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Fortune Global 500 Pacific Construction Group Was Settled in Xinjiang

With festival atmosphere still lingering in the north and south of Tianshan Mountain after Spring Festival, the  headquarters of Pacific Construction Group, one of Fortune Global 500, at No. 2288, Siping Road, Urumqi High-tech Industrial Development Zone (Xinshi District), Urumqi, Xinjiang started its commencement. Its newly registered business license (copy) and official stamp of Pacific Construction Group were made both in Chinese and Uighur.
Yan Hao, chairman of board of directors of Pacific Construction Group, said: The group’s movement to Xinjiang not only conformed to strategic demand of the Belt and Road and economic development reality of Xinjiang but also was closely related to future destiny of the group. Pacific Construction Group would take off again in a return-to-zero attitude and root itself in and build Xinjiang with the identity of local enterprise, so as to open the new pattern of development.
Why can Xinjiang, the core area of the Silk Road Economic Belt, and Pacific Construction Group, one of the first 100 in Fortune Global 500, be united? What kind of influence that this great union will bring about?
Development Strategy: From Building Northeast China to Settling in Xinjiang
2016 was the most groundbreaking year along the development history of Pacific Construction Group. It was in this year when Pacific Construction Group ranked the 99th in Fortune Global 500, occupied the first place among all Chinese private entity enterprises and became the first Chinese private enterprise listed in the first 100 in Fortune Global 500. With constant growth of strength, the group rapidly became an enterprise enjoying 35 platforms and 152 affiliated groups. In terms of development strategy, it formulated development pattern for “actively developing markets in Beijing, Tianjin, Chongqing, penetrating the market in Yunnan, Shanghai and Tibet and making breakthroughs in the Great Northwest China”.
As pointed out in Promotion for Co-construction of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road jointly issued by NDRC, Ministry of Foreign Affairs and Ministry of Commerce in March 2015, we should give play to Xinjiang’s distinct regional advantage and significant window function for opening the west and deepening national exchange and cooperation with Central Asia, South Asia and West Asia; establish the principal transportation junction, business logistics center and cultural center on Silk Road Economic Belt and build core area of Silk Road Economic Belt.
Keenly aware of the historical opportunity that Xinjing’s construction, opening and development brought about, Pacific Construction Group, as the leading private enterprise in Chinese infrastructures construction field, knew it was the time to bear responsibility and display its ability.
In August 2016, the 17th “Lanting Forum” was held in Blue Hall of Ministry of Foreign Affairs, a sign that the 5th China—Eurasia Expo started, themed with “Jointly Discussing, Building and Sharing Silk Road: Opportunity and Future. Under this background, core team of Pacific Construction Group went to Xinjiang for one-week survey, with footsteps from autonomous region to corps and from Urumchi to local prefectures, having discussions and exchanges passionately.
While meeting with Party and government leaders at all levels, Pacific Construction Group expressed their will for actively participating in Xinjiang’s construction and making contributions to the overall Xinjiang’s goal for social harmony and long-term stability.
Xinjiang is featured by typical investment-driven economy. Faced with economic downward pressure, it still replies on huge and effective investment to realize the goal for steady increase; intensifying infrastructures will stabilize and improve investment contribution to economic increase effectively.
In 2016 4th Cooperation and Development Forum for Cities on Silk Road Economic Belt held in September 2016, Pacific Construction Group and People’s Government of Urumchi signed strategic cooperation framework agreement. Meanwhile, core team of the group had investigation and exchange for Xinjiang, at the invitation of governments of Urumuqi, Akesu Prefecture, Altay Prefecture, Turpan city and Bayingolin Mongol Autonomous Prefecture in Xinjiang. The journey, three-day as planned, was prolonged to one week, covering more than 20 meetings. Finally, strategy for moving the headquarters of Pacific Construction Group to Xinjiang was determined preliminarily and there would be investment and construction agreements successively signed.
Later, Yan Hao led team to Xinjiang for investigation and docking again, by which, Yan determined orientation of three strategies (headquarters economy, infrastructures construction and tourist economy) and set about specific deployment for moving to Xinjiang.
With powerful strength and executive force for acting as one of Fortune Global 500, Pacific Construction Group completed going through relevant formalities of taxes, business clearing and qualification transfer in 2 months. At the end of 2016, the group was registered and settled in Xinjiang, which signified the major strategic transfer for entering the Great Northwest, China was completed; thus it became the first Fortune Global 500 enterprise headquartered in Xinjiang.
According to Yan Hao, “Pacific Construction Group will accelerate the pace for supporting Xinjiang through construction, industry and education and make contributions to construction of Xinjiang-the core area of Silk Road Economic Belt. For the purpose of supporting Xinjiang through education, from this year, Huatuo CEO Forum Individuality Scholarship, which has 6-year history, will be launched in all prefectures and cities in Xinjiang and there will be no upper limit of funds.”
Pacific Construction Group has signed investment and construction cooperation agreements with Urumqi, Ili Kazakh Autonomous Prefecture, Bazhou, Changji Hui Autonomous Prefecture, Tuscaloosa, Aksu and other regions and crops, with total investment of more than RMB 300 billion. In particular, the group has reached RMB 100 billion strategic cooperation framework agreement respectively with Changji Prefecture and Urumqi High-tech Industrial Development (Xinshi District) respectively and a RMB 50 billion agreement with Akesu Prefecture.
On February 12, Pacific Construction Group held a meeting about strategy in Xinjiang market, where various platforms of the group were required to commence projects before April 1; meanwhile, it was emphasized that this was a rigid index for group assessment at the end of year and had veto power.
As emphasized by Yan Hao, “moving to Xinjiang is the group’s greatest strategy in 20-year history and also the biggest opportunity. The group will insist on localization development strategy, carry forward craftsman’s spirit and spare no expense to create more wealth with the idea for “wisdom and conscientiousness; diligence and generosity”; highlight reputation, take serving Xinjiang’s economic development as goal and be active and dedicated in construction of the Belt and Road.”
Development Track: From BT Guidance to PPP Improvement
Founded in 1995, Pacific Construction Group is a private enterprise specialized in infrastructures investment and construction, which enjoys multiple general contracting Class 1 qualifications and several specialized contracting Class 1 qualifications in national highway, municipal engineering, water conservancy, building and greening as well as design special Grade A qualification of landscape garden project.
In 1992, Huaian Yinjiang Construction Company, the predecessor of Pacific Construction Group, started to develop market in Nanjing. At that time, Nanjing Orbital Highway was under construction; but no one would like to give the opportunity to this small-sized township company. Finally, the company won the project of three culverts after 11 round trips. Thought it was the fifth-level contractor for this RMB 294,000 project, the company accepted this project still.
The planned construction term lasted for 6 months but the company issued a hard order: The construction must be completed in advance under the premise of ensuring first-rate quality! 70 days later, the company completed 180-day project quantity with excellent construction quality. In that New Year's Eve, workers of the company, driving a hand tractor, left Nanjing for their hometown in Northern Jiangsu.
In the next spring, the three culverts project passed acceptance with excellent quality. The excellent project quality flied to the ears of Nanjing’s deputy mayor and commander in charge of highway construction. After investigation, the project was completed by Yinjiang Construction Company, at a loss of RMB 80,000.
With the spirit for sparing no expense to create capital and paying attention to reputation, in following project bidding, the company was granted with RMB 50 million matching project on a mandatory basis by headquarters of Nanjing Orbital Highway through general contractor-Jiangsu Provincial Transportation Engineering Group Co., Ltd., which created the company’s first bucket of gold RMB 8.6 million.
A tossed stone can raise a thousand ripples. Since then, Yinjiang Construction Company had a rapid development, with projects from 10 to 100, covering the whole Jiangsu Province. In 1995, Yinjiang Construction Company changed into Pacific Construction Group, with registered capital reaching RMB 100 million, and became a “dark horse” in infrastructures construction field.
The story for sparing no expense was selected as typical case of Harvard Business School and mentioned in Li Jiacheng’s My Life Philosophy. CCTV news broadcast summarized: “Today’s integrity creates tomorrow’s market and profits.”
In 1996, Suqian, which became prefecture-level city just now, was in urgent need of building a trunk road. However, there were no municipal finance resources due to initial establishment of municipal government. The government leader found Pacific Construction Group and hoped it could build a road for the city in a pay-in manner. Then the project with construction cost for RMB 50 million was executed in a pay-in manner under the circumstance that the government did not input any startup capital. Having both responsibility and risk, Pacific Construction Group opened the curtain of Suqian construction at turning point of times and thus became Chinese-type BT pioneer.
The so-called BT, Build—Transfer in full, is a kind of financing mode for government using non-governmental funds in non-operating infrastructures construction.
Rome is not built in one day. With Hongzehu Road put into operation, various construction materials and heavy machines required for urban construction were transported to Suqian, and then a modern city was born.
Regardless of 20-year constant overload operation, this road is still intact now, without crack and maintenance; therefore, it is praised as conscientious project built with craftsman’s spirit.
After construction in Suqian, Pacific Construction Group copied BT mode to the whole China and realized PPP mode that our country promotes now. Hongzehu Road becomes the first project of Chinese PPP mode.
From BT guidance to PPP improvement, Pacific Construction Group successively invested and constructed more than 3,000 parks in over 1,000 cities. The group participated in construction of multiple national and provincial key projects, including Shanghai-Nanjing Expressway, Shanghai-Zhujiang Expressway, Beijing-Shanghai Expressway, Beijing-Hong Kong Expressway, Lianyungang (Jiangsu)-Khorgos (Xinjiang) Expressway, Jiangyin Yangtze River Bridge, Nanjing Metro, Lake Taihu Government, Lanzhou New District, Lanzhou New City, Dali Haidong New City, Central Yunnan Industry Cluster, Gui’an New District, Zhaoqing New District and Meian Science and Technology New Town in Hainan.
Just with 20-year efforts, Pacific Construction Group has developed from a small township enterprise to one of the first 100 in Fortune Global 500. Maybe, toady’s Pacific Construction Group is closely based on the enterprise idea for “wisdom and conscientiousness; diligence and generosity”.
Development Trend: From Poverty Alleviation to “The Belt and Road”
With China’s economy entering “new normal”, Pacific Construction Group again stands at turning point of times. The group should seize the new opportunity, meet challenge, take the lead in the industry by bearing social responsibility and welcome new trend of infrastructures construction.
In active response of national call, Pacific Construction Group takes the lead in the poverty alleviation of “the 13th Five-year Plan” through PPP mode and strengthens investment and construction for infrastructures in poverty stricken area. It cooperates with local government to combine government’s social responsibility and coordination ability and private enterprise’ non-governmental funds and management efficiency, so as to establish the community between government and enterprise, where benefits are shared, risks are jointly undertaken, cooperation runs through the whole course and the final goal is to realize win-win situation.
In order to boost poverty alleviation in poverty stricken area, Pacific Construction Group steps into poverty alleviation road with the social responsibilities of private enterprise, capital, resources, wisdom and PPP mode that it implemented first in hands, with footsteps covering picturesque Liangshan, Sichuan, Hefei, the Shore of Chao Lake in Anhui, Xiangxi, the Pearl of Wuling in Hunan and elegant Dali, Yunnan. They invited national authoritative experts to hold poverty alleviation PPP forum together with them, discussed opportunities and challenges that PPP mode is faced with in poor areas under the background of accurate poverty alleviation with local governments and lead poverty stricken areas to develop on a smart, scientific and sustainable basis. Moreover, they established poverty alleviation construction and investment cooperation relationship successively with Chuxiong, Yunnan, Liangshan, Sichuang, Xiangxi, Hunan, Dali, Yunnan and other poverty stricken areas and successively developed “Chuxiong Mode”, “Liangshan Mode”, “Xiangxi Mode” and “Dali Mode”; amount of investment and construction orders signed totals RMB 300 billion and most of projects are under construction.
In construction of this batch of large-scale infrastructures, Pacific Construction Group realizes organic combination between social responsibility and enterprise development by sticking to the principle for “No Borrowing, No Subcontracting and No Uncompleted Project”, innovating investment and financing mechanism and highlighting one key point-poverty alleviation and one cooperation mode-PPP. In many poverty stricken areas, the group did not need government capital drive, i.e. all projects relied on the enterprise’s up-front investment and people were benefited to the greatest extent in operation; in that way, PPP mode becomes an approach for accurate poverty alleviation.
In Guzhang County, Xiangxi, Hunan Province, Pacific Construction Group insists on poverty alleviation through construction, industry and education and yields excellent social benefits. To be specific, the group not only strengthens infrastructures investment and construction and realizes poverty alleviation through construction but also develops brand of Guzhang tea with strength and brand for acting as one of gold top 500 enterprises. Guzhang teas will be purchased by the group, which then process and package it in local area and finally sells to Pacific Construction Group, the ultra internal market; in that way, tea farmers are benefited, government has tax income and the enterprise obtains profits. Besides granting Huatuo CEO Forum Individuality Scholarship to those eligible students, Pacific Construction Group also solemnly promises: Those Guzhang’s poor students admitted to university will be subsidized by enterprises of Pacific Construction Group and can go to the enterprises for internship; after graduation, they can be employed by the enterprises, so as to realize poverty alleviation through education.
In order to implement “the Belt and Road” national strategy, Pacific Construction Group has started to explore overseas market and successively signed agreements with Mongolia, Chile, Ghana, Greece, Albania, Macedonia, Austria, etc. In 2015, core team of the group had an investigation for Greece, Albania, Macedonia, Portugal, Montenegro, Bulgaria, Austria and other central and eastern European countries. In the same year, Yan Hao was invited to the UK to attend international high-end forum and commercial activity, investigated European market and met and exchanged with global top government and business leaders, which was widely watched. In November 2015, Pacific Construction Group signed the project worth EUR 3 billion totally with Albania and Montenegro, a sign for stepping into European infrastructures construction market on a high-standard, large-scale and in-depth basis and “Blue Corridor” of “16+1” Cooperation.
In China, Pacific Construction Group took the lead in making layout in Xinjiang. Yan Hao pointed out: The future investment attraction must distract from “large-large investment attraction” to “attracting those large investors”. After tax reform for replacing the business tax with a value-added tax, enterprise with better benefits made more financial contributions. Pacific Construction Group closely followed national “the Belt and Road” strategy and gave play to pulling effect for acting as one of Fortune Global 500 enterprises. After headquartered in Xinjiang, it would establish headquarters of affiliated groups of Pacific Construction Group in succession to boost realization of the overall Xinjiang’s goal for social harmony and long-term stability.
Party committee of Xinjiang Uygur Autonomous Region pointed out overall requirement of economic work in the whole region in 2017: Pay close attention to infrastructure construction, give full play to key leading role of investment for economic increase in the whole region; determined the goal for fixed assets investment increasing by 50% to RMB 1.5 trillion. Meanwhile, it emphasized social capital should become main body for raising construction capital.
Yan Hao said: “The true generosity to Xinjiang is giving all we have to current Xinjiang. We, as the enterprise in Xinjiang, have responsibility for infrastructures construction and cost lowering. We will participate in Xinjiang’s infrastructures construction with the fastest speed, best quality, lowest cost, fewest conflicts and highest efficiency.” He also said, “Upon our settlement in Xinjiang, we will become Xinjiang people. So we should undertake responsibility for Xinjiang construction and make contributions to Xinjiang’s people; we also should develop jointly with local government and people!
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