China's Guoxin International commits US$2 bln to Christchurch rebuild
Sept. 23 (BusinessDesk) - Christchurch City Council is rolling out the welcome mat for Guoxin International Co, one of China's largest infrastructure development companies, which is committing to raise a US$2 billion fund for investment projects in the city as it enters the mature phase of its post-earthquake reconstruction.
While the letter of cooperation and friendship signed between Guoxin and Christchurch mayor Lianne Dalziel is non-binding, the relationship marks a major step in attracting new investors to the city and has the strong backing of the Chinese government, senior councillor Raf Manji told BusinessDesk.
"This is a very serious commitment from a very reputable and large Chinese organisation to invest in Christchurch, but to do so alongside the community," said Manji, who works closely with Dalziel on the city's financial challenges.
While Guoxin was not the first Chinese investor to express an interest in finding work in the Canterbury reconstruction, the experience to date had been that most would-be Chinese bidders had missed out because of a lack of mutual understanding, said Manji.
"A lot of international capital has arrived" to back the rebuild, and "Chinese investors have come down and tendered for projects, but haven't got anywhere," he said. "That may be because they hadn't established their bona fides in New Zealand", despite in many cases being large, appropriately qualified companies. "You know, some of them have built 300 hospitals and all we need is one hospital, one port. It can be a bit like an elephant mating with a mosquito."
The Guoxin announcement was intended to signal to international investors that Christchurch is "open for business", Manji said.
For its part, Guoxin has committed to raise funds to apply to Christchurch projects, which have yet to be identified and won, in areas such as infrastructure, property, and general investment.
"It's a very broad approach," said Manji. A "second wave of capital" was now coming into the city following the reconstruction already undertaken after devastating earthquakes in 2010 and 2011. "We're not expecting something to appear in the very short term. This gives us the basis for a proper dialogue."
Dalziel led a 35-strong delegation to China earlier this year to forge deeper relations with Christchurch's sister cities, and test the waters for potential investors.
Guoxin also announced relationships with local service providers PwC, ANZ Bank, legal firm Cavill Leitch, and the Canterbury Chamber of Commerce.
The Chinese firm, which is privately owned but grew out of a state-owned enterprise, is described on its website as the international arm of China's largest procurement and tendering company.