Changing the rules of engagement on infrastructure

Chinese companies blaze new trail in Ethiopia, taking on more projects

Big-ticket infrastructure projects have often been the preferred calling card for Chinese companies in overseas markets such as Africa. But with Africa entering a new round of development, many Chinese companies are changing tack and looking to participate in more developmental and societal projects.

Although there are roads, bridges, railway lines and various other government buildings that stand testimony to the Chinese capabilities, companies are now gearing up to participate in projects such as urban facilities, modern transportation and manufacturing.

Sun Guoqiang, general manager of CGC Overseas Construction Group, a Chinese construction major that has been in Ethiopia for more than 15 years, says that although there are still plenty of construction projects in Africa, his company will move away from the business in five to 10 years.

"We will focus on projects in areas such as manufacturing and agriculture and leave the construction business to local companies," he says.

The company has a sizable presence in well drilling and road construction businesses in Ethiopia. Its other main areas of operation include water supply and wind power projects.

"We cannot always focus on construction work, because it is the lower rung of the industrial ladder," Sun says. "Take the case of China itself. Thirty years ago, most of the big infrastructure projects were built by foreign companies, but that is something you rarely see nowadays."

The real endeavor for the CGC Overseas Construction Group is to participate in projects that boost local employment and local communities in Africa. Water supply and wind power projects are examples of this extended involvement, Sun says.

Talking about the water supply projects, Sun says that the company has moved from just drilling wells in rural areas for farmers to executing complex urban water supply projects.

According to Sun, the Chinese company has built more than 60 percent of the $200 million water supply system project for Addis Ababa. The Ethiopian government, the World Bank and the Export-Import Bank of China have jointly financed the project.

In the road and bridge construction sector, the company has played a big role in boosting local employment. It employs around 300 Chinese workers and more than 5,000 local workers.

Dwelling further on this line of business Sun says that 10 years ago the capital city had only 700 kilometers of proper roads. Now it has 1,400 km.