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Business
A Grand Blueprint
PowerChina pushes forward globalization
 NO. 28 JULY 13, 2017
The Port Qasim Coal Fired Power Plant Project in Pakistan (COURTESY PHOTO) 
 

Power Construction Corporation of China (PowerChina) on May 23 opened its Eurasia headquarters in Istanbul, Turkey. One of China's leading state-owned enterprises, PowerChina has core technology capabilities in the sectors of energy and power, infrastructure, water resources and environment. In 2016, PowerChina ranked 200th in the Fortune World Top 500, with corporate assets totaling $92.8 billion.

Establishing its Eurasia headquarters in Istanbul, the biggest city in Turkey, is a strategic move for PowerChina to develop its business globally. Xiong Lixin, Deputy General Manager of PowerChina International Group Ltd. and General Manager of PowerChina Eurasia Headquarters, talked to Beijing Review special correspondent Jiang Wandi on this important decision and the company's future development plans. The main points of the interview are as follows:

Beijing Review: What are the major responsibilities and target markets of PowerChina's Eurasia headquarters? What has PowerChina achieved in the Eurasia region in recent years, and what are its future plans?

Xiong Lixin: Dividing its global markets into six regions, PowerChina has set up six regional headquarters to manage its 259 overseas branches across the world. The Eurasia headquarters covers 63 countries in regions including South Asia, Central Asia, Transcaucasia and Europe.

By the end of 2016, PowerChina had 157 projects under construction in the Eurasia region, with a total contract value of $21.8 billion. In 2016, the regional headquarters signed new contracts worth $6.2 billion, earning revenue of $2.22 billion and profits of $150 million, and creating 14,475 jobs for countries in this region. Newly signed contract value and business revenue from this region both accounted for one fifth of the company's international business. The 157 projects under construction are in 20 countries and implemented by 34 subsidiaries, covering water conservancy and hydropower, water environment treatment, thermal power and grids, new energy, roads and bridges.

PowerChina has been performing its social responsibility in the region, participating in disaster relief, public services and environmental protection and making contributions to infrastructure construction, economic development, social stability and improvement of people's wellbeing.

Why did the company locate its Eurasia headquarters in Istanbul?

Locating the Eurasia headquarters in Istanbul is a solid step for PowerChina to localize its international business. It's a decision made after detailed investigation and careful consideration. We chose Istanbul for Turkey's sound infrastructure, strong processing and production capabilities, advantages in human resources and geographic location, and its influence in neighboring markets and the Eurasia region at large. The strategic partnership between China and Turkey and the latter's economic potential are particularly important factors for us to choose Istanbul.

High-level visits between China and Turkey are frequent, and exchanges in political, economic and trade and cultural sectors have intensified. In May, Turkish President Recep Tayyip Erdogan visited China, attending the Belt and Road Forum for International Cooperation and meeting Chinese President Xi Jinping. The China-proposed Belt and Road Initiative and Turkey's Middle Corridor project have the same orientation and similar visions. Against this background, locating the Eurasia headquarters in Istanbul to cover neighboring countries and regions is an active response of PowerChina to the Belt and Road Initiative.

How does PowerChina realize localization of its business operations in Turkey?

After years of market research and project tracking, we established a subsidiary in Turkey in 2014 in order to intensify exploration of the Turkish market.

We have intensified the localization of our business operations—emphasizing compliance management, strengthening the training of local employees, enhancing the utilization of local resources and strengthening the sense of belonging of foreign employees—in order to make better use of geographic advantages and improve our capability to adapt to local conditions and operate international businesses. We have also strengthened our awareness of social responsibility, trying our best to help local governments solve social and economic problems.

Turkey is a very international country where a large number of foreign companies have made investments. What are PowerChina's advantages in competing with them?

PowerChina is a comprehensive investment and engineering corporation which integrates investment and financing, planning and design, engineering construction, equipment manufacturing and business operations in sectors of energy and power, infrastructure, water resources and environment. It ranks first in the world in terms of integrated capability to plan, design and construct water conservancy and power projects, and it leads China's hydropower industry. With global business operations covering 113 countries and regions, PowerChina is now carrying out 1,207 contracts in 89 countries and regions with a total contract value of around $100 billion. It ranks sixth among the Top 250 International Contractors and second among the Top 150 Global Design Firms list, according to the Engineering News-Record.

PowerChina's international competitiveness lies in the following aspects:

First, PowerChina has world-leading capabilities in water conservancy and hydropower planning and design, engineering management and technology, and it ranks first in terms of integrated capability and business performance in water conservancy and hydropower planning, design and construction. In China, it has undertaken the construction of over 65 percent of the medium-sized, large and extra-large hydropower plants and the planning and design of more than 80 percent of such plants. It also holds more than 50-percent share of the global market for medium-sized and large water conservancy and hydropower plant construction. PowerChina is also the major creator of China's national technology standards and norms on water conservancy and hydropower and thermal power construction.

Second, PowerChina is capable of managing complicated, large-scale projects. It can provide integrated, one-stop services for projects involving water conservancy and hydropower, thermal power, wind power and urban and transport infrastructure, creating bigger value and bringing greater returns for project owners.

Third, its brand image is widely known. In overseas markets, PowerChina has successfully established a diversified market structure with water conservancy and hydropower as the core and covering sectors of road and rail transport, urban utilities, housing construction and water treatment.

Fourth, it has strong engineering and technology capabilities. PowerChina has world-leading comprehensive capabilities in engineering, hydropower plant installation, high-grade railway engineering and urban rail construction. It is also able to construct large and medium-scale water conservancy and hydropower projects and provides design, consulting and inspection services for urban utility and transport infrastructure projects.

To achieve success in overseas markets, what should Chinese companies be mindful of?

To go global, Chinese companies must well understand the social and corporate cultures of host nations as well as cultural differences between China and host nations. Based on this, Chinese companies must illustrate their management and cultural ideas in ways that local people can understand, ultimately achieving success and integrating with local society.

The PowerChina Eurasia headquarters will hire local firms for cultural promotion as well as local accountants and lawyers to ensure compliance. We will hire and train local management professionals and conduct exchanges with local companies. In the meantime, we will also actively communicate with local government departments and participate in public interest and cultural exchange activities.

Copyedited by Chris Surtees

Comments to zhouxiaoyan@bjreview.com

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