From the early days of sending construction workers to earn labor fees on construction sites, to construction subcontracting, general construction contracting, and then to integrated contracting covering survey and design, procurement, and services, in recent years Chinese overseas contracting enterprises have begun shifting to models combining engineering with investment, financing, and integrated development. China's overseas project contracting is gradually moving from low-end to high-end. Facing hundreds of billions of dollars in global infrastructure opportunities, Chinese enterprises encounter huge opportunities but also tests and risks such as low internationalization levels, infrastructure contracting barriers, and regime changes.

Internationalization Level Needs Improvement

Chen Runyun, Commercial Counselor of the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce, said in an interview with reporters that compared with the world's top contracting companies, Chinese contractors still have some gaps overall, such as in internationalization, market operations, talent reserves, as well as financial product services and legal aspects. Chinese contractors can appropriately participate in equity investment to gradually achieve transformation and upgrading.

The equipment manufacturing industry, which has grown alongside overseas contracting projects, also faces internationalization issues. Liu Weizhong, assistant to the chairman of Zoomlion, told reporters that currently the equipment manufacturing industry still has gaps in after-sales service; cooperation forms are also relatively single and cannot yet provide some modern trade services. Next, the company will launch two new business models: localized leasing and globalized financial services, to reduce costs.

Infrastructure Contracting Barriers Become the Biggest Obstacle

In the view of Chen Guocai, vice president of China State Construction Engineering Corp., enterprises still face many barrier-type difficulties in expanding markets. For example, South America is one of the regions with weaker infrastructure in the world. Due to years of inflation and regime changes, infrastructure debt is too large, but due to reasons such as imperfect laws, it is hard to say whether such a huge market can become an opportunity for Chinese enterprises. This requires detailed research on local taxation and other aspects before market development.

In developed countries, overseas contracting enterprises also face "barrier" issues. Zhang Jianping, director of the International Economic Cooperation Office of the Macroeconomic Research Institute under the National Development and Reform Commission, said that developed countries have stricter laws and regulations and more complex systems, with many requirements for infrastructure. In particular, the European Union recently voiced demands for reciprocal openness in government procurement and other areas, while China has not yet opened its government procurement to foreign investment, which also brings challenges for Chinese enterprises to develop Europe's infrastructure market.

Regime Change Factors Are Irresistible

The Libyan war that broke out two years ago caused nearly US$20 billion in economic losses to China's 50 large projects in Libya. To this day, the pace of Chinese enterprises returning to Libya remains slow.

In this regard, Chen Guocai believes that regime change and war risks are irresistible factors, and what enterprises can do is to make good assessments before investing or signing contracts. Zhang Jianping also said that overseas contracting in the infrastructure sector should be organically combined with outbound investment, especially in foreign aid, which should be considered comprehensively and adopt a package negotiation mechanism to effectively respond to and prevent related problems.