Five new trends for construction enterprises going global

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When the Mombasa-Nairobi Railway trains built by China roared through the East African savannah and the Jakarta-Bandung High-Speed Railway became the first "Chinese business card" in Southeast Asia with a speed of 350 kilometers per hour, the world is witnessing the epic transformation of China's construction army from "engineering contractors" to "global urban operators". Behind this transformation lies not only the accelerated infrastructure cooperation driven by policies, but also the in-depth support of market migration, business model innovation and technology brand output. Moreover, it is accompanied by a global journey where risks and opportunities coexist.

1. Infrastructure cooperation driven by policies is accelerating

Driven by policies, China's foreign infrastructure cooperation has shown an accelerating trend, and the scale and quality of international cooperation projects have significantly improved. In 2023, the newly signed contract value of China's overseas contracted projects increased by 9.5% year-on-year. Among them, the countries involved in the Belt and Road Initiative accounted for as high as 83.3%, becoming the core growth engine. The international competitiveness of Chinese construction enterprises has continued to increase. Their overseas revenue accounts for 27.5% of the total of the world's TOP 250 international contractors, highlighting the advantages of technology, capital and industrial chain integration. The regional cooperation mechanism has further released its dividends. After the entry into force of the Regional Comprehensive Economic Partnership (RCEP), China's share of the infrastructure market in ASEAN has jumped from 28% in 2018 to 41% in 2023. Landmark projects such as the China-Laos Railway and the Jakarta-Bandung High-Speed Railway in Indonesia have not only achieved transportation interconnection through full industrial chain output, It has further driven the internationalization of technical standards and management experience.

The policy support system provides a strong impetus for the overseas expansion of infrastructure. Policy institutions such as the Export-Import Bank of China have lowered the threshold for enterprises to undertake overseas projects through financing tools such as cross-border guarantees and engineering loans. Meanwhile, the demand for infrastructure in emerging markets is strong. The growth rate in Southeast Asia, the Middle East and Africa reached 4.6%, significantly higher than that in developed markets.

The China International Contractors Association predicts that by 2025, overseas engineering revenue will account for 30% of the industry's total revenue. In the future, as the integrated investment, construction and operation model deepens and the application of green technologies expands, China's infrastructure cooperation will accelerate its transformation towards high-quality development, injecting new impetus into global infrastructure connectivity.

2. The overseas infrastructure map has been established

In the global infrastructure landscape, Southeast Asia, the Middle East and Africa are becoming core growth poles. Chinese engineering enterprises, leveraging their technological, financial and full industrial chain advantages, are deeply integrating into the fields of transportation, new energy and smart cities, shaping a new model of cooperation under the Belt and Road Initiative.

Southeast Asia has seen a continuous release of infrastructure demand, thanks to its demographic dividend and the opportunity of manufacturing transfer. China Railway Construction Corporation has won bids for landmark projects such as the Kayang Hydropower Station in Indonesia and the East Coast Rail Link in Malaysia, promoting regional connectivity. The Hanoi data center cluster jointly built by China Construction Third Engineering Bureau and Huawei (with a cost of over 1.5 billion US dollars) has become a benchmark for digital infrastructure in Southeast Asia. Huawei's "Digital energy + Construction" portfolio has won 8 orders for hyperscale data centers. McKinsey predicts that the digital economic belt in Southeast Asia will create a market worth hundreds of billions of dollars for Chinese enterprises.

Saudi Arabia's "Vision 2030" plans to invest 1.2 trillion US dollars in infrastructure, among which the New Future City (NEOM) will invest 500 billion US dollars to build a zero-carbon city. China Power Construction Corporation, China Railway Construction Corporation and others will undertake key projects such as pile foundations and tunnels. The "Dubai 2040 Plan" of the United Arab Emirates is accelerating green investment. The photovoltaic project contract of PowerChina in ABU Dhabi has reached 755 million US dollars. The demand for energy transition in the Middle East has driven photovoltaic and hydrogen energy to become new growth poles, benefiting technology support enterprises such as Huawei and Sungrow Power Supply simultaneously.

The infrastructure gap in Africa has given rise to a huge market. The third phase of the Eastern Industrial Park in Ethiopia is planned to introduce 200 manufacturing enterprises, driving a demand of 5 billion US dollars for localized construction. The Forum on China-Africa Cooperation has committed to strengthening financial support. Chinese enterprises have been active in the restoration of the Eastern railway Line in Nigeria and renewable energy projects in Egypt. Boston Consulting Group predicts that by 2030, Chinese enterprises will incubate "high-speed rail + industrial new towns" complexes in Africa, driving an economic increment of 3.2 trillion US dollars.

Emerging markets such as Israel and Latin America are accelerating their expansion. Chinese enterprises have set benchmarks in projects like the Light rail in Tel Aviv and the new port in Haifa. Since 2005, the 228 infrastructure projects implemented by China in Latin America have cumulatively provided 721,000 jobs. 

3. Climb to the top of the global value chain

Under the guidance of the "Belt and Road Initiative", Chinese central enterprises have been continuously climbing to the top of the global value chain through clustered resource integration and model innovation. Take the Colombo Port City Project in Sri Lanka led by China Harbour Engineering Company as an example. This project adopts the public-Private Partnership (PPP) model, integrating resources throughout the entire chain from investment and financing, planning, construction to operation and maintenance, to form a cluster advantage covering land reclamation, municipal facility support and land development. The first-phase investment amounts to 1.4 billion US dollars. It is expected to drive secondary development of over 13 billion US dollars and create more than 400,000 jobs, becoming a flagship project of the Belt and Road Initiative jointly built by China and Sri Lanka. The localization rate of the Colombo Port City project has reached 80%, and it has introduced green design and coral protection technologies, integrating ESG concepts into overseas investment, further highlighting the responsibility and commitment of Chinese enterprises in global governance.

China National Chemical Engineering Corporation has adopted the "T + EPC" comprehensive service model to coordinate design, equipment procurement and construction in projects such as the renovation of the Hachimkent refinery in China, driving Chinese equipment manufacturers to go global in a coordinated manner. Similarly, in its long-term operation at the Port of Piraeus in Greece, China Communications Construction Company (CCCC) has adopted a strategic layout of franchise operation until 2052, achieving a "construction - operation - feedback" closed loop with an annual return rate of over 15%, demonstrating an upgrade from single engineering contracting to high-value-added operation services.

Supply chain collaboration going global has become a new trend. Take CATL's battery factory in Thuringia, Germany as an example. It has driven more than 20 upstream and downstream enterprises such as China Construction Steel Structure and Jinggong Steel Structure to collectively layout, forming a packaged output model of "manufacturing base + industrial park", and achieving an overall leap in the industrial chain. In the Saini wind power project in Croatia, North International innovated the "electricity revenue right pledge" financing model, increasing the proportion of domestic wind turbine exports to 80%, and established a four-dimensional profit system of "investment - construction - operation - trade", breaking through the limitations of traditional engineering contracting.

These practices indicate that China's central enterprises are achieving a leap in the value chain through three major paths: First, they integrate high-end service capabilities such as planning, investment and financing, and operation and maintenance to form advantages in full life cycle management; Second, with Chinese standards and technologies at the core, drive the coordinated overseas expansion of equipment and production capacity. Third, innovate business models and extend from EPC contracting to investment and operation. As "cluster going global" evolves into "system going global", China is transforming from an adaptor to a formulator of international rules, injecting new impetus into the global industrial chain reconstruction.

4. Private enterprises are accelerating their penetration into emerging markets

In recent years, Chinese private enterprises have accelerated their penetration into overseas markets through models such as "borrowing ships to go global" and "localized cooperation", achieving remarkable breakthroughs in the field of international engineering contracting.

Take Nantong City, Jiangsu Province as an example. With its technological strength and government support, local construction enterprises have successfully entered high-end and emerging markets such as Israel, Southeast Asia and Africa. Nantong Daxin Group has passed the global bidding review of the Ministry of Housing and Urban-Rural Development of Israel and obtained the highest G5 construction qualification, becoming an important player in the Middle East market. In 2023, it signed 14 projects with a contract value of 67.35 million US dollars. Suzhong Group has adopted the "industrial chain collaborative overseas expansion" model, cooperating with central enterprises such as China National Petroleum Corporation and China Nuclear Engineering & Construction Corporation, as well as international enterprises. Its business covers Russia, Pakistan, Niger and other places, and it has also invested in building logistics bases overseas, forming a dual-wheel drive of "engineering + investment".

Local governments provide a solid backing for the internationalization of private enterprises through policy guidance and resource integration. The Jiangsu Provincial Construction Industry Association held a foreign economic seminar to promote the "co-construction of industrial chains and coordinated overseas expansion" of enterprises within the province. In 2023, the overseas business volume of Jiangsu's construction industry reached 6.16 billion US dollars, covering over 120 countries and regions. Nantong City has implemented the "Four Ones" project, building a comprehensive service system including financing support, risk prevention and control, and information services. It has also set up overseas economic and trade liaison points to help enterprises expand into markets such as ASEAN and Israel.

5. A new survival rule that transcends cycles

The B3W program led by the United States, with "rule-based competition" and value lines at its core, attempts to restrict the international competitiveness of Chinese enterprises through infrastructure standards, financing terms, etc. The case of 14 Chinese-funded projects being postponed due to the 2022 Sri Lanka debt crisis has exposed the urgency of geopolitical risk assessment.

Under the new normal where global geopolitical risks are intensifying and cyclical fluctuations are intertwined, enterprises need to build "new survival rules that can navigate the cycle" in dimensions such as risk control, in-depth local development, and compliance management.

For instance, the China State Construction Engineering Corporation's new administrative capital project in Egypt successfully resolved cultural conflicts through a 95% localization rate and the training of over 300 local engineers, confirming the inevitability of the transformation from "China Construction" to "local brand". In terms of compliance construction, China Power Construction Corporation has obtained ISO37001 anti-bribery certification and implemented a blockchain evidence storage system to achieve real-time on-chain recording of contract data. This not only meets international auditing requirements but also restores the global credibility of "Chinese standards".

Chinese construction enterprises are reshaping the global infrastructure landscape through comprehensive upgrades in technology, standards and models. From "Built in China" to "Operated in China", and from single projects to full industrial chain output, this process not only promotes the economic development of partner countries but also opens up a blue ocean for sustainable growth for Chinese enterprises. In the future, how to balance risks and opportunities in the complex geopolitical and market environment will become the key for the "Chinese construction Army" to climb to the top of the global value chain.