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UK firms must make the most of Chinese growth

The Chinese are coming – or rather, as Construction News reveals this week, they have already come. Does this represent an opportunity or a threat to UK contractors?

A delegation from the China International Contractors Association, which represents the country’s most powerful construction group, has been to the UK with a view to both investing in UK infrastructure projects and becoming involved in their construction.

The latter could take the form of joint ventures with UK contractors or the use of Chinese materials, equipment and technology. UK contractors’ first reaction, understandably, may be to perceive this as a threat. It’s direct competition from a market with a different set of operating principles, and joint ventures may be just the start.

But money talks. And no one can deny the real and pressing need for investment in UK infrastructure projects. Despite the government’s assertions that pension funds will help bridge the gap in financing, we have seen little or no evidence that this is more than a hope or desire on ministers’ part.

Pension funds have stated openly that they are not convinced by the structure of risks or potential returns on greenfield infrastructure projects.

The Chinese, meanwhile, have already invested in existing assets such as Thames Water and Heathrow and are expressing interest in pipeline projects ranging from the Thames Tideway to nuclear.

There is a delicate balance here between the long term and the short term, between maintaining control and entering into potentially beneficial partnerships.

As our stories last week on the joint ventures lining up for the next phase of Thames Water work, or to build the Thames Tideway ‘super sewer’ demonstrate, collaboration in terms of expertise and experience is sometimes the only way to convince a client that you’re the team for the job. Some of these JVs already have no UK contractors involved.

To put it simply, these projects can’t go ahead without finance and UK contractors need them to get under way so that there is work for them.

What’s more, UK plc needs major infrastructure projects to get off the ground for the boost they will bring to the economy and to the jobs market. The interest from China is there, the conversations are already happening. UK contractors need to get involved now to influence the future, or it will take shape without them.

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