Call on banks to help with firms' foray overseas

The head of one of the country's top civil engineering groups has urged closer cooperation between the corporate sector and banks in exploring overseas markets.

Xu Baocheng, general manager of China Tiesiju Civil Engineering Group and a deputy to the 12th National People's Congress, the country's top legislature, said a lack of future projects for domestic construction companies had led to harsher competition within the industry, putting even great emphasis on winning international projects.

China finished the construction of 85,000 kilometers of highway in 2011, and will have 120,000 kilometers of railway by 2015.

Construction-related industries such as steel and cement are also being hit hard due to overcapacity.

"There will be no way out if they do not go global," Xu told China Daily on the sidelines of the annual session of the NPC.

"If they go overseas, they will bring related companies and other contractors along with them."

In January, China's central bank and foreign exchange regulator announced the establishment of an office to handle loans backed by the country's $3.31 trillion in foreign reserves, in a move designed to allow more overseas expansion by domestic financial institutions.

Xu said his company is mainly involved in infrastructure projects in Asia, Africa and South America, but many projects in such underdeveloped markets lack the necessary financing.

He said it would be ideal for Chinese banks and companies to cooperate on overseas project investment.

He urged the government to allow banks to lend to companies involved in overseas projects, at lower rates of interest. In some countries, he said, companies can gain funding at rates up to 3 percent lower.

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

By the end of 2012, China Tiesiju had projects under construction in seven countries - Ethiopia, Angola, Mauritania, Venezuela, Ecuador, Oman and Nepal - valued at $4.9 billion.

It undertook a railway line renovation project in western Venezuela in 2004, and built a railway in the country's northern plains six years later.

It completed the construction of 424 buildings in Angola in October last year.

He added that timing is crucial in overseas work, especially in developing economies.

If a company gains access to an overseas market in its early stages of development, it can quickly gain a strong foothold.

But if a company arrives too late, it is likely to meet strong competition, similar to China's domestic environment at present.

Xu said overseas business accounts for a quarter of China Tiesiju's revenues, and is expected to account for one-third in the near future.

He said its core business, construction, will account for a third, and investment the final third, resulting in a balanced corporate structure.

Song Jingli and Ma Chenguang contributed to this story

lixin@chinadaily.com.cn