黑洞社区

1 China

The numbers: China spent 拢313bn on construction in 2007 and plans to increase this by 8.5% between 2007 and 2010. This makes it the world鈥檚 biggest spender and fastest grower.

Who's there?

UK firms include Davis Langdon, Atkins, Arup, Buro Happold, Barton Willmore and Gleeds. The main homegrown players are all government-owned contractors such as the China State Construction and Engineering Corporation.

What are they building?

The Chinese construction market has been growing at nearly 18% a year for the past decade, according to figures from Davis Langdon & Seah (DLS) in Hong Kong. However, the picture in the middle kingdom is dominated by two things at the moment: the Beijing Olympics and the rebuilding of Beichuan after the earthquake on 12 May.

To outside eyes, construction in China is all about the astonishing buildings going up in Beijing or the futuristic skyline of Shanghai. However, the latest figures from DLS for 2006 show that these two cities rank only sixth (5.2%) and fifth (5.5%) respectively in the league table of construction output. Far ahead are two boom towns on the eastern coast, Zhejiang (13.6%) and Jiangsu (13.1%). Shandong and Guangdong make up the rest of the top six.

According to DLS and the China Statistical Yearbook, the total value of the construction market in 2006 was RMB4,155bn (拢313bn), with building construction accounting for RMB2,499bn (拢180bn) of that.

What鈥檚 it like to do business there?

Given China鈥檚 legendary talent for bureaucracy, it is perhaps unsurprising that not many British firms have ventured beyond Hong Kong. Of those that have, most tend to be engineers, consultants or architects.

Why go?

Exciting projects. Atkins and Arup are two of the most successful imports to China, with Atkins preparing to design the hundreds of airports that will be needed to service China鈥檚 ever-expanding urban centres. Arup has grabbed more headlines with its design work on the 234m high CCTV Tower and the Bird鈥檚 Nest Olympic stadium, the Water Cube aquatics centre and the 鈥渆co city鈥� at Dongtan.

Why stay away?

The minefield of regulations. For instance, contractors are split into four grades (special, one, two and three) with only those with the 鈥渟pecial鈥� licence able to bid for the most prestigious projects. Tenders are awarded not by the client but by an evaluation committee that consists of at least five members, only some of whom are required to have specialist knowledge of the industry.

These five are in turn selected from a list of names approved by a local construction committee, and if you manage to win a bid, you then face having your every move pored over (and potentially vetoed) by a 鈥渓ocal design institute鈥�.

The advice from Jeff Liu, general manager of Atkins鈥� Beijing office, is: 鈥淚f you want to be successful, you have to base yourself there for the long-term.鈥�

Any tips?

Don鈥檛 say to anyone in Beijing that the Olympic venues are huge white elephants. If anyone has a plan for Herzog & De Meuron鈥檚 stadium and Arup鈥檚 Water Cube swimming pool once the Games are over, then they have been keeping it quiet 鈥�

2 India

The numbers: India spent 拢46.8bn on construction in 2007 and this is set to increase by 8% a year between 2007 and 2010.

Who鈥檚 there?

Plenty of big UK names, including Arup, Davis Langdon, Gleeds, Laing O鈥橰ourke, Lend Lease and Mott MacDonald.

What鈥檚 being built?

Stuart Senior, managing partner at Gleeds, says: 鈥淚t鈥檚 all happening in India. Infrastructure will be massive, roads and railways need renewing, metros are being constructed in all the big cities, and townships are being built to replace slums 鈥� in Mumbai alone, 20 million people live in slums, so this is massive. Shopping malls, hospitals, offices and hotels are also emerging at a tremendous rate.鈥�

What鈥檚 it like doing business there?

鈥淕etting paid can be an issue. Make sure you get your money by aligning yourself 鈥� either formally or informally 鈥� with organisations already working successfully out there.

Why go there?

鈥淭he sheer pace of growth, the fact English is spoken widely and the respect between Indians and Brits based on their historical ties. Also, India will be affected by the credit crunch far less than the UK or US.鈥�

Why stay away?

鈥淚f you want to work here you have to be comfortable with how India is. People sleep on the sidewalks and there is raw, running sewage in the streets: it鈥檚 not for everyone. There is also a lot of paper work.鈥�

Any tips?

鈥淏e careful cracking jokes in Indian business meetings. Brits tend to say throwaway lines in jest but it can be taken literally.鈥�

3 Russia

The numbers: Having spent 拢45bn on construction in 2007, Russia is planning to increase spending by 7.8% in the three years to 2010.

Who鈥檚 there?

Architects such as Foster + Partners, Aukett Fitzroy Robinson, RMJM, HOK and Swanke Hayden Connell, and large consultants including Davis Langdon, EC Harris, Arup, Mott MacDonald, WSP and Waterman Group.

What are they building?

Davis Langdon partner Kevin Sims says: 鈥淭he market is booming. For example, they are desperate for hotels, particularly in Moscow, where a room in a merely reasonable hotel costs up to 拢400. They are also building iconic schemes like the Gazprom tower by RMJM.鈥�

What鈥檚 it like doing business there?

鈥淭here鈥檚 a fair amount of mistrust in this market. People are wary about getting paid, so there is a trend towards fee bidding among consultants and single-stage tenders for contractors. Often you ask for an advance fee 鈥� of 5-40% for consultants and 10-20% for contractors.鈥�

Why go there?

鈥淚f you want to service global clients globally, you need to be in Russia. The economy is expanding rapidly and, unlike the UK鈥檚, it is not based on debt, so there鈥檚 tonnes of work in the pipeline. There鈥檚 a major shortage of contractors here.鈥�

Why stay away?

鈥淭he bureaucracy. In Russia, you have to speak to about 52 organisations to get planning approval.鈥�

Any tips?

Matti Mannonen, managing director of WSP in Finland, says: 鈥淒on鈥檛 book more than one meeting a day in Moscow. The city is totally ruined by traffic.鈥�

4 Vietnam

The numbers: The country spent 拢3.6bn on construction in 2007 鈥� not huge but spending on building is set to grow by 7.5% between 2007 and 2010.

Who鈥檚 there?

Aedas, Davis Langdon, WT Partnership.

What are they building?

High-end residential, hotel and leisure facilities, especially along the coastline.

What鈥檚 it like doing business there?

Chris Perry, regional director for Asia, at Mace, says: 鈥淏y January 2009 it will be possible for foreigners to invest in property, which will give things a big boost. Right now, to break in you need to set up an office with a mixture of expats and local staff. The market is undeveloped and the business community is small, so you鈥檒l get leads pretty quickly. 鈥�

Why go there?

鈥淓veryone wants wacky, funky designs. And it鈥檚 a great chance to work on large-scale projects where they are aiming to achieve international standards.鈥�

Why stay away?

鈥淩ed tape. You need to know the right person to get planning approval. Even if you win planning, you might find that building approval isn鈥檛 granted. People get as far as doing the piling and then find the project gets bogged down while they wait for approval. Here at Mace we鈥檙e still weighing up whether to go in.鈥�

Any tips?

鈥淐arry out projects in stages to cover yourself if work gets held up by red tape.鈥�

5 Poland

The numbers: Poland is due to up construction spending by 7% over 2007/10 from 拢20bn in 2007.

Who鈥檚 there?

Gleeds, Davis Langdon, EC Harris, Arup and Atkins, to name but a few.

What are they building?

Tadeusz Jachowicz, Gleeds鈥� director for Poland and the Ukraine, says: 鈥淢ost of the work is in the residential sector at the moment, particularly in Warsaw. But in other cities in the south, like Katowice, there is a demand for offices which is slowly moving north. In retail, there are a big number of hypermarkets going up in smaller cities by companies like Tesco.鈥�

What鈥檚 it like doing business there?

鈥淧oland is booming. It has been going through changes for a long time now, and some areas of the market are quite stable and organised in terms of who is working there. Big European companies such as Hochtief and Skanska took a big share of the market, and in many cases took over good Polish companies.鈥�

Why you should go

鈥淭here are big projects to work on 鈥� large apartment schemes, high residential towers and top class retail and office schemes. The Euro 2012 football championship, which will be held in Poland, has also brought a lot of optimism.

鈥淭here is a shortage of flats and construction has traditionally been cheap, enabling good margins. This is, however, changing with the shortage of contractors, materials and skilled labour, in part owing to Poland joining the EU and many workers going to the UK and Ireland. On the other hand, people are now returning.

鈥淭here is a lot of demand for companies with the right knowledge and skill.鈥�

Why stay away?

鈥淭here鈥檚 still a legacy of the Communist time. Because of this you need a degree of local knowledge to be able to guide clients through the administrative procedures 鈥� the level of service expected is high. This means you need a base here. There is also still very strong price competition.鈥�

Any tips?

鈥淩eporting up to senior management level throughout a project is done in Polish, but then the board will always expect companies to report to it in English. It means you have to have bilingual people.鈥�

6 United Arab Emirates

The numbers: The seven emirates of the UAE are together expected to increase construction spending by 6.75% over 2007/10 鈥� from 拢7.8bn in 2007.

Who鈥檚 there?

鈥淎nyone who鈥檚 anyone,鈥� says Alan Turner, a managing director at Gleeds.

What are they building?

鈥淚f it can be built, they are building it. Dubai 鈥� the tallest, the longest and so on. Abu Dhabi, like Dubai, is building leisure, residential and commercial schemes on a grand scale. Mega projects include Al Reem Island, a 68 million ft2 scheme which will house 280,000 residents.

What鈥檚 it like doing business there?

鈥淭raditional procurement with a fully designed scheme using bills of quantities is still the main route used. But contractors and materials are in such high demand that more collaborative procurement styles are becoming common. You don鈥檛 have to have a local sponsor but it helps. Most UK companies team up with a local person or their UAE businesses are owned by sponsors.

Why go there?

鈥淭here鈥檚 plenty of work, it鈥檚 relatively straightforward doing business and it can be lucrative if you approach it the right way.鈥�

Why stay away?

鈥淧eople worry that it will be too different and a bit scary but often you find no reason to be afraid.鈥�

Any tips?

鈥淭he place to be is Abu Dhabi. It has more natural wealth than Dubai and growth is overtaking it. Qatar will be in a similar position in five years.鈥�

7 Egypt

The numbers: Egypt spent 拢3.3bn on construction in 2007. This will grow by 5.75% a year up to 2010.

Who's there?

Big players are starting to work here, including Foster + Partners, Carillion through its joint venture with Al Futtaim, Davis Langdon, EC Harris and Gleeds.

What are they building?

Seriously big schemes comprising residential and tourist elements. These include the 拢2bn Cairo Festival City project and a 拢1bn residential development on the Red Sea coast. Foster is designing the latter for Jordanian developer Shaheen Business Development Group.

What's it like to do business there?

鈥淨uite difficult鈥�, says David Sparrow, head of client solutions at EC Harris. 鈥淭here is a total lack of transparency and regulation in the market. The supply side is very immature, so if you鈥檙e doing a project of any significance you鈥檙e going to need to get services like mechanical, cladding and groundworks abroad.鈥�

UK Trade & Investment, the government鈥檚 business development organisation, adds that 鈥済ood personal contacts are essential in Egypt and regular visits are necessary to develop successful business. The usual vehicle for foreign investment is the joint stock model or the limited liability company.鈥�

Why go?

Sparrow says: 鈥淚t鈥檚 an exciting place to be. Lots of commercial clients from the Middle East and Far East are setting up in Egypt, plus some UK banks. Barclays, for example is setting up branch networks there.鈥�

Why stay away?

鈥淪kills are the main problem. They are patchy at best on design, cost control, project management and construction management.鈥� UK IT adds: 鈥淭ime and punctuality can be rather vague concepts in Egypt, not least because of the severe traffic congestion.鈥�

Any tips?

鈥淕et a local partner because foreign companies require a local agent to bid for government tenders.鈥�

8 South Korea

The numbers: Korea spent 拢61bn on construction in 2007 and this is set to rise by 5.5% over 2007/10.

Who鈥檚 there?

No UK firms have a major presence yet.

What are they building?

The hot sectors are retail and commercial. There are lots of large-scale projects happening, such as that at Incheon, a port city in South Korea where a new city is being created on reclaimed mud flats.

What鈥檚 it like doing business there?

Tim Alper, editor of North Korea IT Times, says: 鈥淟ee Myung-bak, the new president, is very business-friendly. 鈥�

Why go there?

Mace鈥檚 Perry says: 鈥淲orking there could be a great way to escape the credit crunch.鈥�

Why stay away?

Alper says: 鈥淩ed tape and protectionist economics 鈥� but things are changing.鈥�

Any tips?

鈥淒oing a joint venture is your best bet.鈥�

9 Mexico

The numbers: Mexico鈥檚 construction spend is to rise by 5.25% a year to 2010, from 拢43bn in 2007.

Who鈥檚 there?

Not much of a UK presence here. Hill International, the US project manager with a growing UK arm, recently got into Mexico by buying Spain鈥檚 Gerens.

What are they building?

Jos茅 Luis Dominguez, manager of Gerens Hill International, says: 鈥淭his market is about tourism and housing for poor people. In five years the government wants to build 4 million cheaper homes.鈥�

What鈥檚 it like doing business here?

鈥淚t鈥檚 relatively risky: Mexican clients don鈥檛 like fixed-price contracts, so a lot of work is done with design and build or guaranteed maximum price deals. The legal system works well, though.鈥�

Why go there?

鈥淭here are huge opportunities, especially for British companies with knowledge of PPP. The government will spend 拢250bn on hospitals, prisons, schools and infrastructure.鈥�

Why stay away?

A spokesperson for UK Trade & Investment says: 鈥淯K business people might find it difficult to get shareholders to understand why they鈥檙e going to Mexico.鈥�

Any tips?

Gerens says: 鈥淢exicans tend to agree to everything but then put off anything they don鈥檛 want to do.鈥�

10 Venezuela

The numbers: Spending on buildings is set to grow 5% to 2010. Venezuela spent 拢11.5bn in 2007.

Who鈥檚 there?

No UK construction firms operate here.

What are they building?

Gerens鈥� Dominguez says: 鈥淰enezuela needs to revamp its oil refineries and plants. It also needs roads, airports and hospitals.鈥�

What鈥檚 it like to do business there?

鈥淚 don鈥檛 think there鈥檚 much encouragement for foreign firms.鈥�

Why go there?

鈥淰enezuela doesn鈥檛 have enough internal capacity to carry out all the work it needs to do.鈥�

Why stay away?

鈥淵ou need to make sure you aren鈥檛 bound to reinvest profit inside Venezuela.鈥�

Any tips?

鈥淕o to Mexico instead!鈥�