How Construction Enterprises Can Build New Advantages for Development Under the "Dual Circulation" Pattern

Discussion Guests:
Cai Chengjun, Chief Engineer of the Standardization Research Institute of China Academy of Building Research, Deputy Secretary-General of the China Engineering Construction Standardization Association

Mao Hongyong, Secretary of the Board and Chief Legal Advisor of Gansu Construction Investment (Holding) Group Co., Ltd., Chairman of Gansu Construction Investment Cultural Tourism Development Group Co., Ltd.

Sun Wei, General Manager of the Technology Development Department of China National Engineering Corporation

Nie Jili, Chairman of Zhongheng Construction Group Co., Ltd.

Building a new development pattern of "dual circulation" is a major strategic deployment to promote the higher-level development of China's open economy and a strategic choice to reshape China's new advantages in international cooperation and competition. During the "14th Five-Year Plan" period, how to seize new opportunities, smooth resource chains, reshape industrial chains, identify development positioning, and establish new competitive advantages in domestic and international development is a topic that construction enterprises must face. Therefore, this report specially invites industry experts and corporate representatives for a thematic discussion to provide references for the development of industry enterprises.

• How construction enterprises can reform and transform

• Sun Wei: Currently, China is still in a critical strategic opportunity period, but both opportunities and challenges have new developments and changes.

In terms of challenges, affected by the COVID-19 pandemic, the foundation for global economic stability and recovery still needs to be consolidated, and the economic and supply chain systems have been significantly impacted; global technological innovation is unprecedentedly active, and a new round of technological revolution and industrial transformation is reconstructing the global innovation landscape and reshaping the global value chain. International technological and industrial competition is becoming more intense, and industrial technological transformation calls for new thinking. China's economy is in a critical period of transforming development methods, optimizing economic structure, and converting growth drivers, with insufficient innovation in the construction field and serious homogenization competition, facing challenges in development models and innovation systems.

In terms of opportunities, China's institutional advantages are prominent, with a solid domestic material foundation, abundant human resources, and vast market space. The long-term positive trend of the economy has not changed; the demand for infrastructure connectivity and industrial investment along the "Belt and Road" is continuously being released, which will generate huge potential for international cooperation, and Chinese enterprises have great prospects for "going global"; the rapid advancement of new urbanization domestically and regional economic integration has become a new engine for economic development; the proposal of the "dual carbon" goal also provides new development opportunities for the construction industry.

In recent years, the state has introduced a series of reform and development policies for the construction industry, pointing out the direction and implementation path for the reform of the construction industry. The construction industry must recognize the situation, seize opportunities, and continue to transform and upgrade to achieve new accomplishments on the new journey.

• Cai Chengjun: The construction industry is an important fulcrum for building a new development pattern. The new development stage puts forward era requirements for engineering construction standardization, and the new development pattern presents new propositions for the internationalization of engineering construction standards. To accelerate the construction of a new development pattern, it is necessary to coordinate the promotion of domestic and international standardization work.

The joint construction of the "Belt and Road" aims to achieve "five connections": policy communication, facility connectivity, unimpeded trade, financial integration, and closer people-to-people ties. On the surface, "engineering construction" only belongs to the category of "facility connectivity"; in fact, each "connection" in the "five connections" contains engineering construction content, and each "connection" relies on the support of standardization.

Compared to simply "Chinese manufacturing," "Chinese projects," and "going global," "Chinese standards" going global represents the highest level of "going global," the highest realm of "going global," and the maximization of comprehensive benefits. If Chinese enterprises want to gain a competitive advantage in engineering technology and construction fields and become high-level beneficiaries, they must focus on leveraging the influence of engineering technology standards, actively adapt to international rules and standards, be familiar with the game rules of the international market, and strive to become the dominant players in market rules and important participants in international standards.

• Mao Hongyong: State-owned enterprises are an important force in promoting national modernization and safeguarding the common interests of the people. They are an important material and political foundation for the development of the party and the country. Under the new development pattern, state-owned enterprises must seek speed, governance, and efficiency from reform, use the dividends of reform to offset the impacts of uncertainty, and stimulate new vitality in enterprises, acting as the "pillar" and the "ballast stone."

Gansu Construction Investment's experience in promoting strategic transformation in recent years can provide certain references for industry enterprises. First, Gansu Construction Investment has moved away from the past single construction model, transforming from a "Construction Investment Group" to an "Investment Group." Focusing on functions such as "financing, investment, management, operation, and exit," it actively promotes the adjustment of the group's functional positioning, leading with "investment" and relying on "construction," driving investment and construction in tandem, and creating a reliable, dependable, and sustainable strong state-owned capital investment platform. Second, in accordance with the functional positioning of state-owned capital investment companies focusing on "capital management," it actively promotes the reconstruction of the organizational structure system, establishing a clear, well-defined, and efficient organizational system with clear goals and responsibilities. Third, it plays the role of "investment leading," daring to explore and practice in investment models and fields, highlighting strategic investment, regional investment, and emerging industry investment, and vigorously practicing the integration of production and finance to promote the group's transformation and upgrading. Fourth, it cultivates emerging industries, optimizes industrial structure, and nurtures and expands emerging industries such as ecological protection, green building materials, wind and solar energy, prefabricated buildings, and new energy, showing potential as a "single champion" in specialized fields in regional markets, forming an industrial layout that balances current and future needs in subdivided fields. Fifth, it focuses on key urban agglomerations and economic zones planned by the state, such as Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, and Chengdu-Chongqing, serving key national regions.

• Nie Jili: Under the "dual circulation" pattern, it is necessary to further stimulate the vitality of private enterprises. Currently, industry enterprises must do their homework in the following areas: first, talent cultivation, as high-quality human capital remains the primary resource for enterprise development; second, technological innovation, focusing on "high precision, new, and special" to establish new core competitiveness; third, digitalization, making data an important capital for enterprises; fourth, cultural construction, creating a corporate culture conducive to future development and the integration of new generation forces.

Zhongheng Construction has made new explorations in stimulating corporate vitality: on one hand, it insists on the dual main business of "construction + technology" to solidify the development foundation; on the other hand, it focuses on the research and innovation of underground space technology, possessing over 200 research achievements, especially independently innovated intelligent technologies such as long spiral pressure-injected piles, expanded base piles, and interlocking piles, which have economic and social benefits of low carbon emissions and energy conservation, widely applied in urban renewal of old districts, underground parking lots, etc., and have been used extensively in Jiangxi, Shandong, Henan, Guangdong, and other places. Currently, Zhongheng Construction is using underground space as a new breakthrough point, establishing advantages in further stimulating organizational vitality and corporate development vitality, and is developing into a truly comprehensive construction technology company.

• How construction enterprises can better "go global"

• Cai Chengjun: The internationalization of standards is a long-term and arduous task. Promoting the internationalization of engineering construction standards is a complex system project that must accomplish the following tasks:

Implement a main line, adhere to strategic guidance, planning layout, and scheme implementation. Research and formulate the "Implementation Opinions (Plans) of the National Standardization Development Outline," clarifying development goals and strategic promotion guarantees.

Optimize two systems: first, deepen the supply-side structural reform of engineering construction standardization, establishing a new type of standardization system that promotes the coordination of "technical regulations, technical standards, compliance determination, certification and accreditation, inspection and testing." Second, optimize and improve the "organizational system of professional standardization technical committees," strengthen the organizational construction and capacity enhancement of domestic standardization technical support institutions, and explore the establishment of a new pattern of synchronous construction and coordinated development of international and domestic standardization organizations.

Establish three platforms: First, build a "standard international public information platform" for the country and industry to provide basic information services for standard "interconnectivity". Second, integrate industry translation resources to establish a translation corpus for engineering construction standards and build a "cloud platform for English translation of engineering construction standards". Third, rely on professional standardization service institutions and third-party platforms to build an international knowledge base for Chinese and foreign engineering construction standards, establishing a comprehensive service platform for the internationalization of engineering construction standards.

Improve four mechanisms: First, establish a "government-industry-academia-research-society collaborative promotion mechanism" to better coordinate and optimize standardization resources across all fields and chains, enhancing the effectiveness of standard internationalization work. Second, establish a "full industry chain collaborative promotion mechanism" to leverage the role of engineering design and full-process engineering consulting in promoting Chinese technology and standards as well as the international expansion of construction enterprises. Third, establish an "international and domestic standards synchronous promotion mechanism" to accelerate the formation of a symbiotic effect where standards promote technological innovation and technology drives standard advancement. Fourth, promote the establishment of a "capital-driven project, project-driven standard collaboration mechanism" to rationally utilize capital to drive the internationalization of standards through funding, technology, products, and projects.

Enhance five capabilities: First, strive to undertake more secretariats of international standard organizations to enhance the international influence of standard organizations. Second, strengthen the construction of an international expert team to enhance participation in standard internationalization and strive for more voice in the formulation of international standards and international standardization activities. Third, strengthen in-depth research and continuous tracking of standard internationalization to enhance research and service capabilities in standard internationalization. Fourth, enhance the technological innovation capability of standards to promote the marketization, industrialization, and internationalization of innovative technologies and achievements. Fifth, establish an innovation and development alliance for group standards in engineering construction to accelerate the cultivation of group standard-setting entities with international influence and enhance the innovation and development capabilities of group standards.

• Mao Hongyong: In the new era, state-owned enterprises should carefully assess and grasp the opportunities of the "dual circulation" development pattern, leverage their advantages, and integrate into the construction of the "Belt and Road".

As a state-owned enterprise in the northwest inland, in recent years, Gansu Construction Investment has considered the survival and development of the enterprise from an international perspective, deeply implementing the overseas business philosophy of "sincerity, kindness, benefit, and practicality", seizing the geographical advantage of Gansu Province as a golden passage of the Silk Road, not limited to a single route in the physical space of the "Belt and Road", but focusing on expanding the "circle of friends" along the "Belt and Road", promoting the "China-Gansu International" brand, and carrying out international business such as general contracting of projects, investment in industrial parks, establishing overseas regional headquarters, and international trade logistics in 24 countries and regions along the "Belt and Road", making Gansu's enterprises, products, technologies, and voices present along the route.

The group adjusts its overseas business strategy in a timely manner according to market changes, deeply cultivates the African market, and consolidates traditional market advantages; serves national strategies, participates in construction projects of embassies and consulates abroad under the Ministry of Foreign Affairs and foreign aid projects under the Ministry of Commerce; emphasizes westward development and lays out in emerging markets in Eastern Europe; integrates into the South Asia corridor and participates in infrastructure construction; strengthens maritime "going out" to expand overseas development space, achieving certain results.

In the process of "going out", Gansu Construction Investment insists on deeply exploring overseas markets, telling the "Chinese story", and promoting and enhancing friendly diplomatic relations between China and relevant countries; advancing towards a higher direction of regional and global industrial chains, focusing on "walking steadily, walking for a long time, and walking more effectively", expanding diversified business operations in international trade, building materials, machinery manufacturing, pharmaceutical production, real estate, hotels, tourism, etc., basically achieving the goals of capacity going out, market going in, industry going up, and benefits coming back.

• Sun Wei: Design consulting, as a core business in the construction industry chain, plays an important role in promoting the high-quality development of China's construction industry in the international market. Foreign design consulting services are knowledge-intensive services that need to consider the legal, standard, customary, and cultural differences of different countries and regions during the process. Compared to domestic design consulting projects, there are policy risks, technical risks, and effectiveness target risks.

Based on practice, I believe that in response to risks, first, we must strengthen investment in the preliminary feasibility study of projects, thoroughly understand and grasp local laws and regulations, environmental conditions, resource allocation, customs, and habits in the early stages of projects to ensure that design content and engineering construction organization comply with local legal, regulatory, and technical standards. Second, we should use a reasonable combination of guarantees and insurance to avoid contractual liability risks. For example, using professional liability insurance in foreign design consulting services is an important measure to avoid significant claims against design consulting firms due to design responsibilities. Third, we should accelerate the benchmarking research of Chinese and foreign technical standards, break the differences and contradictions in technical systems, expression methods, and mutual recognition between Chinese and foreign construction standards, resolve the application risks of Chinese and foreign technical standards, and achieve early interconnectivity of standards in the field of engineering construction between China and foreign countries, providing strong support for the design industry to "go out" and participate in foreign contracted projects.

• Nie Jili: The difficulties faced by private construction enterprises in "going out" mainly manifest in unclear strategic orientation, conflicts in corporate cultures between domestic and foreign enterprises, and an incomplete professional system in overseas markets.

Zhongheng Construction established its overseas business department in 2008, laying out in Saudi Arabia, Uganda, South Sudan, and other places. It later established Zhongheng Construction Group International Engineering Company, actively exploring the business model of private construction enterprises "going out" through undertaking engineering projects, accumulating certain experience: First, respond to national initiatives and actively go out; second, based on tangible engineering construction projects, understand the political, economic, cultural, and operational models overseas, familiarize with the local construction market and business environment, providing decision-making references for the overall development of the enterprise; third, actively adjust strategies according to changes in domestic and foreign situations.