2012-03-11 09:30:00

Chinese Working to Reconstruct America

Yuan Ning is leading the charge on a host of infrastructure projects

When Yuan Ning came to the United States to lead the local operation of the China State Construction Engineering Corporation in 2001, he made a big decision on how the company should navigate the U.S. market.

"We should stay on the general contracting side and be practical about our operations in the U.S. market," said Yuan, 47, sitting in his office at China Construction America headquarters in Jersey City, N.J.

This decision led the wholly owned subsidiary of its Chinese parent, China's largest State-owned construction company, to becoming one of the most competitive construction companies in the U.S. market.

Most recently, China Construction America 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, Yuan said.

"It's a milestone for us because we always worked jointly with local companies on other projects in New York. It's understandable - we are a Chinese company, as you know," the China Construction America president said, indicating Chinese companies are still not fully accepted by some in the local construction market.

Back in China, more than 66 construction projects carried out by the Chinese parent company received the Lu Ban Award - the highest award in Chinese construction. Its construction portfolio includes the headquarters for China Central Television, the tallest skyscraper in Beijing, and the Beijing National Aquatics Center, or the Water Cube, which was used for swimming races during the 2008 Beijing Olympics.

China State Construction Engineering Corporation established its presence in the United States in 1985. But the road for the company to reach where it is today has been a bumpy one.

"We entered the U.S. market with 'ambitious goals' and invested in more than 70 residential projects across the U.S. back then," Yuan recalled.

Real estate investment has been a major focus for China State Construction Engineering Corporation in China and the company thought it had the advantage to invest in the same area in the United States. The results, however, turned out to be somewhat unexpected. It eventually took the company about 15 years to wrap up the projects and it paid a big financial price, which Yuan didn't disclose.

In 2001, the company had to move its headquarters from the World Trade Center to Jersey City after the Sept 11, 2001, terrorist attacks.

But 2001 was also a turning point for the American subsidiary's business in the United States. It won its first public works contract in the nation to build the Santee High School and Technology Center in South Carolina, after shifting its focus and becoming a general contractor. Since then, it has completed about 100 projects all over the United States, and is currently undertaking about 10 projects in New York, South Carolina, Washington, D.C. and the Bahamas.
After all this time, China Construction America has gradually established its reputation and is no longer a newcomer to the U.S. construction market.

In New York State alone, it won bids for projects including the renovation of the Alexander Hamilton Bridge (between Manhattan and the Bronx), construction of the ventilation shafts for the No 7 Subway line extension in New York (a $57 million deal), and the Yankee Stadium Station. The list just goes on.

The $407 million deal for renovating the Alexander Hamilton Bridge is currently its largest project in the United States. It will help create nearly 10,000 jobs, including construction workers, suppliers and subcontractors, throughout the whole project, which is to be complete by December 2013.

"We feel big responsibilities for this project because a lot of planning work needs to be done for the renovation work of the bridge. We work mostly at night and have to make sure the traffic is smooth during the day," Yuan explained.

In South Carolina, the company is currently renovating the North Charleston Coliseum (a $12 million deal) and building the River Bluff High School (a $75 million deal).

On its 25th anniversary of operating in the United States, New York City Mayor Michael Bloomberg congratulated the company, saying it "has worked with the utmost professionalism and dedication on America's buildings and infrastructure and communications networks".

In 2011, Harvard Business School published two case studies on China Construction America's operations in the United States, featuring it as one successful example of Chinese companies tapping into the U.S. market.

Yuan recalled that China Construction America experienced some setbacks in a few bids in recent years. In some cases, he said, the company wasn't even issued with the pre-qualification (screening of potential contractors on basic facts such as their experience, financial ability, reputation, and work history), something he said shouldn't happen to a well-established construction company like his.

"You would think this shouldn't happen during this time because the U.S. needs help in fixing its economy.

"I think it has something to do with politics, the upcoming elections for example,” he went on. But I hope this is only temporary."

For a Chinese construction company to compete in the U.S. market and undertake these big public projects, the challenges can very well be imagined. Yuan admitted the difficulties, but he believes in expertise, hard work and a willingness to give the lowest bidding price.

Over the past 10 years, China Construction America has grown from about a dozen employees to today's 1,000 in the US. Ninety percent of the staff, according to Yuan, are local hires.

Joseph Catapano, a project manager who oversees the Staten Island Expressway site, said he feels "very privileged" to work for the company.

"It's a very good opportunity for me and I see myself working here until I retire," said Catapano, who has 12 years of engineering experience in New York and California.

"We only employ union workers at our New York job sites," said Yuan, adding the company agreed to follow the "Buy America" rule for the Alexandra Hamilton Bridge project as one condition prior to the bid.

"Buy America" requires the U.S. government to prefer US-made products in its purchases. In this case, companies that win bids should only use U.S,-made products, such as steel.

Yuan said after so many years, China Construction America is ready to take on different projects, and maybe even go back to residential projects. Starting this year, its parent company is planning to invest $2 billion in the U.S. market to boost its investment in public-private partnerships, infrastructure development, mergers and acquisitions and residential projects.

"We have an advantage to help the US build its infrastructure projects. We can bring money and our connections established with both Chinese and foreign banks (to generate the capital) and of course our expertise," Yuan said, calling it a "win-win solution."

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