Advantages

Executives and officials said the full financial force of the Chinese government behind its infrastructure companies gives those companies an edge that is hard for private industry elsewhere to beat.

An example is the Bay Bridge project in California. It includes reconstruction of the eastern span of the bridge, which was heavily damaged in a magnitude 6.9 earthquake in 1989.

State-owned Zhenhua was selected, despite its lack of experience in bridge building, because of advantages including its huge steel fabrication facilities and low-cost work force of roughly 35,000 people.

The decision to save some $400 million by outsourcing the fabrication of the main sections of the bridge reflected global realities, especially of the aging American steel industry, says Steve Heminger, executive director of San Francisco's Metropolitan Transportation Commission.

The Chinese company also had the ability to make and deliver both the new sections of the bridge and the huge crane needed to lift them into place, he said.

Diligent workers

Low-cost labor also helped China Overseas Engineering win the highway project in Poland, although the company had to back out in June. The group had said it could build a kilometer of motorway for 6.6 million euros ($9.35 million), by far the lowest bid.

"The Chinese work day and night, 12 hours a day, seven days a week, and even during holidays," Krzysztof Lenarczyk, a Wiskitki town hall official in charge of infrastructure, told Agence France Press. "They started work in January (when public construction works are suspended in Poland) and they worked throughout the worst sub-zero weather."

"Chinese companies could make money from projects that Europeans deemed impossible to profit from. The main reasons are Chinese people's diligence and the country's cheap work force," says Li Jun, an assistant researcher at China Institute of Contemporary International Relations.

Road ahead

Overseas contractors from China have developed abundant working capital, techniques and expertise over the past 30 years, primarily in developing countries eager to upgrade their infrastructure. Now they have the confidence to take on more overseas building projects, especially in developed economies, experts said.

"The advantages in Asian and African markets are consolidated while breakthroughs are made in Europe and the United States," says Diao Chunhe, president of the China International Contractors Association.

"China has moved from simply exporting labor service to securing projects that include design, outsourcing and contracting," says Hu Huimeng, deputy chief engineer of China Overseas Engineering Group. These projects require stronger know-how in implementation, risk management and financing, he said.

But Chinese companies lag in management skills and the ability to adapt to local markets, especially in developed economies with established laws and procedures on labor practices and environmental protection.

"We need to learn how to play the game in line with their rules," Hu says.

China also needs to cultivate a talent pool for overseas engineering and reduce its reliance on the low-cost labor force, professionals say.

"It is time to be confident, but not yet to be proud," according to Xiang Haifan, a professor at Tongji University and a member of the Chinese Academy of Engineering. He made the comment at the July ceremony celebrating Zhenhua's work on the Bay Bridge.

In the bridge-building sector, he said by way of example, a Chinese company may be able to offer lower cost because of its cheap work force, but China might be less competitive in its bridge construction abilities than Japan or South Korea.

Lu Wenxue, a councilor of China International Economic Cooperation Society, says "delicacy management" is urgently needed to direct China's overseas building projects. "We are expanding fast, but we lack the cross-culture training programs and consulting services," he says.

Qiu Chuang, chairman of Chartered Institute of Building North China and adjunct professor of Tsinghua University, sees the fundamental task as the cultivation of talented people. The skill levels of engineering consultants and project managers do not yet match the need in overseas projects, he says, and such expertise is crucial.

Li Sixiao contributed to this report.