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Firms eye multi-billion pound Chinese market

China is emerging as a key prospect for rail infrastructure projects, with 42,000 km of tracks slated for construction over the next 10 years.

In a sector document set to be published by UK Trade and Investment, timed to coincide with two top-level delegations from the Chinese Ministry of Rail arriving in the UK, the Government argues that the decision by China in 2005 to liberalise construction is beginning to bear fruit for foreign firms.

The document – entitled Railways, China: Sector Report 2009 – will say that following China’s entry to the World Trade Organisation “multiple investment entities including private and foreign capital are being encouraged into the rail construction and operation sector on the market-oriented basis”.

By the end of 2010, the Chinese government will have spent £113 billion on railways in just five years. And the country’s plans to swell total capacity to 120,000 km by 2010 promises accelerated spending over the next decade.

Balfour Beatty Rail and Mott MacDonald are long standing operators in the Chinese Republic, and both have recently secured new contracts. But other firms have begun to feel their way too.

Civil engineering and demolition firm McGee this week confirmed it was looking toward Chinese soils for future expansion.

Industry heads have admitted that, in the current climate, it is important to either diversify or look abroad for new opportunities.

CHINESE CHALLENGES

Despite the value of work on offer, some industry sources have predicted only a few large firms will decide to take on work in China because of the difficulty in offering competitive prices.

UKTI is expected to concede as much in its sector report, saying: “The demand for the transfer of technology, against the fear of copying if the transfer is not agreed, the huge difference in cost levels and cultural differences in the approach to technology choice and to procurement are all problems encountered in doing business.”

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