Land of the Rising Sums

Far East construction and development firms have had to acclimatise to regional differences in the Middle East.

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Contractors and developers from China, Taiwan, Korea and other Far East Asian countries have been adding to the fierce competition in the Middle East.

The economic downturn and resulting pressures on the construction market have intensified competition across the supply chain. Piling contractors tell CW that they can compete with as many as 13 other providers for work on a standard building – creating little margin both in profits and chance to innovate.

As if domestic competition was not intense enough, the last few years has seen significant increase in the presence and success of companies from China and surrounding countries in the Middle East.

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Nirvit Sharma at the New Delhi-based private research firm Grail Research, which produces insights into regions for companies looking to expand, says that his firm has seen an increase in interest from Far East Asian and South East Asian companies to enter the region. “That’s definitely happened,” he says.

“They see the Middle East as having much scope for development, and specifically for UAE. From Korea and China we have seen demand for information, although mostly from the supplier side, rather than from the contractor side.”

However, contractors, engineering firms and developers from the east have also been making their presence felt, typically setting up discreet offices in Dubai or Abu Dhabi and gradually claiming more contracts.

Hyundai Engineering & Contracting (HDEC), from Korea, has seen particular growth recently in its business providing building and upgrades to roads, bridges and harbor projects among other areas of infrastructure. The construction outfit gained kudos two years ago for completing the civil works for the first stage of the Jebel Ali New Container Terminal.

More recently, it partnered with HBK Contracting to build the first phase of the residential and cultural development Musheireb – also known as Dohaland – in Qatar. The win boosted the value of Hyundai’s portfolio in the region to US $4.4 billion. Perhaps most impressive is the firm’s success in Saudi Arabia, where its business includes engineering work on a power plant and Jubail Industrial Harbour.

It is one of a few east Asian companies to see some big business in Saudi Arabia. At the beginning of this year Daelim Industrial Company, a Taipei, Taiwan-headquartered firm, won the contract to build a low-density polyethelene plant in Jubail. S I Kim, general manager for the Damman office, said the construction of the plant in was ‘much higher’ than the US $300 million initially reported, though he would not be drawn for the exact figure, which could be more than double.

Also in the first quarter of 2010, CTCI Corporation, another Taiwanese firm, was awarded the engineering, procurement and construction contract, in January, to build an amines plant that will produce 210,000 tonnes per year in Jubail Industrial City.

China Jiangsu International Construction (CJIC), part of the outward-looking China Jiangsu International Group, has had a presence in the UAE since 2004, though sister companies in Qatar and KSA have been active since the 1990s.