Part 7-2: Working Overseas, Advanced Civil Engineering, (NTUST, 5908701)
MT KAO (Blog: http://mtkaoforum31.blogspot.tw/)
3). Chances for Taiwanese Construction Industry to go for Overseas Market
(1) There’re two possibilities that either Taiwanese contractors come to oversea countries working as pure constructors with supposed superior construction technology and engineering ability to the natives; or to take the total scope of project development providing loans, complete planning and design, carry out construction, undertake operation and until transfer back the works to the owner.
In the first option, Taiwanese contractors go for overseas only win and make money when they’re proven competitive and efficient, that they’ve to show overall edges over local contractors who grow stronger day by day. And as described above, the overhead or added value enjoyed by pure construction works are limited and market become tighter and the rising local constructors are able to take almost every contract.
It won’t help whether or not the owner of the projects are governmental or private for Taiwanese contractors. As civil work is concerned, no places in southeast Asia will think Taiwanese contractors’ service is indispensable.
But if Taiwan can provide loans in connection with the construction contracts, the contractors will be welcome in many places where provision of loans will ease the financing strain to confine the development. The competitors in the project involving investment or loans will be European, Japanese or those from NIC countries. Taiwanese companies will have greater chances to get the works and the contractors may work for project management or real construction. However, the loaning agreements usually are between governments, so called “G to G”, to guarantee the return of the loan. The chances aren’t there now.
Should loans not be available, Taiwanese contractors or engineering firms will have to work as the subcontractors of the international developers and main contractors. And they need to prove they will be able to save money, keep quality and speed up the progress for developers or main contractors. And it means they have to contend with other NIC contractors or even the ones of third world origin.
(2) A foreign company can never be as efficient as the natives to organize local labor force or purchase cheap material. Working capital is also something that the contractors from developing economics no more feel they are short of. So, only projects with elements Taiwanese contractors will have advantages over the native companies, they will have chances to get the works. Say, better construction technology and work experience.
However, Taiwanese sub-contracting system is a problem that the resources, especially those to support market development, are thinly divided among many sub-contractors. The Market is highly fragmented so that the main-contractors, even those with high revenue on the report, staff very limited number of engineers. This is another difficulty for Taiwanese contractor to pursue the overseas contracts in tendering and execution stages because you can’t send people from small company abroad without affecting their homeland activities.
(3) So, it seems like that only consulting companies can go to take limited amount of overseas engineering contract as much of planning and design works can be done remotely in Taiwan.
Of course, the engineering works done must conform with standards and norms such as BS, DIN, or JIS wanted by main contractors and not CNS or American codes usually followed in Taiwan.
Supervision will be another challenge because the owner or international main contractor wouldn't pay as much of Taiwanese expatriate will cost. So, majority of them require a competent local partner to second.
The purpose to work in overseas countries shall be reviewed. Will the business expanded to cover foreign countries be allowed to fetch overheads, profits or service charges as required? Or will it increase the sales of home country made product, software, construction plants or permanent equipment?
4). Adjustment needed for Company getting Overseas Contracts
(1) Consideration shall be given to the overseas allowance, vocation, compensation for tax incurred in foreign country, care of spouse and education of children for the expatriates sent to foreign land in addition to their regular salary and bonus in home country.
(2) People sent to foreign land will face challenges and can very likely be working in desolated situation; and only elite of each discipline shall be assigned to solve the quandaries.
Contrary to the above, two problems always appear in a company undertaking overseas works: 1. sectionalism exists in the concerned departments, chiefs tend to send less qualified people; 2. After distinguished performance in overseas projects, many expatriates coming back home only to find out "good" positions having been occupied by people of inferred capability.
There must be a fair policy and under it a mature personnel management system covering domestic and overseas projects. The chief of department must be a stakeholder for success or failure of the projects the company undertaken.
(3) The percentage of overseas sale amount may be just a few related to total company revenue, but efforts to spent for supporting operation in different countries, such as accounting, taxation, currency exchange, law and rules abiding, local standards and codes, contractual administration, procurement, and financing arrangement can be unproportionally heavy in headquarter.
The unfamiliarity and the relative massive cost to prop remote operation always hesitate the responsible managers of the supporting departments to throw in reasonable cost to administer the issues, until it become big problem. Thus, furthering the companies’ reluctance to take more overseas works.
(4) The company pursuing overseas works shall offer money, know-how, credited work experience and ready to deploy talented people for whatever the projects undertaken at any time. However, it takes time to obtain a contract, the company shall be big enough to dedicate for what they will have in hands given the short mobilization time.
Ironically, big company and their follow managers only to think of overseas business at times when they feel jobs in hands aren't enough. But the contracting business will not come only to fit your schedule, again, only those with plenty resources can afford to do overseas work.
5). Assignment of People for Overseas Works.
(1) The assignment of branch or project managers of overseas works are critical. They’ve to be adaptable and adeptly in strange country: keen and quick to accept different culture; eager to defend own company’s interest and shun from any private agenda.
The appointment has to be prudent because they’re one of the very few can be sent from mother company to lead in the places where the projects located because of the high salary difference compared with the locals.
In general, personality of a representative is more important than his education; cultural adaptability than language, and impulsive energy than professional experience.
(2) It takes time to get the good contracts in overseas work, however, the company management is not patient to wait for the business success and is likely to push for immediate money count. For overseas work, meaningful scrutiny can only be made by people closer to the place where clients and projects are located, i.e., the representatives or the agent in the area. Under enormous pressure they may be forced to undertake projects not worth for risk and resource spent.
For the same consideration that the people in headquarter shall not be hasten to recall representative(s) from foreign branches or to change the local agent unless they’ve made mistakes hurting interest of the company.
6). Necessary Mentality Changes for Overseas Business Decision Makers
(1) The company management shall be knowledgeable for overseas business; and is willing and passionate to develop prospect in foreign lands. If the decision makers himself have overseas experiences themselves, it’s a plus.
For Taiwanese companies enjoy vigorous domestic business at the moment, they must understand prosperity brought by market protection is temporary, that only the industry strong in essence and endurable for foreign competition the companies’ future can be guaranteed.
In view of the problems that always happen in a small construction market, the management and employees of Taiwanese companies all alike shall realize the need to go out for challenge, is a hard but useful way to embrace the bigger market, not least to get baptized for advanced technology through early contact with the international competitors.
Consequently, all of them shall be willing to strengthen expertise, learn international practice and adjust attitude and approaches.
Before going for specific project, the Company must make sure it will have people experienced enough to go for assignment; or it have fair chances to recruit qualified people.
(2) For operation in strange country, the company management shall open their mentality. The worst sentiment that an expatriate or those sitting in faraway mansions may develop is the feeling of superiority toward the locals; they judged the people wrongly for talent and loyalty and have to pay the price for wrong decisions all the way to losing money and reputation.
Actually, an idealistic team shall consist of local agent (sponsors, partners), staff and expatriates; working intimately to overcome the difficulties waiting for foreign companies.
A capable and trustworthy agent or sponsor will obtain in time information, establish links with authority, and acquire competitive local resource for the company. Above all, they wouldn't get wrong contracts for the company for meager commissions to continue the agent ship.
In almost all the countries, the implementation of the projects, engineering or construction, require minimum participation of the local partner(s); a good one will offer the assistance to reduce the cost, solve problems related to license and official permits. Some of the reliable local partner will be eager and able to share the financial overburden resulted from the unbalanced payment schedule.
The employment of locals, especially, in the branch office for business pursuance and project supporting is vital. Their salary and chances of promotion must be assured; and the opportunities to learn the advancing technologies must not be reserved. Overall, the employment shall be made in a way more prospective than their engineering contemporaries working for native companies to ensure loyalty and reliability.
As people from Taiwan in strict sense will only work as passerby ultimately. Trust and confidence must be established with the locals as they're there forever. Even slight discrimination will be incubated and turn out to become source of disloyalty and misconducted behavior in the future.