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Peacock Flying NORTHeast

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by Dr. Fisher

Byron Bai had an early dream of building houses. So heentered the university as a student in Industrial and Civil Buildings, Civil Engineering in today’s terms. Upon graduation he was employed by the China Petroleum and Natural Gas Co., an oil exploration and refining company. Having worked for a short period, it became evident to him that there would be limited opportunity for him as a civil engineer working in the oil industry.


There was a prevalent saying during the time of Chairmen Xiaoping Deng, “Peacock Flies Southeast”. The basic meaning was that outstanding men should move toward the Southeast of China where economic development was moving forward at a rapid pace. This economic development actually covered most of China’s coastal regions, including Dalian. Thus, after two years in the oil fields, He followed the “Peacock” to Dalian and settled in the new Dalian Development Area (DDA).


He began work for a state-owned enterprise, the Dalian Exploitation and Construction Company. It was the first company in DDA, and the Vice Mayor of Dalian was the first general manager. The company undertook the infrastructure work for the Dalian Sino-Japanese Industrial Park. This was the very first industrial park in China to be co-invested by the Chinese and Japanese governments. Later, in 1993, the company was awarded a contract to do a turn-key construction project invested by a Japanese company, MARUBENI.

 


“It was the first time for me to encounter working with a foreign enterprise, and it greatly influenced my future work ideas and attitude.I was impressed by the rigorous work attitude of the Japanese. We were all impressed by the professionalism of the Japanese and their attention to detail. Initially we misunderstood the Japanese and thought they were too particular. But as time went on we began to understand that they were being thorough and detailed in their work. This was something we Chinese lacked. So we started to change our thinking and work style. We approached the Japanese with an attitude of learning from them. We needed to relinquish our old habits and ways of thinking.”


During the same time period the state-owned construction companywas working as a subcontractor on another project in partnership with a very large Japanese construction company, Simizu. In the process of cooperating with them, the Chinese team learned many new construction methods.


“From this experience, we felt a need to make many improvements inside our company. As a state-owned company, the majority of our projects were government owned, and we did not really understand competing for foreign-owned projects. Our boss felt we should not count only on government projects, but should be market oriented. Thus a special foreign-owned project department within our state-owned construction company was established. There were 20 people chosen to work in this new department, and I was lucky enough to be chosen. I am please that I was able to participate in this process and be a leading member.” From the onset, the newly formed Chinese group had no clear knowledge of how to do a turn-key project for a foreign company. This was in the 1990’s during the height of Japanese owned project investment.


“Looking back at that time, we struggled on the first few projects and though improved over time, were not really capable of accomplishing these projects in the manner we should have. We could have been more comprehensive and complete in our work.” From his experience working on these foreign projects, he felt that traditional Chinese construction must learn from foreign companies. Byron also felt that he needed to improve his work capabilities and skills in a similar way. He resigned from the construction company and became the group leader of a project team for Price Waterhouse Cooper (PWC). There he was in charge of special restructuring and management for state-owned enterprises. He worked with colleagues from PWC Brittan, PWC Singapore, and PWC Shanghai.


“It was a period of learning for me, where I received training on advanced management ideas, and learned a great deal about the working culture of western companies. My western colleagues provided much valuable information and gave me a new view of western working methods”.


Having worked with both Japanese companies and western companies, he had developed many contacts and also gained valuable experience working with foreign companies. In 2001 he decided to leave PWC and start a new private construction supervision company. He was one of the founders and shareholders of this new company.


“My decision to enter into this new venture was based on two key factors. I realized how difficult it is for a foreign enterprise to invest in China. They do not understand the China domestic environment and need a professional local company to assist them in solving problems. The second factor was that foreign companies at that time had a better reputation than Chinese companies with respect to financial dealings”.


It was about 2004 that Euro-American companies started entering into the Dalian market. Prior to that, most of the work in DDA waswith Japanese and Korean companies. Given his experience working with western companies, he felt there was an opportunity to work with these new incoming western companies. Thus, in 2005, he founded a newconstruction enterprise, E&G Construction International, a Yihua Group affiliated company.Thus, in this new venture he could concentrate on his real interest of working with western companies.


“At E&G Construction International, we work as a Turn-Key General Contractor (Engineering, Procurement, and Construction – EPC) focusing mainly on foreign invested projects. Initially, there was a reliance mostly on Japanese projects. We continue to work with Asian clients from Japan, Korea, Hong Kong, and mainland China. However, we have completed projects from many other foreign countries as well, including United States, Canada, Australia, France, Italy, Germany, and Brazil. In Dalian, there are not many companies who can provide complete Turn-Key (EPC) service”.


Byron felt his business model had many advantages to foreign owned companies and will become the preferred business model of the future. As the market trend of foreign investment in China continues, there will be more Euro-American and high end manufacturing companies moving into the Northeast. While this presents opportunities for companies like Byron’s, it also presents challenges. There is a need to continually improve management methods so as to provide professional services similar to what the foreign customers are accustom to in their own country.


“Industrial construction is a very competitive industry. As with any industry, it is very price sensitive. However, when working with western companies one cannot rely only on price alone, nor rely on past performance of successful projects as a guide to the future. The quality of the company’s service and professional team are very important to foreign enterprises. Companies must provide the best product with the best service, providing the best price performance ratio and best value to the client”.


Thus, from Byron’s view, the main way to be competitive in the future is to continue to grow, develop, and gain the insight and capabilities necessary to understand the clients’ specific needs and satisfy their requirements in an excellent manner. After all, it is the customer centered approach that is foremost in any business, and is becoming more and more important as new foreign enterprises find their way to Dalian.