Leighton deal continues Chinese global expansion drive

CHINESE construction and engineering companies have emerged as major global players in recent years, overtaking their Western and Japanese rivals.

Workers walk back to a construction site after their lunch break in Beijing this week.

CHINESE construction and engineering companies have emerged as major global players in recent years, overtaking their Western and Japanese rivals.

Indeed, Chinese companies ­account for five out of 10 top construction firms in the world by ­revenue, according to figures from International Construction Magazine.

China Communications Construction, which paid $1.15 billion for Leighton Holdings’ John Holland unit, is the fifth-largest builder in the world behind French engineering giant Vinci. Listed on the Hong Kong and Shanghai stock exchanges, it has a market capitalisation of $23.5bn.

The Chinese hold top three spots in the world, led by China State Construction and Engin­eering.

CCCC’s deal continues the push of Chinese companies to expand aggressively internationally in search of new opportunities as competition intensifies at home.

Though these companies have solid reputation for finishing big projects on time at home, some have experienced difficulties in operating project overseas and especially where they can’t bring in their own workers and engineers.

For example, China Metallurgical Group, the former contractor for Citic Pacific’s disastrous Sino Iron Project in Western Australia, significantly underestimated the cost of construction that played a major role in Citic’s budget blowout.

China has funded three new large multilateral financial institutions, with a combined money pool of $US240bn: the New Development Bank, the Silk Road Infrastructure Fund and the Asia Infrastructure Investment Bank.

In 2012, Chinese contractors took the largest share of total global revenues, at 23.2 per cent or $US344bn.

China Communications Construction International president Lu Jianzhong said there were significant growth opportunities in the Australian market.

“It will be an important strategic addition to CCCC and we see (John Holland) as a strong independent competitor in the Australian market,” he said.