. The shift in their investment direction also is evident in their business style. The first of many projects is a cement plant that will be a joint venture with other companies. No detailed plans have been revealed. 

Still, even as they adapt, new challenges arise. Rising labor costs and lower bids placed by competitors make life tougher for China Construct Algeria, even in a country they once considered their home turf.

"We once had a privileged reputation due to our consistent quality and responsibility in conducting projects even in difficult environments," says Luo.

China Construction Algeria employs 13,000 Chinese and 5,000 local workers and collaborates with 300 local companies in Algeria. Language barriers and the unfamiliar work customs and habits of local workers are two obstacles for Chinese companies seeking to use more African human resources.

The company's prospects rose when the country's current president, Abdelaziz Bouteflika, assumed office in 1999. China Construction won the contract to build the first five-star hotel in the country, a Sheraton, specially for the 35th annual conference for the Organization of African Unity. It has since become an Algiers landmark.

While some countries in the continent have adopted Chinese construction standards, used for many foreign aid programs, Algeria has not. North Africa has been heavily influenced by Europe for a very long time, and many countries in that area have adopted European standards.

China Construction has tackled that challenge by outsourcing and cooperating with European suppliers and operators. During the engineering, procurement and construction of many projects, China Construction now serves as a leader of an international team to finish the whole project.

The company has continued to grow, and since 2012, it has four marketing centers on the continent, expanding its business to Central and West Africa.

"In the long run, Africa will still remain the major market that Chinese construction companies will be attracted to," Li says.

zhangyuchen@chinadaily.com.cn