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Business

Riverside project heralds company's return to Thailand

Bangkok -- On a blazing hot day, Dai Bin Bin retreats to the Chao Phraya River, savoring the views from a stretch of riverfront property. Only minutes from downtown, it is an idyllic oasis of undeveloped land -- for now. Soon to rise here will be one of Thailand's tallest towers, filled with luxury condominium units, hotel rooms, upscale shops and restaurants.

Dai Bin Bin, CEO and Chairman of Beijing Construction Engineering Group, at the Four Season project site in Bangkok (photo by Ron Gluckman)

With a budget of 1.2 billion U.S. dollars, the Four Seasons project will feature a 72-storey tower set to soar 300 meters over the River of Kings by 2018. It is one of the largest private construction projects in the country and a bold vote of confidence for an economy that has stagnated during years of political turmoil.

In an exclusive interview with the Nikkei Asian Review, Dai, CEO and Chairman of Beijing Construction Engineering Group, is bullish about the project much of which his company is building and financing, and Thailand as a whole.

"This is a very good place for Chinese investment," he said. "From my point of view, the environment is very good, and will attract more overseas investment."
 
Beijing Construction Engineering is one of China's biggest construction companies, and increasingly a global player. The company was established in the 1950s after the formation of the People's Republic of China. It was appointed to build much of central Beijing, including the Great Hall of the People. More recently, the company has been active throughout the world, from Africa to the U.K., where it is a partner in the 800 million pound Manchester airport reconstruction.
 

A mock-up of what the Four Seasons site will look like when completed in 2018. (courtesy of Country Group Development)

Besides building the world's largest Four Seasons property (in terms of the number of hotel rooms and apartments), in conjunction with a Capella Hotel and other facilities, Beijing Construction Engineering is also a 30% investor in the five-star riverside project. Financing will be provided by the Export-Import Bank of China, a longtime backer of the construction company.
 
The 355 luxury apartments are priced at the top of the Bangkok market, but
expected to be an easy sell in China, where sales offices will likely open soon in Shanghai and possibly other cities, according to Ben Taechaubol, CEO of Thailand's Country Group Development. The lead company in the project had acquired 5.75 hectares downriver from King Taksin Bridge, one of the largest prime sites remaining in Bangkok.
 
"We see good opportunity in Thailand," said Dai. "The Chinese love Thailand." Despite years of political upheaval that culminated in last year's military coup, he still perceives Thailand as a bankable tourist and recreation region, not only for China, but for all of Asia, and much of the world.

The project is Beijing Construction Engineering's largest investment in Asia and is emblematic of the huge wave of Chinese entities expanding overseas. The company was started as a state enterprise and the focus for much of its first half-century was the mainland, especially Beijing.

"If you look along Chang'an Avenue," said Dai of Beijing's central boulevard running past Tiananmen Square and the Forbidden City, "Our company built about 70% of it." Other landmark projects built by the company include the Oriental Plaza, among China's first modern malls, and the Capital Museum, the largest in the world.
 

Oriental Plaza in central Beijing, one of the first luxury malls in China, built by Beijing Construction Engineering Group (courtesy of Beijing Construction Engineering Group)

Beijing Construction Engineering has had to navigate the difficult transformation from nurtured state enterprise in a protected home market, where backroom deals are the norm, to a more transparent global player. The process is ongoing and press interviews are part of the broader effort to match international standards of operation.
 
As part of China's economic liberalization, companies were encouraged to investigate opportunities overseas. In the first phase, most initially looked to nearby nations, fellow communist states and emerging markets with few other investors.
 
Nowadays, Chinese companies aim to be truly competitive globally, not only within the developing world, but also by battling and beating international contractors in the West. Beijing Construction Engineering has been among the more aggressive and successful Chinese companies. Its American division, BCEGI-INC. USA has projects from California to Florida, including the $140 million Shores Luxury Apartment in Marina Del Rey, near Los Angeles, and ambitious plans for a $1.2 billion, 94-acre mixed use project in Osceola, Florida.
 
Other notable overseas projects include the 60,000-seat Tanzania National Stadium, the palace of the Togo President and Sudan's International Airport. In Sri Lanka, the company is building the country and South Asia's tallest structure, the Lotus TV Tower, which will be completed in 2016.
 
With a workforce of about 80,000 and 26 offices worldwide, the company recorded revenues of about $10 billion last year and the bulk of that sum remains in China. But by various measures and indexes, Beijing Construction Engineering has ranked within the top 250 companies in the world.
 
Dai knows that Chinese companies have encountered much controversy and often fervent anti-Chinese protests overseas. In Myanmar, the massive Myitsone Dam project involving China Power Investment was abruptly halted after extraordinary public pressure in 2011. In March, Sri Lanka's new Maithripala Sirisena government suspended work on the Beijing-funded $1.5 billion Colombo port project. In the Bahamas, ongoing controversy surrounds the $3.5 billion Baha Mar mega-resort project involving Export-Import Bank of China.
 
Around the globe, Chinese companies face increasingly harsh scrutiny over bidding practices, alleged corruption and concerns about construction quality. There are also looming geopolitical issues: Myanmar's dam reassessment was part of a larger shift away from Chinese patronage, with the government aiming to attract more Western investment, a pattern repeated in other countries swamped by Chinese investment, such as Mongolia.

In Sri Lanka, the government questioned the cost and logic of a bevy of Chinese-funded projects that had ruffled the feathers of longtime ally India. In numerous bids for projects, Chinese companies had been excluded or rejected over questions about financing and government subsidies.
 
"Our company has never had this kind of problem, but we know other companies from China have," Dai said. "When Chinese companies go abroad, they have their way of doing business. In some parts, it can be easier. In other parts, more difficult.
 

Ben Taechaubol, CEO of Thailand’s Country Group Development (courtesy of Country Group Development)

"China and the world can be better integrated," he added, emphasizing that this integration was still in its infancy. "We are trying to contribute to the world. In Africa, we do a lot of training, helping people. We help to build hospitals and housing. We are trying to help create better living conditions for people and a better future."
 
Beijing Construction Engineering is no stranger to Thailand, or its erratic growth patterns, having actually opened an office in the country two decades ago. But the Thai operation was hit by the 1997 Asian financial crisis, which started and then worsened considerably in Thailand.
 
Dai sees the current project as Beijing Construction Engineering's long-delayed return to the Thai market. "We have a good relationship with our local partners, and hope to enlarge our business here," he said. "We will be looking at other opportunities."
 
Taechaubol, CEO of Country Group, said that the riverside project is a strategic first step in what could be an ongoing business partnership. While he is bullish on the potential Chinese investment, he said that Thai, Asian and Western investors had also been enthusiastic.
 
"We think China is an important market, however it's important with a project like this to ensure a good mix of clients," he said. Country Group said that a third of the units have already been sold off-plan.

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