Thursday, May 19, 2011

Chinese road-building conundrum

If they can build those...
Poland's roads are in a league of their own, in a bad league, as you all know and as we have mentioned often here. Poland's road-building sector is supposedly in not much better shape with cut-throat competition and low margins bankrupting many companies. This phenomenon is quite strange because overall Poland spends quite a lot on roads. For example, a 10-kilometre fragment costs 2.3 billion zloty. So when a Chinese company came and said it would build roads quickly and significantly more cheaply, it was sure to win some contracts and it indeed did.

Reality, however, has prevailed yet again over marketing blitz and now we can see that what is cheap is expensive. The key parts of the highway that was to connect Warsaw with Germany ahead of the upcoming Euro 2012 soccer championships are nowhere to be found. Or rather only a big hole in the ground can be seen. Instead Polish contractors are striking because the Chinese company did not pay them on time. The government's road agency is also threatening to throw them out. It seems more and more likely the highway will not be ready before 2012.

Are the Chinese really to blame? Maybe some people on the market have arrived at the conclusion that having a Chinese company, one that is totally alien to our little road-building world, is not such a good idea. But before we throw them out, let's look at other roads across Poland. Well, surprise, surprise, what you find are delays, people going to court, contracts being annulled or missed. Successive governments have also been promising to build thousands of klicks of highways for years.

Maybe, just maybe, this is not the fault of the Chinese. There are so many wild stories about road-building processes in Poland that I would not be surprised at all that someone decided to "get rid" of Chinese competition once and for all through a little "informal arrangement."

1 comment:

  1. That's the problem in overseas outsourcing. But let's look at the bigger picture. This is not just in Poland. In some countries where corruption is rampant, millions of dollars of infrastructure budget are wasted every year. Lets just all hope that the road will be finished on schedule and would not turn into a white elephant.