Fitting in is the biggest challenge

By Xing Zhigang and Li Jiabao (China Daily) Updated: 2014-06-17 09:11

CRI-Eagle was jointly established in 2008 by the developer of Eagle Canyon Golf Estates, with a 49 percent stake, and a subsidiary of China Railway International Group holding the rest. As the overseas business gained more importance, the overseas branches and operations of China Railway Engineering Corp were incorporated into China

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Railway International Group last year.

"CRI-Eagle Investments' mission is to win business in project contracting through investment," Wen said. "It has been hard to break into South Africa's project contracting market, which is well developed and controlled by big local companies. The investment operation focuses on property development and

In 2008, Li said, CRI-Eagle bought a site in Johannesburg for a low price and turned it into a golf course with adjoining

The company's landmark development is Sandton Skye, 200 high-rise apartments in affluent Sandton, the business district of Johannesburg. Construction began in 2011 and is expected to be completed next month.

The company also owns a two-hectare plot near Nelson Mandela Square, also in Sandton, and plans to start building an office building there this year. The company's partner, Investec, an international specialist banking and asset management group, has already leased 20,000 square meters of the development to a law firm.

"In developing property, we used to do what is done in China: build first and then sell," Wen said. "But doing things that way the investment was onerous, financing costs were high and local banks were unwilling to finance our projects. In addition, home loans are subject to currency losses owing to the depreciation of the rand.

"So we changed our approach, deciding the best thing to do is to form partnerships locally. In this overseas market we have limited resources and are unfamiliar with buyers. Our company will generally be unfamiliar to those thinking about leasing our properties, but our partners' reputations will be familiar to them."

The joint venture investment is "not bad in that it supports daily operations and will produce a profit" despite currency problems, Wen said.

"Our investments are part of a strategy of building a reputation and showing that we are committed to the local market with high-end products. Our ultimate goal is to win infrastructure contracts, including building airports, and renovating the railway transport network and ports. Whenever opportunities emerge, we will be there to grab them."

Prospects in South Africa's infrastructure construction market are promising, he said, including estimates that $10 billion will be spent to upgrade the railway freight network over the next five years.