Wu Yi hopes to transform construction in Australia

Wu Yi hopes to transform construction in Australia

Mon, 12/02/2018 - 12:29
Qiu Liang Xin

GLOBAL REACH: China Wu Yi is following the path of its ancestors, according to chairman Qiu Liang Xing. Photo: Philip Gostelow

Vince Mulholland

Located on the south-east coast of China, Fujian Province has always been one of the Middle Kingdom’s most culturally and economically important regions.

More than 600 years ago, China’s fleets first started their journeys in the port city of Quanzhou, beginning the ancient maritime Silk Road that linked China to Indonesia, the Middle East, Africa and Europe, spurring rapid cultural and industrial exchange and development.

Today, for one of China’s biggest construction, manufacturing and development giants, Fujian Province’s capital Fuzhou is the frontier for what it hopes will be an historic expansion.

China Wu Yi, a state-owned and publicly listed company on the Shenzhen Stock Exchange, is already one of the country’s most-travelled enterprises.

Ranked among the top 250 building companies worldwide by US Engineering News, China Wu Yi operates in more than 30 countries across Europe, Asia, Africa and North America and the Middle East.

Australia is the only region where China Wu Yi does not yet have a footprint.

China Wu Yi chairman Qiu Liang Xin said the company had been encouraged to seek out a mutually beneficial partnership in Australia under the auspices of the modern maritime Silk Road – part of the wide-ranging Belt and Road Initiative announced by President Xi Jinping in 2013.

That partnership is Wu Yi Doric, an independent, 50:50 joint venture with Perth-based construction firm Doric, which has been operating in Western Australia for nearly three decades.

Wu Yi Doric represents the establishment of a tier-one contractor for the Australian market, with the company’s mandate to use the significant financial muscle of China Wu Yi to bid competitively on projects worth $100 million and above.

The partnership, which has been in genesis for more than 12 months, will enable Doric to fulfil its long-held ambitions of a national expansion, while also setting its sights on exposure to South-East Asian markets.

Mr Qiu said Wu Yi Doric was a perfect example of the spirit of the Belt and Road Initiative, which has been designed to enhance connections between more than 60 countries, drive significant economic development and would allow China Wu Yi to follow the path of its ancestors.

“The gist of the initiative means to cooperate in a peaceful manner, be open minded and tolerant, learning from each other and making mutual benefits and win-win outcomes,” Mr Qiu told Australia China Business Review.

“China Wu Yi and Doric will further their cooperation to instil new power into the construction industry, with new technology and concepts.

“From here, we wish to broaden extensively the cooperation between China and Australia to many more sectors and hope that our work can underpin friendship among our people as well as between our governments.

“This long-lasting friendship will benefit not only our people but economic growth in Australia.”

China Wu Yi, which reported operating income of more than ¥2.57 billion ($502 million) to the Shenzhen Stock Exchange in 2016 and holds more than ¥10.9 billion ($2.1 billion) in total assets, is considered to be a leading innovator in pre-fabricated buildings.

As well as being a large-scale construction firm, China Wu Yi is a big manufacturer of next-generation building supplies.

Mr Qiu said the company had developed a production-line style of pre-fabrication at its six factories in China, not too dissimilar to the automated process of manufacturing automobiles.

He said it was this technology, developed in-house by a large and dedicated research and development team, which had the potential to transform the Australian construction market.

“The principle that lies behind that is we want to build constructions and buildings in the way that a car is produced,” Mr Qiu said.

“Everything, including staircases, walls, beams and balconies, everything needed for a building can be pre-produced in our factory.

“It has lots of features and advantages – energy saving, environmentally friendly, and it can shorten the timeframe of construction projects.

“We believe it is a trend that the construction industry is going to develop in the future around the world.”

Mr Qiu said China Wu Yi, which is also a prolific developer and real estate investor, had already established Australian subsidiaries to create projects on two parcels of land, one in Sydney and the other in Perth.

Wu Yi Doric has been appointed preferred contractor for both projects, which are in the pre-approvals phase with more details to be announced in coming months.

Mr Qiu said if the company were able to successfully introduce its building techniques and technology into the Australian market, it would begin evaluating the possibility of building a local pre-fabrication facility.

“These pre-fabrication bases are reliable production bases for construction industrialisation,” Mr Qiu said.

“They can supply Australia with the products it needs for buildings and houses.

“We hope that our cooperation with Doric and our new technology can largely reduce the cost of construction in Perth and in Australia.

“As far as I know, the property prices in Perth are still quite high, and the main contributor is the construction cost.

“The project in Sydney is a trial, it is like a pilot project for us, and we would like to see if the Australian community will be happy to see this type of technology used.

“The process is to purchase the land, use our pre-fab technology in the building and deliver the construction to the local people and see what their feedback is.

“If we can see positive feedback and positive outcomes from this project, we will have confidence in setting up a pre-fab factory in Australia.”

Mr Qiu said China Wu Yi had been attracted to Doric not only because of its strong track record of project delivery, but also because of the strength of its network among local governments, developers and subcontractors.

“Entering the Australian market is a long-term strategy for China Wu Yi and the cooperation between China Wu Yi and Doric is an alliance of powers,” Mr Qiu said.

“This arrangement can fully utilise the features Doric possesses – its good reputation, people and its network and its considerable experience in local projects and good performance.

“As far as our own company is concerned, we have a very strong financing capacity as a state-owned company.”

And it is thanks to Doric’s network, or guanxi, that Wu Yi Doric was established.

Doric chairman Harry Xydas told attendees at the company’s VIP launch at Fraser’s in Kings Park the companies had been introduced by long-time Perth property executive Neil Kidd.

Mr Kidd is the Australian representative for global property and development powerhouse, World Trade Centre.

Mr Xydas said Doric had considered an east coast expansion on the back of its $700 million worth of projects in hand and annual turnover of more than $400 million, but once introduced to China Wu Yi by Mr Kidd, he realised something greater could be achieved by leveraging the shared business principles of the two companies.

“It was timely and fitting for our next strategy to expand our operations nationally,” Mr Xydas said.

“I am confident Wu Yi Doric will make a successful impact in the industry and for the economy, and it was Neil who created this opportunity.

“We believe Wu Yi Doric represents an ideal solution, with the potential of becoming a leading independent construction company in Australia.

“This is why we have chosen this, rather than a short-term, one-off joint venture or a corporate transaction.

“China Wu Yi’s additional capital, technologies and competitively priced products will provide a good foundation for us.”

Doric managing director Vince Mulholland, who will also lead Wu Yi Doric, said the partnership would allow for projects of scale that previously could not be targeted.

Wu Yi Doric will operate under a non-compete arrangement with Doric and Jaxon, the group’s residential building arm, both of which will continue to bid on projects valued at less than $100 million.

“Doric has always historically done projects across many sectors, but it was constrained in terms of capital and in terms of the size of project that it could target,” Mr Mulholland said.

“A lot of our clients had been talking to us about larger projects that they’d been doing, but they couldn’t see that Doric had the capital.”

Mr Mulholland said he expected Wu Yi Doric to make a significant impact in the local construction sector, where developers were continually seeking a point of difference, as well as cost savings.

“Developers are very interested in terms of what we can offer as a new company, bringing the best of what Doric brings to the table, in terms of being an established builder with a reputation that it can deliver on projects, and China Wu Yi can bring new technology and major project experience to the table,” he said.

“They’ve built major stadia, major projects with universities, residential, government buildings, so they do very large projects in the hundreds of millions.

“The clients that we’ve talked to are very interested in looking at that.”