Chinese Companies: Late for Iraqi Reconstruction?

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Last updated at: (Beijing Time) Tuesday, July 01, 2003

Chinese Companies: Late for Iraqi Reconstruction?

The post-war Iraq leaves a lot of work to be done, which naturally spells numerous business opportunities. When and how will Chinese companies enter the Iraqi market? What is lying ahead of them? And who on earth leads the rebuilding of Iraq?

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Return to Iraq in wake of war in order to demand goods payment

Chen Xianzhong is the only private Chinese businessman that has been long living in Iraq carrying out business activities. On March 19, the day before the US launched a military attack on Iraq, his 10 containers of textile products of US$1.5 million which were sold to the central market under Iraqi Ministry of Trade arrived at Umm Qasr, the only deepwater port in southern Iraq. On March 20, these goods entered the buyer's warehouse. However, the war broke out that night, therefore the payment could not be shelled out.

Once the war ended, Chen Xianzhong risked his life to go back to Iraq. He got in touch with former officials with the central market and carried on negotiations with UN officials responsible for supervision of the implementation of the Oil-for-Food Program. A month later Chen Xianzhong successfully got back the total payment of these goods.

War parties share the major contracts, while Chinese may strive for subcontracts

Chen Xianzhong once did a careful analysis of and research on roles that Chinese companies could play in the post-war reconstruction of Iraq, and he found that there lay a good many opportunities. "Although corporations from war-backing countries dominate big contracts to rebuild Iraq, Chinese companies also can compete for and win some subcontracts of the bigger contracts."

Chinese commodities are popular in Iraq due to the cheap price, but the quality is rather beyond compliment, said Chen Xianzhong. He warned Chinese businessmen not to only eye on temporary benefits while neglect long-term ones, the final outcome would be no other than Chinese companies being squeezed out the Iraqi market.

US decides whether to continue the implementation of already-signed contract of US$700 million

The three-person group from China National Machinery & Equipment Import & Export Corporation (CMEC) reached Iraq by bus on June 24. Early the next morning Zhang Ruichen, chief-representative with CMEC office in Iraq, headed for Iraq National Electric Power Project Company (hereinafter called NEPPC) which signed a huge pre-war contract of the construction of electric power stations in Iraq with his company. He was not too sure whether the contract could be still carried out.

Zhang Ruichen met one of his Iraqi acquaints, a senior technician and once participating in negotiating the contract. He said, "Since your equipments have already been transported here and are kept in good condition at the construction site, you can resume the construction of the first unit. As for the construction of the other three units, they are not up to the Iraqi side but the US."

Three foreign companies win contracts in a day, too late for Chinese?

Zhang's acquaint suggested him to register at the office of the US Bechtel in Baghdad and make negotiations with them. Bechtel, America's largest construction firm, was awarded a reconstruction contract of US$680 million and entitled to examine and approve all projects dealing with infrastructure reconstruction in Iraq. Zhang Ruichen was delighted by the remarks. Before returning to Iraq, he thought the US would abrogate all contracts signed with the former Iraqi government. He really didn't expect that efforts would reverse impossible cases.

However, when he walked out of the NEPPC building, he ran into a representative with Hyundai Corporation in Iraq who also made a pre-war contract of the construction of Iraq's electric power stations. This representative told Zhang Ruichen that during the war he didn't leave Iraq and now he won a reconstruction contract.

It was the third successful precedent for foreign corporations to win Iraqi post-war rebuilding contracts that Zhang Ruichen had heard of in less than a day. He also heard about that French and Russian firms also had got in Iraq and were operating actively. He suddenly came to realize that they just seemed to have returned early, but actually they were late.

By PD Online Staff Zhu Lizhen

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