With contracts such as the US$18.2bn HK airport expansion and the $US2.8bn Pakistani Motorway, Aconex is already heavily involved in the OBOR.
This is a great article from the Wall Street Journal/Australian- and very timely given China's announcement over the weekend of dramatically increasing the spend on the initiative. I have added the Pakistani Motorway image below the article's title.
Western firms bet big on One Belt, One Road
Aconex supported US$2.8bn Pakistan Motorway project
NINA TRENTMANN
The Wall Street Journal
12:00AM May 16, 2017
China’s One Belt, One Road infrastructure project presents giant business opportunities for Western companies — if they already have deep ties in China and the region.
With more than $US900 billion ($1.31 trillion) expected to be invested in roads, ports, pipelines and other infrastructure as part of the project, which spans countries in Asia, Africa and Europe, there is some opposition to China’s heavy-handedness in choosing contractors and suppliers.
At a high-level summit promoting the project, China’s President Xi Jinping on Sunday portrayed the country as a committed free trader and pledged more than $US100bn in new financing and assistance. The project, launched in 2013, is based on updating the ancient Silk Road that linked China to Central Asia, Africa, the Middle East and Europe and is intended to better connect China to its exports markets.
The summit in Beijing is also expected to open up new avenues for Western companies searching for growth opportunities outside their home markets.
Multinationals such as Honeywell International, General Electric and Caterpillar are moving forward with plans to participate in One Belt, One Road. These companies have well-established relationships in Beijing and are poised to benefit.
“OBOR fell in our lap, as a perfect serendipity,” said Shane Tedjarati, president of Honeywell’s regions business. The company generated a “significant amount” of money with OBOR-related projects, Mr Tedjarati said.
US companies could use the business. The percentage of sales outside the US by S&P 500 companies was 44.3 per cent in 2015, the most recent data available, down from 47.8 per cent the year before and an average of 46 per cent from 2009 to 2013. Asian sales fell to 6.77 per cent in 2015, from 7.8 per cent in 2014, according to S&P Dow Jones Indices.
Experience in markets outside China is an advantage for international companies. While Chinese firms may be the main contractors for projects such as port installations or bridges, they will end up subcontracting to other, often times Western, companies with experience integrating technology across borders, Western firms and experts say.
That expertise combined with strong China relationships is key for Western companies looking to get involved in One Belt. Being able to develop a single, unified network to operate everything from trains, shipping logistics to toll roads is an advantage.
“We are on the ground in almost all of the Belt and Road countries, with local knowledge and understanding, as well as access to technology and deep domain expertise,” said John Rice, president and CEO of GE’s global growth and operations unit.
Since the project spanned multiple countries across several continents, Chinese companies may not be able to provide integrated services, such as distributed control systems for industrial plants across all One Belt, One Road regions, said Mr Tedjarati.
“We can then say ‘Do you know we can also service you in Kenya and in Kazakhstan?’,” he said. Honeywell would take on that work. China sales accounted for about 6 per cent, $US2.4bn, of Honeywell’s revenue in 2016.
China’s total value of trade with participating countries reached $US953.6bn last year, according to the Belt and Road Portal, a website operated by the Chinese government.
Caterpillar is present in more than 20 OBOR countries. “We have learnt that these projects are increasingly demanding in terms of timely delivery, quick response, 24-hours technical support and smooth communication,” said Qihua Chen, country manager of Caterpillar in China.
Siemens, for example, has a competitive advantage because of its longstanding presence in China and technical experience with various electricity and track standards so that it can operate its trains across several countries, said Muslum Yakisan, head of commuter and regional trains.
Financing, however, still works in favour of Chinese, not Western companies, some firms say. Industrial and Commercial Bank of China, the world’s largest bank by assets, said it made lending to Chinese firms a priority, as many of these were already existing customers.
“We can offer better deals than our Western competitors,” said Xiao Lu, head of corporate banking at ICBC in London.
------------------------------------------------------------------------------------------------------------- This post is based on my own research and is not investment advice. When making investment decisions, always DYOR.
