Improve the level of enterprise management and promote the high quality development of the industry

At the end of 1 in 2020, a sudden new crown epidemic swept across the globe. Although there is still great uncertainty about the global spread of the epidemic, the agencies are generally optimistic about the judgment of economic recovery in the post epidemic era. On the one hand, according to the world economic outlook issued by the International Monetary Fund in June, it is predicted that the global economic growth will be - 4.9% in 2020 and 5.4% in 2021. Although compared with the forecast of economic growth in April, the global economy will show a "V" recovery trend in the post epidemic era; On the other hand, some countries around the world have tried to "unseal with the epidemic", and their willingness to restart the economy has been increasing. The acceleration of vaccine research and development in China, Britain, the United States, Japan and other countries will provide support for economic recovery. Infrastructure investment is one of the most effective ways to stimulate the economy. In the post epidemic era, China's foreign contracting industry will face a new round of development opportunities.
The financial crisis caused by the spread of the epidemic in 2020 will bear the brunt of the rapid decline of consumption. Different from the rapid contraction of investment after the financial crisis in 2008, the way of economic recovery in the post epidemic era is bound to be different from the past. Combined with a series of policies recently issued at home and abroad, it can be clearly seen that "high quality" is the most prominent feature of infrastructure driven economy in the post epidemic era. Whether it is the internal demand of "three leaders, three leaders and three demonstrations" proposed by China to build a world-class enterprise, or the external requirements of "high quality infrastructure investment principles" proposed by G20 group for the sustainability, life cycle economic benefits, environmental benefits, social benefits, risk resilience and infrastructure governance of the project, All of them put forward higher requirements for enterprises to participate in infrastructure investment and construction in the post epidemic era. From the perspective of enterprises, we must improve the management ability of the whole life cycle of the project. Based on the author's many years of experience in international business management, this paper discusses the path to promote the high-quality development of foreign contracting industry by improving the management ability.

There are some problems in the project life cycle management of Chinese enterprises.

1、 Insufficient attention to the sustainability of the project itself.

When some Chinese enterprises contract infrastructure projects abroad, they do not consider the sustainability of the projects. On the one hand, it is reflected in the insufficient consideration of the economic feasibility of the project, the importance of EPC benefits in the process of developing the project, and the insufficient consideration of the future project operation income. Some of the projects promoted by the project have advanced planning and construction, which makes the project construction beyond the development stage and operation capacity of the host country, and can not form cash flow as expected, Some projects are "built but useless". On the other hand, the overall consideration of the long-term benefits of the project from the perspective of economy, society and environment is not enough, and the one-sided pursuit of the short-term economic benefits of the project ignores the inclusiveness, environmental impact and social effects of the project to a certain extent, resulting in the impact of the project in the local area not reaching the expected effect.

2、 The overall planning of investment construction business integration project is insufficient.

The mode of integration of investment, construction and operation includes three main links: investment, construction and operation, which is regarded as the main direction of the transformation of engineering contracting enterprises. However, because of their limited investment capacity, engineering contracting enterprises often require that the profits obtained during the construction period can cover the amount of equity investment when undertaking projects in the mode of integration of investment, construction and operation, In order to make up for the risk brought by the lack of investment capacity through the advantages of construction capacity, enterprises pay too much attention to the profits in the construction stage, which conflicts with the benefits in the capital and operation stages. On the one hand, due to the development of comprehensive profits from the perspective of the whole life cycle, some projects with high quality were shelved due to the low profits during the construction period; On the other hand, even if we get the development rights of some projects with high profits during the construction period, due to the lack of attention and preparation for investment and operation, there is a contradiction between the front-end and back-end risks of the project.

3、 The connection management of each link of EPC is insufficient.

With the rapid development of EPC + F mode in China's foreign contracting industry, the EPC capacity of foreign engineering contracting enterprises has made great progress, but the improvement of EPC capacity can be roughly divided into two categories: one is the large group with the whole industry chain, which constructs the implementation mode of design and construction enterprise formation going out to sea from the group level; the other is the large group with the whole industry chain; On the other hand, the window company, although it does not have the ability to implement EPC, focuses on building the management and control ability of EPC. The two modes play an important role in supporting enterprises to undertake business in the general contracting mode, which makes the performance ability of Chinese enterprises in the single field of design, construction and procurement comparable with that of international contractors. However, there is still a certain distance in the comprehensive ability. The main problem is that the connection management among design, construction and procurement fails to effectively coordinate.

4、 The quality of development and the level of profit are not high.

After nearly 30 years of rapid development, the annual compound growth rate of contract signing and revenue is more than 17%. Under the premise of rapid growth of contract signing, revenue and profit scale, the indicators reflecting asset quality and profitability are at a low level. By selecting some international first-class enterprises and domestic first-class enterprises as the benchmarking results, the net assets, profit margin, surplus cash protection ratio, current assets turnover rate and asset cash recovery rate of foreign construction enterprises have maintained a steady and progressive level for many years, and are higher than those of domestic enterprises. On the one hand, because the competition of Chinese enterprises is at the middle and low end of the value chain, the fierce competition environment erodes the profits of enterprises; On the other hand, because of the lack of control and voice in the core technology, most enterprises still use labor-intensive extensive development mode.    

5、 The degree of internationalization and localization of enterprise management is not high.

The localization of enterprises mainly includes the localization of institutions, the localization of employees and the internationalization of operation and management. The three are progressive relations. From the perspective of localization of institutions, the overseas layout of the eight major construction enterprises has been gradually improved. Taking Gezhouba international business as an example, it has set up 99 branches in the world, covering 142 countries and regions. However, from the perspective of employee localization, except for a few countries in a few enterprises, the degree of employee localization can reach more than 90%, most Chinese enterprises still adopt the implementation mode of Chinese managers. It can be inferred that: at present, Chinese enterprises are in the transition stage from the localization of institutions to the localization of employees, and the localization of employees is the transition stage from the localization of general managers to the localization and internationalization of senior managers. In this stage, the cost of overseas operation has not been significantly reduced and the efficiency has not been significantly improved because the Chinese personnel are still dominant.

Suggestions for enterprises to improve management ability.

1、 Improving sustainability from the perspective of project life cycle

The whole life cycle of the project includes planning, design, financing, construction, operation and maintenance and future disposal. The sustainability of the project should be considered from the perspective of the whole life cycle. First of all, we should adhere to the development concept of "planning first, orderly promotion", combine with the reality of the host country, develop projects that can make the host country "usable, affordable and well used", and solve the problem of insufficient future cash flow caused by insufficient demand for projects from the source; Secondly, we should speed up the transformation and upgrading and innovate the mode. While closely following the national policies, we should strengthen the cooperation with international financial institutions, constantly broaden the financing channels and reduce the financing cost; Thirdly, we should constantly improve the information management ability in design, construction and operation and maintenance, promote the combination of basic management tools with big data, cloud system, artificial intelligence and other advanced technologies, continuously reduce costs and improve management efficiency. Finally, on the basis of considering the economic benefits of the project, we should comprehensively consider the favorable and unfavorable effects of the project on the ecological environment, biodiversity, climate and resource utilization, so as to meet the needs of the host country in driving the economy, promoting employment, and improving the ability and level of industrialization, and effectively improve the sustainability of the project.

2、 Overall consideration of project investment, construction and operation.

As one of the main directions of transformation and upgrading of foreign contracting enterprises, the integration of investment, construction and operation helps engineering contracting enterprises extend from traditional construction to high value-added fields such as investment, planning, design and management. First of all, we should constantly improve the understanding of investment, construction and operation integration projects, speed up the extraction and summary of the characteristics and modes of projects in different regions and fields, so that the subsequent development of such projects can identify risks in advance and respond to them; Secondly, we should focus on the core links of enterprises. On the basis of continuously improving the profit margin of core business links, we should strengthen the cooperation among central enterprises, central enterprises and private enterprises, and third-party market cooperation, so as to achieve the goal of complementary advantages, effective risk control, and cultivating the ability of non core links; Thirdly, it is necessary to balance the profit level of different links. The profit rate of some projects presents the characteristics of "U" distribution, that is, the profit of construction link is low, and the profit of investment and operation link is high. In this case, it is necessary to comprehensively consider the comprehensive income of each link, avoid the "one size fits all" approach as far as possible, and scientifically judge its feasibility in combination with the characteristics of projects in different regions and fields; Finally, from the perspective of engineering contracting enterprises, it is necessary to plan ahead of time to reserve and train investment and operation teams.

3、 Attach great importance to the coordination of design, construction and procurement

Throughout the world's first-class international contractors, even if they subcontract the work of each section, they continue to strengthen their management ability of overall design, construction and procurement. As a project contracting enterprise, the key to collaborative design, construction and procurement is to strengthen the guidance of design. First of all, in the process of practicing international high standards, we should improve the inclusiveness of Chinese standards and promote Chinese standards to accelerate "going out". Only Chinese standards can best serve our construction and procurement activities. We must build a comprehensive demonstration project integrating Chinese standards, design, construction and procurement through the practice of high-quality projects of enterprises, Let the world understand, be familiar with and recognize Chinese standards through projects; Secondly, on the basis of improving the professional integrated service ability, the optimization ability of design for contracting and procurement scheme should be improved, especially for large and complex projects. Through the preliminary scheme planning, equipment selection, design optimization and value engineering, the cost of construction and procurement can be reduced, and the overall benefit of the project can be improved; Finally, we should constantly strengthen the platform construction by building an integrated platform of design, construction and procurement, improving various resource databases, and improving the degree of information sharing and resource integration ability.

4、 Strive to improve the profit level and development quality of enterprises

We should improve the quality of development from the perspective of improving the profitability of enterprises. First of all, lean management should be carried out in the whole process of project implementation to improve the profit margin through cost reduction and efficiency increase; Secondly, we should choose the path of differentiated development. The leading enterprises should mainly enhance the ability of resource integration, and the professional enterprises should mainly enhance the professional competitiveness, so as to enhance the profitability of each enterprise in the segmentation field and avoid the decline of profit margin caused by homogeneous competition; Thirdly, we should strictly control business risks, establish and improve risk identification, early warning, prevention and control and disposal systems, and ensure that there are no systemic and disruptive risks, which is the basis for achieving high-quality development; Finally, we should increase the investment in core technology research and development to enhance the core competitiveness of enterprises. Although the engineering contracting enterprises are constantly innovating in the application of patents, they are not investing enough in the invention patents with intellectual property rights. With the state owned assets supervision and Administration Commission adjusting the assessment standard of central enterprises to "two benefits and three rates", the index of R & D investment intensity has been increased. From the perspective of enterprises, it is necessary to establish and improve the technological innovation mechanism of contracting enterprises, Promote the transformation of enterprises from labor-intensive enterprises to technology intensive enterprises.

5、 Accelerate the transformation of enterprises from transnational operation to transnational group

During the epidemic period, most countries chose to close the country and cities, which greatly affected the enterprises with low degree of localization due to the restrictions on the entry and exit of personnel and goods. However, the operation of enterprises with high degree of localization was generally stable. It can be predicted that in the post epidemic Era, localization is the main trend of the development of foreign contracted projects. First of all, on the basis of further improving the overseas layout of the enterprise, we should further improve the degree of localization of employees, especially the localization of middle and senior management personnel. The management by foreign personnel can greatly improve the management efficiency and reduce management disputes; Secondly, we should select several local partners with similar cooperation ideas, smooth communication and good foundation to focus on cultivation, build a close community of interests with them through the implementation of the project group, and realize the localization of the business network. According to the experience, some loss making projects implemented by domestic enterprises can often be reduced or even reversed by local subcontracting. Thirdly, it is necessary to actively integrate into local development. In the case of localization of institutions, personnel and network, it is necessary to further promote cultural integration and transition from a community of interests to a community of destiny. Taking the projects of Gezhouba in Ghana, Equatorial Guinea, Ethiopia, Namibia and other countries in Africa as an example, the overseas image of Chinese enterprises has been effectively improved by actively integrating into the local environment while implementing the projects, and performing corporate social responsibility to build roads, assist students, plant trees, dig wells for the host country, and actively assist the host country in anti epidemic and disaster relief during the epidemic period, It has laid a good foundation for the rolling development of our company in Africa.
In the post epidemic era, great changes will take place in the international political and economic situation. China's government work report in 2020 does not put forward specific targets for annual economic growth. On the one hand, because of the great uncertainty of the global epidemic situation and economic and trade situation, on the other hand, it conveys a clear signal that our development should pay more attention to quality. From the perspective of enterprises, to moderately slow down the speed of scale expansion, we should first focus on the "refinement" of operations, then improve the "excellence" of profitability, then improve the "strength" of influence and discourse power, and finally "enlargement" of scale, so as to realize the coordinated development of quality, scale and efficiency of enterprises.

(the author is the general manager of China Gezhouba Group International Engineering Co., Ltd.)