ENGINEERING THE FUTURE
As a senior executive of one of China’s biggest contractors, Zhang Jianguo is eager to contribute to regional development.
Adjusting to the uncertainty of China’s “new normal” phase coinciding with an economic slowdown is an uphill task for business leaders, but Zhang Jianguo believes he is plotting the right course. The vice-president of China Machinery Engineering Corporation (CMEC) is pursuing a strategy to promote long-term, sustainable growth by investing overseas and embracing technological change.
Sipping a cup of tea and looking relaxed, the sharply dressed, soft-spoken executive of the giant engineering conglomerate began an interview with Asia Focus by acknowledging that he rarely provides insights into corporate investment plans or his personal life.
“Upon this visit [to Bangkok] on behalf of CMEC, our usual business practice mainly focuses on work rather than discussing personal details. But in this case, we can speak as friends for this interview,” he said.
Building and maintaining friendships abroad is central to the success of organisations such as CMEC.
“Our expertise is associated with engineering procurement and construction (EPC) and the majority of our investments are allocated overseas, in which joint-venture investments with other companies have been made,” he said.
The EPC field is a complicated one because a company has to establish good relations and communicate well with state authorities and local citizens alike in order for a project to start smoothly, said Mr Zhang.
Adding to the challenge is the need to thoroughly review local laws and regulations together with local business customs, he stressed.
As of June 30, 2016, CMEC had undertaken engineering contracting projects in 48 countries, primarily in Asia, Africa, Europe and South America.
One notable overseas project is the Thar coal field II and power station project in Pakistan, which falls under the Chinese government’s One Belt One Road (OBOR) initiative as part of the China-Pakistan Economic Corridor. The integrated coal-powered project aims to alleviate chronic electricity shortages in Pakistan, allowing it to improve its power generation structure as well as push forward with local economic development.
Initiated by President Xi Jinping as a way to revive the ancient Silk Road trade routes, OBOR is an ambitious, inclusive development plan for land-linked and maritime trade. Infrastructure investment is a key component as success will depend on a strong regional network and connectivity to facilitate trade and investment flows.
Another flagship project developed by CMEC is an African hydropower plant completed in 2010. Nicknamed the “Three Gorges” project of the Republic of Congo (Brazzaville), the 10-megawatt plant is located in Imboulou and has greatly expanded power generation capacity in the African nation.
CMEC is also interested in exploring investment opportunities in Thailand given how the OBOR initiative also aims to help upgrade infrastructure in Southeast Asia, said Mr Zhang.
The Chinese executive did not reveal investment details, but stressed that CMEC would be making more effort in the Thai market, especially in new energy fields such as solar, waste and biomass power-generating projects.
Since Thailand is a member of the China-led Asian Infrastructure Investment Bank (AIIB), it is expected that there will be investment cooperation between China and Thailand to promote infrastructure connectivity, which explains the interest of CMEC in Southeast Asia’s second largest economy, he reaffirmed.
“Made in China 2025” and “Thailand 4.0” are also compatible with one another as the two national development strategies are designed to foster the growth of innovation-driven industries and information technology, which will lead to new opportunities for greater investment flows between the two countries, said Mr Zhang.
In any case, economic growth outlook in each country and overall global economic conditions will determine the company’s overseas investment approach over the next five years, he said.
Chinese companies have been aggressive in expanding their overseas investments in recent years amid concerns about lukewarm economic conditions domestically. Increased investments abroad by Chinese companies also help further the government’s goal to make the yuan a truly international currency and to create more trade link.
But there could be some stumbling blocks ahead for Chinese conglomerates. Authorities in Beijing late last year signalled a plan to place curbs on Chinese companies seeking to purchase assets overseas in order to contain capital outflows. Commerce Minister Gao Hucheng has expressed concern about the huge difference between outbound Chinese investments and the sum of foreign direct investments flowing into the world’s second largest economy.
HIGH AMBITION
Similar to its peers, CMEC has its own challenges to overcome, said Mr Zhang. In the near term, these include lacklustre global economic conditions and the slower pace of economic growth momentum in China. The latter is considered the “new normal” now that policymakers in Beijing have declared that longterm sustainability will rely more on domestic consumption-led growth than manufacturing for export.
“Although many companies are facing the same situation, the amount of contract projects [for CMEC] has dwindled due to slower economic growth and this means there is stiffer competition happening,” said Mr Zhang.
“The ultimate concern is whether the company can leapfrog into becoming one of the prominent international corporations in our category.”
Vision is of paramount importance as it will enable the company to capture new opportunities to develop itself and manage business operations accordingly. Good teamwork, endurance and determination are other attributes essential to corporate development, he said.
“We would not be able to secure work projects if we could not outdo what our competitors are capable of doing, so we have to be more determined,” Mr Zhang reiterated.
CMEC began life as a subsidiary of stateowned China National Machinery & Equipment Import & Export Corporation, which was set up in 1978. The company was listed on the Hong Kong Stock Exchange in 2012 and its controlling stake is now owned by China National Machinery Industry Corporation (Sinomach). The core business of CMEC is engineering contracting, but also extends into trade, investment, research and development, and international services.
The company has now extended its business reach to more than 150 countries and territories in the fields of international contracting and general international trade. The contracting business involves a broad range of areas such as electric power and energy, transport, electronic communication, housing and architecture, manufacturing and processing plants, environmental protection, mining and resource prospecting.
The company’s revenue in the first half of last year was 8.4 billion renminbi (US$1.23 billion), down 17.2% year-on-year from the same period a year earlier.
‘DO MY BEST’
Mr Zhang is not an engineer or business specialist by training and his career path has been an unusual one. He was a professor specialising in ancient Chinese documents before he decided to pursue a completely new field, taking a position as a human resources executive at CMEC in 1991.
Working in HR, he said, enabled him to gain a better understanding of the company’s management system and business plan. This work experience eventually served as a platform for him in preparation for high-level executive responsibilities in the years to come.
As his potential became more apparent to company leaders, Mr Zhang obtained more international experience as a general manager of a CMEC subsidiary, CMEC International Tendering Co Ltd, engaging in import and export activities.
“Although my university degrees have no relation to what I have been doing at CMEC, I was willing to learn everything no matter how difficult or unfamiliar the task was,” she said with a smile. “I was determined to do my best and the seniors at the company helped with navigating the work process.”
Mr Zhang keeps in mind Chinese proverbs to help stoke his passion for work and determination to get the job done. “Clear mindset” and “preparation through knowledge and tools” are the main messages in those proverbs, which he incorporates into his work ethic.
He acknowledges that he puts a great emphasis on discipline when it comes to delivering professional work performance. While the term “perfectionist” does not fit his character as he is more of a pragmatic type, he insists there has to be a high standard for people to aim for.
For any executive in charge a large conglomerate, stress is unavoidable. Mr Zhang has devised his own strategy to avoid feeling overwhelmed by prioritising the most important issues among the many requiring his attention.
Light exercise two or three times a week also helps, and a stroll in a park is part of his usual exercise habit. Winding down to classical music — Beethoven, Mozart and Chinese opera are favourites — is another effective tonic.
In addition to these leisure activities, Mr Zhang enjoys composing Chinese poems in the ancient style as a means to express his thoughts and emotions artistically. And he is not alone in relishing this pursuit as there is a group of friends that he joins for poem composition.
Summing up his work experience at CMEC, Mr Zhang says he “adores the company and it has been an honour to work here”. Its successful performance, which he hopes to help perpetuate, is “a collective result of every employee’s productivity”.
“We would not be able to secure work projects if we could not outdo what our competitors are capable of doing, so we have to be more determined”