WARSAW, Poland—The apartment building being erected next to mine here in Warsaw is being built almost entirely by Chinese construction workers. It’s the second one to stand on a run-down property picked up by a Chinese investment holding.
Of course it bodes well for the neighborhood that the ramshackle buildings on the site will disappear. The skeletal shaft of an old industrial chimney piercing the overgrown remains of a series of roofless workshops, and the house with the crooked walls and partially caved-in roof where the Chinese workers are living, have been a dilapidated eyesore for some time now.
I see the Chinese workers all the time, walking the 100 yards or so across the lot to the construction site and wonder how well they’re settling in—and not just them.
What has hit home in Poland recently is the fact that Chinese construction firms are obviously here—if maybe not here to stay. Bearing witness to this fact are the inroads China Overseas Engineering Group Company (COVEC) tried to make into the European road and infrastructure construction market, an affair, which became a headline-grabbing embarrassment.
On Monday, after months of stalled work, COVEC lost its contract to build sections of a new highway linking Warsaw and Berlin.
There has been extensive media coverage of the dramatic stall-out that was punctuated with a series of protests—including burning tires and roadblocks—by Polish subcontractors owed tens of millions of zlotys by the Chinese company, which had signed a huge construction contract with the Polish government.
It was hoped that COVEC would have a new, freshly-steam-rolled, piping-hot, split-lane highway ready by next summer for the Euro 2012 Soccer Championship. The event is slated to bring hundreds of thousands of pumped up fans to the Polish capital by plane, train, and inevitably automobile, and as it stands, a trip to the championships on Polish single-lane roads, which are in a rather poor state of disrepair, is not quite the welcome the country wants to give.
At the end, all work had ceased on the parts COVEC was responsible for because the company had not been paying its bills, citing liquidity problems.
In September 2009 COVEC, working in partnership with two other Chinese consortiums, the Shanghai Construction (Group) General Company and the China Railway Tunnel Group Company, dramatically low-balled and won the bid to build parts of the highway.
The team with the winning bid offered to do the job for about half of what European companies were willing and/or able to do it for. The stink raised by home-grown firms even reached Brussels where they accused COVEC of price dumping to get its foot in the door of a promising European construction market. The powers that be in Brussels ruled in favor of free market rules. If they want to do it for less, they should be free to do so.
A bit closer to home, the main opposition party has filed a complaint at the federal prosecutor’s office, alleging criminal mishandling of the public tender process that brought COVEC into the picture. Eventually even the prime minister has publicly weighed in, threatening to saddle the company with fines for breach of contract.
I guess hindsight is 20/20 and observers are still left wondering how well prepared Chinese firms really are to function in the free market.
