British firms have been warned that they risk missing out on Hong Kong’s next infrastructure boom if they do not step up their presence in the region.
Billions up for grabs
Hong Kong’s next generation of infrastructure projects could deliver billions to UK civils firms, but only if they reaffirm their commitment to region, UK trade commissioner to Hong Kong Stephen Cartwright has told NCE.
Cartwright said the key for firms was to make it clear that they are committed to the region if they are to win work.
“I’ve made the point quite a few times, that if a company is ready for the next stage then they have to be prepared to commit and invest in a regional business.”
He cited Laing O’Rourke and Kier as firms that had made that commitment. “Laing O’Rourke and Kier International, they have been really involved in the rail sector with MTR,” he said. MTR is Hong Kong’s rail infrastructure owner. “Those two companies looked to engage and now have returned to Hong Kong.”
“I’ve made the point quite a few times, that if a company is ready for the next stage then they have to be prepared to commit and invest in a regional business”
UK trade commissioner to Hong Kong Stephen Cartwright
Cartwright was speaking to NCE following last week’s Think Asia, Think Hong Kong event in London which attracted over 1,000 businesses and 100 Hong Kong government officials.
Officials used the event to unveil a planned HK$350bn (£29bn) infrastructure spend. Cartwright said the “next generation” of projects would provide massive opportunities for UK firms.
“The third runway at Hong Kong International Airport is one of the significant big builds coming up,” he said.
“There will also be a lot of cross boundary infrastructure projects going on.”
Up in the air
A public consultation examining plans to expand the airport closed at the beginning of the month. The plans include building a third runway and associated terminal, airfield and apron facilities by reclaiming around 650ha of land north of the existing airport island. The project is estimated to cost HK$136.2bn (£10.7bn).
Cartwright cited the airport because of previous involvement of UK firms on the project. In the past, construction on the airport has delivered UK firms contracts worth 13-15% of the total project bill − a figure Cartwright says is a good indicator for the future.
“There is real substance in this. This is not a plea, but an up to date statement that reflects what’s happened because this work is not happening by accident. They [the Hong Kong Government] came through London because there are so many areas they are looking for world class experts, and they have landed here,” he said.
Small companies can benefit too, says Cartwright
Cartwright said opportunities weren’t restricted to those already on the ground, and not solely to big companies.
“I think the fact that there are UK companies on the ground, they have a track record but there’s scope and potential for others to join,” he said.
“People might think, there are so many companies in the marketplace, would there be any opportunity? And the answer is yes and it’s come straight from the horse’s mouth from the Hong Kong government themselves and they are looking for the right matches. It gets down to very specific detail.”
He said even the smallest companies offering niche services could be picked to work in Hong Kong as the focus was on sustainability, green energy and the best quality areas, where British expertise excelled.
UK engineering firms have been told to stop individualist behaviour and form consortiums to win work in international markets, or lose out to more competitive multi-national consortiums.
Association of Consultancy and Engineering chief executive Nelson Ogunshakin said firms must rethink the landscape of how they work overseas.
“The industry has to move away from isolation thinking and take more leadership. The days are long gone where you can compete fiercely against each other,” he said.
“In a very global market where people are collaborating to get the best and get a share of the projects it may be an opportunity for UK plc to start thinking how can we bundle the best of the UK companies together?”
Ogunshakin said that Asian companies are already successfully pursuing this strategy and pointed to a $20bn (£13bn) nuclear power contract awarded to a consortium led by the Korean Electric Power Company (Kepco) in December 2009.
Kepco will build four new nuclear reactors by 2020 for the Emirates Nuclear EnergyCorporation (ENEC). Kepco is in a consortium of Korean Hyundai Heavy Industries, Samsung Engineering & Construction and Doosan Heavy Industries & Construction.
“What the Chinese and Koreans have been doing is taking a leadership strategy whereby they go and talk to government and their promoters and put themselves forward as a complete entity. Behind us we have a team of consultants, contractors, equipment suppliers and that is the way to go in this competitive world.”