Foreign firms look north from Hong Kong
Companies like Serco establish bases in the city as Beijing opens the bidding for US$55b of work
Hong Kong could be set for a surge in the number of foreign infrastructure firms setting up in the city after a landmark decision by Beijing's Municipal Commission of Development and Reform to allow overseas companies to bid for US$55 billion worth of projects.
British firm Serco, the world's biggest services company with particular expertise in transport projects, became the latest international company to relocate its regional headquarters to Hong Kong, following General Electric, the American infrastructure, technology and finance giant, which moved its global operations office to Hong Kong in June.
[Beijing] is careful in directing where it wants foreign funding
Management consultancy McKinsey calculates that mainland spending on infrastructure between 1992 and 2011 reached 8.5 per cent of gross domestic product, compared to an average of 5.5 per cent in the developing world. The largest share of that spending went on roads, the power industry, railways and water; investment in those areas has until now been dominated by state capital.
Financial advisory firm KPMG noted in a report released earlier this year that with the Chinese government aiming for 7 per cent annual GDP growth for the period up to 2015 and turning to alternative sources of finance, infrastructure investment was becoming increasingly open to private capital.
London-based Serco, which operates Hong Kong's Cross Harbour and Aberdeen tunnels and maintains all red-light traffic enforcement cameras installed at intersections in the city, is eyeing that trend as it seeks to boost its global businesses, which last year generated revenues of some US$4.5 billion.
Rod Chisholm, Serco managing director for Asia, said his priority was to grow the group's business on the mainland, targeting infrastructure along with healthcare.
"The Chinese government has seven or eight rapid transit systems in second-tier cities under construction now, and construction on another 11 is due to commence in the next two or three years. So what we hope to do is share the success we have had elsewhere," said Chisholm, referring to Serco's management of London's Dockland Light Railways and Dubai's metro.