CHINA CONSTRUCTION NEWS

Eco-Coatings Face Massive Business Opportunities; [1]
SinoCast China Business Daily News. Dallas: Jan 22, 2003. p. 1

Managing construction industry development in China
Deepak Bajaj, Rui Zhang. AACE International Transactions. Morgantown: 2003. p. IN41

Heads in the sand?
Fiona Sutherland. International Construction. Chicago: Sep 2002. Vol. 41, Iss. 7; p. 15 (2 pages)

Vogue trader
Anonymous. International Construction. Chicago: Sep 2002. Vol. 41, Iss. 7; p. 16 (1 page)
　

Copyright Chemical Week Associates Jan 21, 2004

Demand for plastic additives in China is expected to grow 7%/year, to $3.5 billion in 2007, according to a study by BRG Townsend (Mount Olive, NJ). Demand for most additives is growing 8%-10%/year, but overall growth is being offset by slower growth for plasticizers, the largest additives segment (chart), says Fred Gastrock, project manager/additives at BRG.

HOW ADDITIVES ADD UP

Copyright 2003. Financial Times Information Limited - Asia AfricaIntelligence Wire. All Material Subject to Copyright.)

BEIJING, December 25, SinoCast -- The Professional Committee of Intelligent Building of China Construction Industry Association (CCIA) has been set up recently, which means that Chinese intelligent building industry has been formed and seen a robust growth.

Since the 1990s, the functions of building must be upgraded by technological means, which is a main tendency in the development of the world's construction industry. Thus, intelligent building appeared in China and developed rapidly.

As a combination of high technology and construction technology, the intelligent building changes the traditional industrial structure and plays a significant role in promoting the development of the relevant industries. It has much room to grow and has presented great market prospects and opportunities now.

The newly established committee will conduct industrial surveys and researches, propose solutions of technology and legislation, promote the quality supervision, and help companies improve the technology and management.

Copyright 2003 The McGraw-Hill Companies, Inc., All rights reserved.http://www.mcgraw-hill.com

New regulations going into effect in China are changing the way that international designers and contractors do business there. China's entry into the World Trade Organization requires opening its construction market to foreign participation. For the first time, the regulations allow wholly owned foreign enterprises in the country's construction industry. But the new rules are also likely to end the ability to work in the country on a project by project basis.

"Permission to set up wholly owned foreign firms will provide a good opportunity for long-term development," said Diao Chunhe, vice chairman of the China International Contractor's Association. Diao spoke at the Global Construction Conference in Washington, D.C., Dec. 9, sponsored by the Associated General Contractors and McGraw-Hill Construction, ENR's parent.

China was the third-largest market in the world in 2002, with $404 billion in construction, according to market research firm Global Insight. "We estimate growth at 8.5% a year between 2002 and 2007," said Toronto-based director Chris Holling.

Diao added that the new rules allow joint ventures between foreign and local partners and allow foreign firms to have a majority ownership. But wholly foreign-owned construction enterprises are limited to contracts on projects that are fully funded by foreign investors, funded by international financial institutions with contracts awarded by competitive bidding, or projects where foreign investment is 50% or more of total cost. Projects that are "technically difficult" for Chinese firms or that they cannot "execute independently" may also be awarded to such ventures.

Diao said CHINCA can help international firms find joint venture partners in China, and he said the group is considering accepting foreign contractor members in an international division.

After April 1, 2004, however, foreign contractors will not be able to work in China "by applying for approval on a project to project basis," according to a white paper on the new regulations by Hew Kian Heong, a partner in the Shanghai office of construction law specialist Masons Thelen Reid LLP. Contrac- tors will have to work through a Chinese corporate entity.

Richard F. Brose, in the Newark, Del., office of BE&K, said he has worked on a number of chemical plant projects in China through a Kvaerner/BE&K joint venture, where they take "project responsibility with the client" but would "prefer not to set up a company in China."

Implementation measures for the design firm regulations have not yet been issued, but draft measures include a provision requiring 25% of the professional staff of a wholly foreign-owned design enterprise to be foreign service providers who are registered architects or engineers in China. This requirement will be difficult for any foreign firm to satisfy, said Hew. "It will be interesting to see if foreign designers can remain competitive on fees if they have to maintain a large number of expatriate staff," he said.

Henry A. Levine, deputy assistant secretary of commerce for Asia and the Pacific, said China offers enormous business opportunities and enormous challenges and problems. "Beware of anyone who emphasizes only one side of the coin," he said. Challenges include "ex-cessive regulations, lack of transparency (even Chinese companies have a hard time finding out what regulations apply), theft of intellectual property rights and a business system that runs on personal relationships" rather than on the rule of law.

Credit: Janice Tuchman

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BEIJING, August 21, SinoCast -- The 2003 China Construction Market International Seminar was held in Beijing yesterday. Some experts pointed out at the meeting that China's construction market grew quickly in the past, and it would become the largest construction market of the world in next five years.

President of China Civil Engineering Society (CCES) Tendering and Bidding Branch Mr. Nian Fuli said that proactive fiscal policy and prudent monetary policy of Chinese government pushed fixed asset investment increasing rapidly and provided more chances for construction industry. In 2002, China GDP (gross domestic product) exceeded RMB 10 trillion, in which construction market contributed over RMB 700 billion, accounting for about 7% in GDP.

Construction income and construction acreage were both increasing. In 2002, total output value of 47,000 Chinese construction companies reached RMB 17 trillion, and the construction acreage was 2.1 billion square meters. Both figures increased by over 10% respectively.

Investment for construction and equipment installation projects kept increasing as well. In 2002, total fixed asset investment was RMB 4.3 trillion in 158,000 projects through out the nation, with a 17% increase in work load over that of 2001. (Li)

Copyright Euromoney Institutional Investor PLC Jul 1, 2003

By Carl B. Cheng and Zhou Yun, Freshfields Bruckhaus Deringer, Shanghai

Eight ministerial bodies headed by the State Development and Reform Commission (SDRC) recently issued the Invitation and Submission of Bids for the Survey and Design of Construction Projects Procedures (the Procedures), which will take effect on August 1 2003. The new regulations expand upon the PRC's existing construction-related bidding regulations and are intended to provide bidders with an operational framework.

The Bidding Process

The Procedures provide detailed procedural and documentation rules, which if complied with, will undoubtedly assist in creating a more fair and transparent bidding process.

One of the biggest problems that bidders have faced is the inability to obtain adequate access to information about the relevant project. Because the existing bidding rules were unclear, parties inviting bids would often provide less favoured bidders with incomplete or inadequate information. In order to level the playing field, the SDRC has required that 10 documents that it views as essential in allowing bidding parties to fully understand a project be included in the bid invitation. Further, the Procedures require that if at any time the tenderee responds to a question posed by a bidding party, that information must be shared with all bidding parties. Additionally, the Procedures will now require that a bidder be given at least 20 days to tender from the date that it receives the bid materials.

The Procedures require that the manner in which tenderees conduct the bidding process be in strict accordance with the terms announced in the bid invitation. To make bid invitations available to more parties, the Procedures also require that the bid invitation announcements be made public for a minimum of five workdays. In addition, it is stipulated that tenderees may not exclude bidders by means of a lottery or any other "unreasonable" method in order to limit the number of bidders.

Scope of Application

While the majority of the survey and design of construction projects that involve the invitation and submission of bids will be subject to the Procedures, the Procedures are limited to those projects that fall within the scope set forth in the previously released Standards for the Scope and Size of Construction Projects Requiring Invitation of Bids Provisions.

In addition, projects that meet any of the following criteria will, upon approval, be exempt from the Procedures: projects involving State security and State secrecy; crisis-related projects and those involving disaster relief; projects that rely heavily on certain patents or know-how; projects involving advanced technology and professional workmanship that limit the number of bidding parties to fewer than three; and expansion, improvement or technology reform-related projects that will be integrated with an existing system and therefore require the involvement of specified parties.

While it is clear that projects that meet any of the above criteria qualify for government exemption approval, the Procedures fail to specify which government body will issue that approval. Until SDRC interpretations clarify this issue, these exemptions may be arbitrarily applied.

Depending on the nature of the project, the Procedures are flexible enough to allow bids to be entered for either an individual phase of a project or for an entire project consisting of multi-phases.

Bidding Methods

Construction projects that meet the following criteria must conduct public bidding: projects that are fully invested by State capital; projects in which State capital takes a controlling or leading position; projects that are included in a list of key projects as determined by the "development and reform department of the State Council" (this most likely refers to the SDRC); and projects that are included in a list of key projects as determined by provincial authorities.

However, if the above four types of projects that otherwise require public bidding meet the following criteria, upon approval, the tenderees may conduct their bidding process by invitation: projects that include advanced technology or distinct environmental features that limit the number of potential bidders; projects whose public bidding costs would be too high (when compared with the project's total investment); and project specific limitations relating to the timing of the project's completion that would be significantly affected if bidding were conducted publicly.

While tenderees in bids by invitation are not required to post their invitation publicly, the Procedures require that they invite at least three bidders to take part in the process.

Tender

The Procedures state that only survey and design companies that meet criteria may enter bids. A foreign design and survey company may enter a bid only if: (i) it is duly registered in its home country; (ii) it meets the requirements which China made in its treaties and protocols; and (iii) it is in compliance with China's administrative regulations on market entry for survey design.

Joint tenders are expressly permitted but a party in a joint tender may not submit another tender in its own name or participate in other joint tenders.

Penalties

While it is clear that the Procedures focus on ensuring transparency by tenderees, they also include a detailed list of procedural rules for bidding parties. If bidding parties fail to abide by these rules, the evaluation committee, in many cases, may disqualify their bids.

The Procedures include specific penalties, usually fines, which will be enforced if the regulations are violated by tenderees. However, it remains unclear which government body will be in charge of enforcing the penalties and to what extent affected bidders will have recourse.

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CHINA, January 23, SinoCast -- At present, China's annual output of construction coatings is 1.3 million tons and China has become the world's third largest coating-producing country. Judging from the growth speed of China's construction industry and building material industry, China's output of construction coatings will reach 1.8 million tons by 2005. By 2015, the output of construction coatings will reach 3 million tons, and the application rate in the outside wall decoration will exceed 60%. Beijing will invest RMB 280 billion in the Olympics Games in the following 5 years. The expenditures that are closely linked with building materials are as follows: RMB 90 billion used to construct subways, light railways, expressways and airports, USD 14 billion used to build stadiums and gymnasiums for the Olympic Games; and the expenditures used to restore the dilapidated and old houses of 9 million square meters. About 10% of the total expenditures, namely, RMB 28 billion, will be used for coatings. Therefore, Beijing Olympic Games will provide the business opportunity of RMB 28 billion.

In recent years, China has introduced from abroad over 30 production lines of construction coatings. These production lines have played important role in the quality improvement and product structure adjustment of China's construction coatings. The inspection reports, as issued by China's authoritative inspection agencies, show that the quality of domestically produced coatings is as good as that of imported coatings with respect to the physical and chemical indicators. Therefore, if the quality to be assured, the domestically produced coatings are very likely to win the competition.

Copyright American Association of Cost Engineers 2003

...CONSTRUCTION INDUSTRY IN CHINA

China's construction industry is very big by world standards. In 1994, it employed 31.88 million people and had a total of 94,942 number of enterprises with a gross output of US$89 billion [8] On a purchasing power parity basis, the industry annual output ranks among the world top ten. Traditionally, the construction industry grew within the government stipulated 5-year plans, which emphasized mainly heavy industries, military and civil engineering work, and residential housing.

The Ministry of Construction (MOC) is the top government body in charge of the construction industry. It implements national policies and administers construction activities through local Construction Commissions, which have administrative controls over design institutes, construction enterprises, building research organizations and others related to the construction industry. Some other ministries, e.g., Ministry of Railways and Ministry of Transportation, have their own construction teams and responsible administrative departments, which focus mainly on their own industry.

In addition, the State Planning Commission, the People's Construction Bank of China, the State Science and Technology Commission, and the Ministry of Finance are actively involved in the construction industry. While the MOC is responsible for drafting building regulations, policy, technical guidelines, and development strategy, maintaining the unified building price quota, reviewing zoning and land use, etc., the State Planning Commission is responsible for drafting capital construction plans, determining investment direction, and reviewing and approving project proposals and feasibility studies of medium to large scale projects. A major difference from most Western countries is the role of the People's Construction Bank of China. It is acting as a credit provider on behalf of the government and is responsible for approving and auditing both medium-term and long-term finance for capital construction.

At the project level, three principal organizations are involved: the development units being the clients, which are state owned enterprises, government institutions or departments; the design institutes, which are multidisciplinary design offices with architects, structural engineers, service engineers and cost engineers under the same umbrella; and the construction enterprises acting as general contractors and subcontractors.

A development unit is responsible for lodging development applications, obtaining statutory approvals, appointing design institutes, and construction enterprises. It is also responsible for overall management for project inception to completion. Very often a development unit has an in-house project management division (often referred to as a preparatory office) established mainly on an ad hoc basis. However for large companies, preparatory offices may be permanent functional divisions in their organizational structure.

A feasibility study commissioned by the development unit is used to obtain approval from the local Economic Planning Commission. Once it's been approved, a loan can be secured from the People's Construction Bank of China, which is also responsible for auditing and project payment. The preparatory office will lodge the conceptual design documents along with budgetary estimates prepared by a design institute to a local construction commission for approval.

Once approval for the design documentation and budget is obtained, the preparatory office is responsible for selecting contractors. Until the open tendering system was rcintroduccd in 1981, projects were allocated to construction enterprises by the government rather than through a tendering process. Contracts between a development unit and a construction enterprise were very simple and usually based on "mutual respect and trust."

The construction enterprises are divided into building contractors, services contractors, civil contractors and labor contractors. Subcontracting is not widely adopted in China, and most construction units have their own comprehensive labor forces, though management skills have been compromised due to the traditional focus of supplying labor for sectional works rather than overall management.

The design institute will hand over the project to the preparatory office once the construction documentation has been finished. The preparatory office will take the full responsibility of handling the project during the construction phase, including site progress inspection, interim payment, variation claim assessment, extension of time, final account settlement, and any dispute resolution...

Copyright PRIMEDIA Business Magazines & Media Inc. Sep 2002

NOT ON the heels of China's accession to the World Trade Organisation late last year, this month will see the beginnings of an unprecedented change in the country's leadership. Three of the top jobs in the Communist Party are widely tipped to change hands, including that of state president and general secretary Jiang Zemin and prime minister Zhu Rhongi.

The new leaders look set to inherit, by world standards, a robust economy, with the growth of 7.7% predicted for 2002/3,compared with 7.3% last year. But dig deeper and it is apparent that this relies on massive, and ultimately unsustainable, government spending. Also that not even this level of growth will absorb the swelling ranks of the unemployed, currently increasing at the rate of nearly nine million a year. In an economy so dependent on domestic demand, and where more than half its total liquidity is provided by individual savers-the fall in confidence accompanying rising unemployment and debt, combined with a dangerously weak banking system will create in reality, an economic time bomb.

Even putting aside these domestic economic pressures, the exposure to the world economy which comes with WTO membership will likewise expose the weaknesses of the state-owned sectors of the economy, which employ 45% of the urban workforce. And even the expected rise in foreign investment attracted by China's new open attitude seems unlikely to save the situation.

Big spenders

Despite this, observers say that the new leadership is likely to continue with the current expansionary policy, as outlined in China's Tenth Five Year Plan (2001-5). Alongside the plan's revolutionary proposals to encourage greater investment from multinational companies is a heavy emphasis on infrastructure development.

This continues the trend of the past four years, which has seen exceptionally high levels of investment in infrastructure due to a government fiscal programme funded by the issue of special bonds. In the year to June, investment in the sector increased by more than 22% and most of the $18bil. special bond issue this year will be allocated to infrastructure development. By the end of this current five year period, China aims to have a total length of 1.6 million kilometres of motorway and 75,000km of railway requiring $120bil. to be spent on constructing 200,000km of highways and $32bil. on railways by 2005. 30% of the rail budget is earmarked for the western regions, the development of which is a priority of the government.

News of the moment, and hailed by premier Zhu Rongji as a symbol of the 'new, open China', is the 4,000km eastwest pipeline which will transmit natural gas from the Tarim basin in China's far north west, to Shanghai, on the east coast. The project is China's largest ever energy venture with foreign companies; Royal Dutch/Shell, Exxon Mobil and Russia's Gazprom each having a 15% stake in the joint venture company, PetroChina has 50% and the remaining 5% is owned by Sinopec. The $20bil. pipeline will be the longest of its type in the world when it is completed in 2004, and by 2007 it will also be transmitting the most gas, with an annual capacity of 20bil.m^sup 3^. The project forms a pivotal part of the government plan to reduce China's heavy reliance on environmentally damaging oil and coal, as well as to develop the western regions of the country.

The Pearl River Delta in the Guangdong province encompasses Hong Kong, Macau and Shenzhen and attracts high levels of foreign investment. Here again there is a focus on infrastructure, much of which is aimed to improve links between Hong Kong and the mainland as well as integrating the west and eastern sides of the delta itself. However whereas roads in the region received the bulk of attention in the 1990s, it is now the turn of rail projects to dominate.

Work is currently underway on the Shenzhen underground railway, an 18 station, 19.5km line which starts at the Hong Kong border and is eventually planned to link with the Hong Kong and Guangzhou underground systems. Guangzhou's second subway line is now under construction, with work on a third planned to begin later this year. Ultimately another four lines will be added - giving the city's network a total length of 206km. Further plans for the region include a high speed rail link between Hong Kong, Shenzhen and Guangzhou and, perhaps in the distant future, a tunnel up to 50km long, to run between Zhuhai and Shenzhen. Road links between Shenzhen and Hong Kong are to be further improved with the construction of the Hong KongShenzhen Western Corridor, hinging on the construction of the 5.1km long Deep Bay Bridge. Costing $8.1bil., work on the bridge should begin next year, with completion scheduled for 2006.

Shanghai is the centre of government economic development plans and its administration announced in February that it will spend $24bil. on infrastructure, including a high speed magnetic levitation link to the airport. A $12bil. project to transform the district of Hongkou into a new development zone is also underway, and there are talks about building a huge LNG terminal and natural gas distribution pipeline for the city once the east-west pipeline is in place.

Olympics fever

Beijing has announced that it will spend $102bil. over the next five years on construction projects, with $23bil. allocated to Olympics related work alone. Among the projects are $4.5bil. worth of roads and airport upgrading, including two more ring roads around the city; $6.5bil. for railways including extensions of the underground and $1.3bil. on the venues themselves; 32 stadia in the city are to be refurbished or developed from scratch.

These projects just scratch the surface of those planned to be realised in China over the next five to 10 years. Hopefully they are built to last - it seems that the money to build anything else may soon run out.

www.intlconstruction.com

A member of www.primediabusiness.com

Copyright PRIMEDIA Business Magazines & Media Inc. Sep 2002

It is no secret that the Chinese construction industry has huge potential for growth - the Ministry for Construction expecting the number of cities alone to increase from 770 to more than 1,000 over the next 15 years.

Construction industry volume amounted to nearly $211 bil. in 2000, and with the government's annual investment of approximately $23bil. into the Chinese infrastructure market this figure is set to keep on rising.

Besides the improvement of western China's entire motorway network, the 'Go West' development programme includes the construction of a 640km railway from Chongqing to Huaihua and another, 955km from Xian to Hefei, among its many projects.

Participating in Bauma China is one way to be part of this remarkable growth. The plant and equipment trade show will be held in Shanghai from November 5-8th this year. On display will be the most up-to-date and innovative machinery and equipment available, making it the perfect platform for strengthening business ties and gaining a foothold in the Asian construction market.

For more information visit: www.bauma-china.com

www.intlconstruction.com

A member of wwwprimediabusiness.com