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New partnership emerged under B&R: technology, capital cooperation

June 29, 2018


Abstract : With the deepening of the Belt and Road Initiative, corporate cooperation has advanced to a higher level , resulting in a new model of multiple cooperation in technology and capitals, experts said at the Belt and Road International Summit 2018.

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BEIJING, June 29 (Xinhua) -- With the advancement of the Belt and Road Initiative, corporate cooperation has been promoted to a higher level, giving birth to a new model of multiple cooperation in technology and capital, experts and business leaders said at the Belt and Road International Summit 2018, which was held by Siemens in Beijing.

Dong Bin, chairman of the international engineering branch of China Energy Engineering Co., Ltd, said at the forum that the international political and economic situation and the international engineering contracting market have undergone profound changes in recent years. Project contracting companies in various countries are actively exploring business model innovations, and transforming from the traditional overseas Engineering, Procurement and Construction (EPC) to the business models of EPC + financing + investment + operation and maintenance, BOT, PPP and other modes.

Under such circumstance, resolving the issue of investment and financing has become the key to success of a project. Multi-party cooperation therefore is becoming a a common choice among most companies.

-- Conquering Project Challenges through Technical Cooperation

From the sectors of energy to transportation, the huge demand for infrastructure construction from Belt and Road related countries has created many opportunities for cooperation.

Karim Amin, president of sales and operations of Power and Gas Division, Siemens Ltd., said that the demand for electricity in developing countries, which are also Belt and Road related countries, stays high while the level of their electrification is relatively low. 

Chinese enterprises seized this opportunity and achieved remarkable results in expanding their overseas business through EPC projects in recent years. However, they also confronted lots of difficulties and challenges when going abroad. Zhang Tiangui, general manager of the Dresser-Rand business of Power and Gas Division, Siemens Ltd., noted that the international market has high standards and requirements for some key equipment. It is difficult for Chinese enterprises to undertake EPC projects at overseas due to strict requirements for risk management.

Faced with the high-standard product technology requirements of the “Belt and Road” project, as well as the delicate project implementation and risk management and control challenges, Chinese companies are looking for the suitable partners for cooperation.

Cao Peixi, chairman of China Huaneng Group, said at the forum that it is recommended to strengthen the strategic interconnection of energy power planning in various countries, and establish a more comprehensive and in-depth partnership. The new international energy and electricity cooperation framework and regional cooperation framework will promote the development of energy and electricity links in various countries and share the resulting benefits.

-- Improving credit ratings to help EPC to go overseas successfully

Pan Dapeng, senior official with Global Cooperation Department of China Development Bank stated at the forum that infrastructure construction starts from a conceptual stage, at which the government put forward some ideas and make preliminary feasibility studies, then the banks participate in financing to further carry on these projects.

With the deepening of the Belt and Road construction and the development of related markets, more and more overseas owners have put forward requirements for “bringing capital out of China” for EPC companies. How to build a complete and sturdy capital chain for the projects with partners has become a new topic that Chinese companies need to face.

In this regard, Lothar Herrmann, Siemens Greater China CEO said that in this field, companies such as Siemens can help Chinese companies to complete financing successfully by arranging equity investment, project loans and export credits, and by providing financing consulting services.

Liu Yingyi, director of Airport Business of Siemens Logistics Automation (Beijing) Co., Ltd., said that the “Belt and Road” cooperation project requires strong capabilities when it comes to project management, logistics management, and financial services, as well as the ability to integrate and manage different regional cultures. Siemens offers financing solutions, including complete solutions from the entire design process to the implementation process, and its investment companies also engage in project equity investment.  (Edited by Ma Xin, maxin11@xinhua.org)


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