With the advancement of China’s Belt and Road Initiative, more and more enterprises are venturing overseas. However, Chinese curtain wall enterprises face considerable risks when expanding abroad because of the following reasons:
① Significant differences between countries in politics, economy, culture, religion, customs, and legal systems.
② Unpredictable factors such as political instability, currency fluctuations, labor policies, overseas construction costs, and visa requirements.
If risks are underestimated or prevention are poorly managed, the expected economic benefits may not be obtained. And in serious cases, huge losses may be incurred. Based on the practice and thinking of managing overseas projects, the following will analyze the main risks in curtain wall project management abroad and proposes several countermeasures. This is also crucial for SunFrame’s future development.
The Chinese curtain wall industry faces many risks in the process of expanding globally, which may come from market environment, policies and regulations, cultural differences, and operational management. The following is a detailed risk analysis.
Building regulations, tax policies and trade policies in different countries may be adjusted at any time, especially restrictions on imported products or changes in technical standards.
Different countries have different technical standards for the safety, energy saving and environmental protection of curtain wall products (such as the EU’s CE certification and the US’s ASTM standards). So companies need to invest additional costs for certification and adjustment.
Sino-US trade frictions, the EU’s anti-dumping investigations against Chinese companies, and political instability in other regions may affect project progress and costs.
Many countries have mature local curtain wall companies, which are more familiar with local market needs and regulations and have more advantages in culture and language.
Some international markets have fierce price competition. Chinese companies may need to win bids at low prices. However, this may lead to compressed profit margins and affect long-term development.
In high-end markets such as Europe and the United States, Chinese companies have relatively low brand awareness and recognition, and may face barriers to entry in high-end markets.
Overseas landmark buildings usually have high requirements for curtain wall design and construction. Some Chinese companies may face problems of insufficient technical capabilities or insufficient project implementation experience.
Due to cultural differences, language communication problems or unstable local supply chains, projects may face construction delays, affecting corporate reputation and cost control.
Remote management of overseas projects may make quality control more difficult, especially when the supply chain is complex and there are many subcontractors.
The culture, business practices and working methods of different countries may lead to communication barriers or management problems, affecting the execution efficiency of curtain wall project.
Overseas markets require professional teams familiar with local languages and cultures. Chinese curtain wall companies may face challenges in recruiting and managing local talents.
Some countries have strict labor protection policies involving working hours, salary standards, union relations, etc. And this may increase management complexity and costs.
Overseas projects usually involve transactions in multiple currencies. The exchange rate fluctuations may lead to uncertainty in profits.
Overseas projects have a long payment cycle, especially in countries with unstable economies or low credit ratings. This may cause difficulties in fund recovery.
The financing costs in the international market may be higher than those in China. Besides, some countries have restrictions on foreign investment.
Overseas curtain wall projects involve complex contract terms. If local laws are not fully understood, economic losses may be incurred due to contract disputes.
Different countries have different legal systems, and regulations on project execution, labor-capital relations, tax treatment, etc. may lead to legal risks.
In some countries with weak intellectual property protection, the curtain wall technology and design solutions of enterprises may be plagiarized or stolen.
Overseas markets have a high dependence on supply chains. If there are problems with local suppliers, it may affect project progress and costs.
Cross-border transportation involves complex logistics processes and may face transportation delays, increased tariffs or increased logistics costs.
In some markets, specific materials may need to be imported or purchased locally. If there is a shortage of supply or price fluctuations, costs may increase.
Among them, 7.1 and 7.3 are not a problem for us SunFrame, because our curtain wall products are all self-produced. And as for other components or materials, we also have our own domestic suppliers. And we have strict control over these products.
In some regions, political turmoil or social instability may affect the normal implementation of the project.
Economic fluctuations in some emerging market countries may lead to a decline in construction market demand, or even project cancellations or capital chain breaks.
Overseas projects may face the risk of natural disasters such as earthquakes and typhoons, which increase the complexity and cost of design and construction.
Europe, North America and other regions have strict requirements for building environmental protection and energy conservation. Chinese companies need to invest more resources to meet these requirements.
As the world pays more attention to sustainable development, companies need to invest more in research and development of green buildings and low-carbon technologies, increasing cost pressure.
Being familiar with the policies, regulations, technical standards and market demands of the target market to avoid compliance issues is the very first essential step.
Next is to improve technical innovation capabilities, accumulate high-end project experience, and establish a sound project management system.
In order to make the work go smoothly abroad, we can recruit a professional team familiar with local culture and regulations to improve communication efficiency and market adaptability.
As for the risks, we can diversify market risks through diversified layout and manage financial risks through insurance, hedging tools, etc.
Last but not least, we should strengthen brand construction, establish an international reputation through high-quality projects, and improve market recognition.
China’s curtain wall industry faces many risks in overseas markets, including policies and regulations, market competition, cultural differences, finance and operations. Nevertheless, with technological progress, cost advantages and scale capabilities, Chinese companies can occupy an important position in the international market through effective risk management and strategic adjustments.
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