Poland to China: You’re Fired

The Financial Times reports the collapse this week of a road-building deal between a Chinese company and the Polish government:

When China’s Covec construction firm won the bid to build two sections of Poland’s main east-west highway two years ago, it seemed like a win-win situation for everyone involved. The cash-strapped Polish government would get new highways built in time for next summer’s European football championships at rock bottom prices. China, in turn, could use Poland as a springboard to break into Europe’s construction sector ….

China Overseas Engineering Group is a subsidiary of China Railway Group, one of Asia’s largest construction and engineering companies, and won a 2009 tender to build 50km of the highway – becoming the first Chinese company to win such a large European contract.. Covec’s bid was astonishingly low, coming in at less than 50 per cent of the 2.8bn zlotys ($1bn) that the government had budgeted ….

The Chinese company last week tried to renegotiate the contract, saying that raw materials were unexpectedly expensive and that it had been unfairly treated, but the government rejected the bid as it could have opened the way for similar renegotiations from companies building hundreds of kilometres of new roads around the country.

June 14, 2011 11:57 PM
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