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New rules for China's overseas contractors

Updated: 2011-01-13 10:33

(China Daily)

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New rules for China's overseas contractors

Workers at an oil field in Saudi Arabia. China said on Wednesday it will release a new guideline for better development of the country's project contractors overseas. [Photo / China Daily]


BEIJING - The Chinese government will introduce new guidelines to strengthen its efforts in improving and regulating the performance of overseas project contractors, a move that will help companies establish their brands, said a vice-minister of commerce on Wednesday.

"Chinese overseas project contractors should strive to maintain a balance between quantity and quality in developing overseas contracted projects. So they can build their brand and forge their edges in the long term," said Chen Jian, vice-minister of commerce.

He also said the government will establish a long-term mechanism to provide information service for the companies to easily adapt to the local customs and avoid cultural conflicts.

"New rules will be implemented by the government to complement the current regulation system, so that all Chinese companies will abide by the rules and fulfill their share of social responsibilities," Chen said.

In addition, companies are urged by the vice-minister to optimize their development mode and move upward along the value chain.

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According to Chen, more and more Chinese companies will have business opportunities abroad since the global industrial restructuring is still underway and emerging economies are keen on improving their infrastructure.

However, the rising number of labor disputes has prompted the government to step up efforts to enhance regulation of those companies' behavior overseas.

In April last year, the Ministry of Commerce, together with six other government agencies and more than 200 overseas Chinese embassies, rolled out an 8-month special inspection of more than 2,700 project-contracting companies both at home and abroad.

China's overseas project-contracting business maintained a rapid growth for the last few years and played an important role in the country's economic growth. It now absorbs more than 3,000 companies, with projects scattered all over the world.

According to the ministry data, agreements worth more than $130 billion were signed in 2010, up 3 percent year-on-year. The annual turnover jumped by 16 percent year-on-year to more than $90 billion.

Despite the rapid development, Chinese companies have only a limited market share in the global market and there is considerable room for future expansion, Chen said.

However, he cautioned that protectionist barriers raised by some local governments to reject Chinese companies as well as social and political instability in some countries will prompt security concerns for Chinese companies.

But "I believe Chinese companies face more opportunities than challenges", Chen said.

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