How going global can go well for firms

China's overseas business is still at its beginning stages, and more effort has been urged to strengthen the enterprises' "soft power" abroad amid the boom of going global.

"Chinese enterprises' going global for overseas investment and project contracting is still in its infancy," Xia Keliang, deputy director of the International Department of China Tiesiju Civil Engineering Group Co Ltd, told China Daily in an exclusive interview.

But, he said, "we are well-developed in 'solid power,' such as technology or labor costs."

Xia added: "As cost advantages are ebbing, we need to enhance our performance on 'soft power,' such as green operation, local laws, cultures, corporate social responsibilities and labor standards. There is a long way to go."

Xia's group is a leading State-owned construction enterprise in China, and overseas business makes up about one-third of the company's total business value.

The company's project-contracting business - including railways, highways, residential housing, and water and power facilities - extends from Angola, Ethiopia and Mauritania in Africa to Venezuela and Ecuador in South America.

Xia estimated that as the global economy undergoes recovery and restructuring, the global construction industry will boom, with an estimated annual growth of about 70 percent before 2020.

The emerging continent of Africa will account for a major share of the increase owing to growing demand for energy exploitation, upgraded transportation networks and better infrastructure facilities.

With the support of the Chinese government and growing business opportunities, an increasing number of Chinese enterprises have gone into overseas business since 2008.

Xia said Chinese enterprises enjoy some advantages - high technology and good management after decades of development; competitive resource costs; and capital leverage supported by the huge foreign exchange reserve - and that these advantages will remain for quite a while.

But they also face challenges from an intensified global market and rising costs.

The price of resources, such as iron, steel, oil and cement, rose markedly in recent years, while labor costs kept increasing, driving up operating costs.

"Faced with China's higher global profile, some countries talk of a 'Chinese threat' and set up barriers to China's bidding on overseas business, which hurt the development of our overseas businesses," Xia said, while noting that unstable conditions in some regions also stacked the odds.  

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