Builder flexes muscle in US
Updated: 2014-10-09 13:00
By Zhang Yuwei in New York(China Daily USA)
The 44-month Baha Mar project on Nassau’s Cable Beach is worth $3.5 billion and will be a “showcase” for the China Construction America company. Provided to China Daily
From the renovation of the Alexander Hamilton Bridge between Manhattan and the Bronx, to construction of the ventilation shafts for New York's No 7 subway line extension and the Yankee Stadium Station, not many may have known that the general contractor is a Chinese firm.
The China Construction America projects in New York are among more than a dozen the company has in the country.
CCA has come a long way since establishing its US operation in New York nearly 30 years ago.
That success didn't come easily.
"There have been quite some ups and downs in the past 30 years, especially during the first 15 years," said Yuan Ning, president of CCA.
CCA isthe US subsidiary of China State Construction Engineering Corp Ltd, the top global contractor ranked by ENR, an industry magazine.
Like many Chinese firms that would face challenges entering overseas markets, CCA spent much of its first 15 years learning about the business environment in the US, which accounts for about 2 percent of the parent company's total revenue. The importance and potential of that market are reasons why CCA has persevered.
"Persistence is the key," Yuan said, referring to what the company has learned most in operating its business in the US. "We understand that it would take some time for us to get a better understanding of this market, and we need patience to achieve what we had planned for the US market."
The company had to pay large sums for its initial investments in real estate projects in the US. It eventually took the company about 15 years to wrap up those projects before it moved on to construction management.
In 2012, CCA was awarded a contract with the New York State Department of Transportation and kicked off the reconstruction of the Staten Island expressway and bus/high-occupancy vehicle lane extension. The $109 million deal was the first China Construction America won as an independent contractor in New York State, said Yuan, who said the deal was "significant for us and our business in the US market".
Yuan leads some 1,000 employees of CCA in the US. The company's workforce grew rapidly in the past 10 years along with the projects. More than ninety percent of the staff are local hires, according to Yuan.
"We have stepped up efforts in staff training, which is part of our effort to strengthen our corporate culture so that we are a responsible local corporate citizen," Yuan said.
In April, CCA completed the acquisition of Plaza Construction, a leading US construction management and general contracting firm. The financial details weren't disclosed, but the deal could potentially boost the financial strength and bonding capabilities of Plaza, which will run autonomously.
"The deal comes naturally as their business segments and markets are highly complementary to the two companies," Yuan said. Plaza is also a good addition for CCA's private construction and real estate business in the US, he said.
With a combined contract value above $3 billion, CCA's revenue is expected to top $2 billion in 2014, making it a Top 30 contractor in the US, Yuan said of the merger.
For Yuan, it's just the beginning of CCA's American dream.
By December, the company - as both a contractor and investor - is scheduled to complete the Baha Mar resort project in Nassau, the Bahamas.
The 44-month Baha Mar project on Nassau's Cable Beach is worth $3.5 billion and will be a "showcase" for CCA, Yuan said. "It also will place a good foundation for us to tap into the Caribbean market."
Sarkis Izmirlian, chairman and CEO of Baha Mar Ltd, the owner of the resort, said that when the site - with a collection of hotel brands with gaming, entertainment, private residences, shopping and art galleries - is in full operation, it could create up to 10,000 local jobs, which will contribute about 12 percent to Bahamas' GDP.
"This partnership (with CCA) is going to have a huge, long-term impact on the Bahamas," said Izmirlian.
Yuan, who also serves as chairman of the China General Chamberof Commerce-USA, said he wants to share what CCA has learned over the years with his Chinese peers looking to invest in the US.
"It's important to think how to be sustainable in the US market after the initial investment," he said.
"Something useful to remember," said Yuan, "the obstacle is the path."
(China Daily USA 10/09/2014 page2)