Complementary objectives, skills and strategies are at the core of a new joint venture that’s aiming to shake-up the local construction industry.
Complementary objectives, skills and strategies are at the core of a new joint venture that’s set to shake-up the local construction industry.
Doric Group and China Wu Yi publicly launched new independent company, Wu Yi Doric, at a reception last night, which will compete for tier-one construction projects valued at over $100 million, initially across Western Australia before branching out nationally and into South-East Asia.
The companies were introduced two years ago through the World Trade Centers Association, and registered the new entity last October, a 50-50 tie-up between both Doric and China Wu Yi.
The agreement is a first for China Wu Yi, an integrated property group with interests across the global construction industry, technology, real estate investment and development, operating in 30 countries across Asia, Africa, the Middle East and North America.
Based in Fuzhou, China, China Wu Yi has been listed on the Shenzhen stock exchange since 1997 and ranked within US Engineering News-Record’s top 250 international contractors for the past 24 years.
China Wu Yi chairman Qiu Liang Xin, who was in Perth last week for the launch, said the business had always wanted to set up shop in Australia.
“We’d been seeking a way to enter the Australian market faster and more effectively,” Mr Qiu told Business News.
“We found that the two companies could complement each other well.
“Doric has a strong background of management and construction performance, in the local area, and a good network and reputation.
“In our 30 years, China Wu Yi has collected rich experience in engineering and construction management and international business, and pre-fabrication technology.
“So the cooperation between our two companies is a win-win solution.”
He said China Wu Yi would provide strong financial capacity, technical support and construction materials including its own prefabrication technologies, which it had already rolled-out in China with six factories.
Mr Qiu said there was a range of advantages associated with the company's prefabrication technologies, including its ability to speed up the process of construction, its energy saving and environmentally friendly properties, and the fact that it was a less expensive and high-quality alternative to traditional materials.
The first step was introducing the prefabrication in Perth, and then taking it nationally, with the plan to eventually set up factories across Australia.
“We wish through our cooperation with Doric we can not only bring new technology to the construction industry, but more importantly expand the relationship between China and Australia (beyond mining) into other industries,” Mr Qiu said.
The group more than doubled the project-value of its pipeline between 2016-17, jumping up six places on the BNiQ Search Engine’s list of construction companies active in WA, overtaking the likes of national organisations John Holland and Pindan, currently ranked fourth.
Current projects include Yagan Square, Subiaco’s Station Street commercial development, the Melbourne Hotel redevelopment, Secret Harbour shopping centre and HMAS Stirling redevelopment.
“As a strategy of expanding nationally, this was timely and fitting,” Mr Xydas told Business News.
“We have $700 million worth of work in hand, $400 million in revenue and about 200 staff – so one would be tempted to go alone.
“But after considering all the options we came to the view that it would be best to form a long-term strategic alliance - we bring complementary skills.
“In simple terms, China Wu Yi wanted to expand in Australia and we wanted to expand nationally, so it’s a convergence of the two strategies.”
The group had previously started a JV with Spanish firm Tecnicas Reunidas to tender for the New Museum, but Mr Xydas said that relationship had fallen through after the Spanish company's chief executive departed.
He said creating the new entity provided an added advantage in that the group could now operate across different segments of the market by offering three-tier pricing – projects up to $50 million and between $50 million and $100 million would be tendered by its existing Doric/Jaxon operations, while those above $100 million would be undertaken by Wu Yi Doric.
“In the medium term we need to become more competitive,” Mr Xydas said.
“Australia has one of the highest construction costs in the world and its impacting developments, and the margins for developers.
“We have to find a way of reducing our costs and delivering our projects quicker for clients – China Wu Yi’s prefabrication technology is one solution.”
Negotiations are already under way for Wu Yi Doric’s first major project in Perth and it is currently tendering for a second project in Sydney.