A couple of weeks ago in France my wife and I looked for a new barbecue. The French salesman encouraged us towards the expensive French made barbecue on the basis that the cheaper ones came from “abroad” (another European country), were made by a company he hadn’t heard of and were probably barbecues they couldn’t sell at home. We bought the cheaper one and found that it had a worldwide guarantee. Although there may not be a guarantee, China is determined that only the best of Chinese contractors work abroad.
China’s “Going Out Policy” amongst Chinese contractors has resulted in the large increase in overseas projects undertaken by Chinese contractors in recent years. A quick glance at the ENR listings show the progress made in the international market by Chinese contractors with no less than 51 companies in the top 225. Every year, these major contractors are joined by yet more compatriots, as the world recognises the strength and commitment of these companies.
From 1 November 2009, the Regulation for the Administration of Qualification for Undertaking Overseas Projects by Chinese Contractors (“Regulations”) will come into force to license the new joiners to the party and audit the contracts already underway. The Regulation is promulgated by the Ministry of Commerce of People’s Republic of China and the Ministry of Housing and Urban-Rural Development of People’s Republic of China (“MOHURD”). MOHR focuses on the administration of qualifications of Chinese contractors who have been undertaking or will undertake overseas projects and on safe construction.
The Regulation provides different standards for Chinese contractors to apply for the qualification certificate, depending on whether or not they were engaged in construction and engineering activities. The qualifications will then be given on criteria based on technical competence, credential established in the domestic construction market, financial standing, commercial reputation, the overseas experience of senior managing staff, their safety and security track record and procedures.
The penalties stipulated in the Regulation are fairly harsh and undertaking overseas projects without the necessary certificates will be severely punished with the penalties ranging from warning, fine, confiscation of illegal income to the criminal prosecution of the staff.
What does this mean to the rest of the Construction Industry? For the Employers choosing Main Contractors and for Main Contractors choosing major subcontractors the certification will provide reassurance as to essential matters such as its contractor’s standing and track record in China, its commitment to safety and international experience at senior manager level.
It appears that whilst the Chinese authorities are keen on encouraging more members of its construction industry to spread their wings overseas, it seeks to ensure for the benefit of all its members, that only those members who have already shown that they can add to the good reputation of the Chinese contractors can offer their services in the world market. A clever move whether you manufacture barbeques or build bridges.