Rail to connect dreams

Chinese railway builder diversifies, helps other countries accelerate development

Completion of nearly 10,000 homes near Luanda, the capital of Angola, by China Tiesiju Civil Engineering Group Co is serving as a launching pad for even more ambitious projects by the Chinese state-owned enterprise.

The company, founded in 2000 as a railway construction company, completed 9,808 homes that comprise the first phase of a massive social welfare housing project in Cacuaco, a city of Luanda.

They were delivered in May to the property owner, Sonangol Group, an Angolan government-owned company that oversees petroleum and natural gas production. The Chinese company has also built public service buildings and infrastructure including roads.

The project, valued at $800 million, broke ground in 2008 and was the largest among the company's Africa-based projects.

The growth and transformation of CTCE has been nothing short of phenomenal.

In 2000, CTCE employed 29,878 people and had yearly revenue of 4.06 billion yuan ($652 million). By last year, the number of employees had shrunk to 21,444 while yearly revenue had skyrocketed to 51.23 billion yuan.

As a part of the SOE reforms pushed by former premier Zhu Rongji, the company became formally independent from what was then the Ministry of Railways in 2002. It is now part of the state-owned China Railway Group, one of the largest construction companies in the world.

"In recent years, the requirements for admission to the construction industry in China have been lowered, so that many other companies have crowded into the business, leading to significant and steady decreases in profit margins in the Chinese market," says Wang Chuanlin, general manager of CTCE.

The company first decided to branch out from railway construction to multiple fields, including construction-related industries, investment management and logistics. It made a risky but potentially lucrative move jumping into overseas markets.

"There are many construction companies in China, but only a few are competitive enough to survive the fierce competition and the tough conditions overseas," says Shao Gang, the company's deputy general manger.

The company has not only survived but also thrived despite challenging conditions in such countries as Angola, where a 26-year civil war ended only 12 years ago.

By the end of last year, CTCE had 16 overseas projects under construction in seven countries, including Ethiopia, Angola, Mauritania, Venezuela, Oman and Nepal, with contract values adding up to more than $5 billion.

In 2009, CTCE was awarded a massive railway construction project on the northern plains of Venezuela, valued at about $3 billion.

The company now has 378 projects under construction at home and abroad.

The company's overseas challenges have sometimes led it to branch out even more to help meet local needs.

"The African economies enjoy great vitality as well as opportunities. Construction is just a part of the continent's rising economy. To achieve sustainable development in African countries, we plan to contribute more to the countries' industrialization," Shao says.

In Angola, many construction materials had to be shipped from China during the construction of the first phase of the Cacuaco project. Now the company can buy some of the materials it needs from local firms as Angola's light and heavy industries have grown over the past few years.

"We are interested in setting up factories in Angola and other countries." Shao says. "To minimize the market risks, we want to start the operation with construction-related businesses, such as the manufacturing of prefabricated slabs, colored steel tiles and steel structures."

New opportunities also are emerging in the company's original line of business.

In his speech at the African Union Conference Center on May 5, Chinese Premier Li Keqiang expressed the hope that the African capitals could be connected with high-speed rail lines. Shao, who heard the speech, was inspired by Li's perspective.

"Compared with airports, high-speed rail is a better choice, since it features both high speeds and much bigger carrying capacity."

CTCE has built a total of 15,000 kilometers of railway, almost one-seventh of China's total railway length.

"As the only benchmark enterprise under the China Railway Group Limited, CTCE is expected to win more railway construction projects in Africa in the future," Shao says.

zhulixin@chinadaily.com.cn

(China Daily Africa Weekly 06/27/2014 page22)