{"id":37005,"date":"2020-05-11T08:56:00","date_gmt":"2020-05-11T08:56:00","guid":{"rendered":""},"modified":"2021-10-21T14:17:55","modified_gmt":"2021-10-21T14:17:55","slug":"12005-in-croatia-china-s-building-its-bridge-to-europe","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/12005-in-croatia-china-s-building-its-bridge-to-europe\/","title":{"rendered":"In Croatia, China\u2019s building its bridge to Europe"},"content":{"rendered":"

In 2017, Croatia obtained 357 million euros of EU Cohesion Policy funds<\/a> to cover roughly 85% of the construction costs of the Pelje\u0161ac bridge.<\/p>\n

The bridge will connect the southernmost portion of Croatia, where tourism hotspot Dubrovnik is located, with the north of country. The two are currently separated by the Neum corridor, a 12km strip of land belonging to Bosnia-Herzegovina. The bridge will bypass the Bosnian territory by connecting the Croatian mainland with the Pelje\u0161ac peninsula, improving the flow of goods and people. It is also meant to reinforce the country\u2019s territorial cohesion, seen as an important step since Croatia became an EU member in 2013 and hopes to join the Schengen are<\/a>a soon<\/a>.<\/p>\n

The bridge is also a showcase for China, marking the first time a Chinese company has won an EU tender.<\/p>\n

\u201cFor China, the Pelje\u0161ac bridge project is a Belt and Road Initiative success story,\u201d says Lucrezia Poggetti, analyst at Mercator Institute for China Studies whose research focuses on EU\u2013China relations. \u201cBut its success is disputed as a possible case of unfair competition, since the European companies who bid for construction were outcompeted by a Chinese state enterprise that was able to charge a lower price.\u201d<\/p>\n

Controversy and complaints<\/h2>\n

The Pelje\u0161ac bridge has been under intense scrutiny since the Austrian company Strabag, which also competed for the tender, laid an accusation of price dumping at its constructor, the China Road and Bridge Corporation (CRBC).<\/p>\n

\u201cOn 23 January 2018 we filed a complaint against the award of the Pelje\u0161ac bridge. Besides two formal appeal grounds, we claim that certain items in the CRBC tender bid are unusually cheap. We emphasise the authority\u2019s obligation to question unusually low prices according to EU law (…),\u201d said Marianne Jakl from Strabag SE Corporate Communications & Investor Relations in an email to China Dialogue.<\/p>\n

The Croatian State Commission for Control of Public Procurement Procedures rejected their appeal and Strabag subsequently filed a complaint to the Administrative Court in the capital Zagreb. It\u2019s still pending.<\/p>\n

\u201cThe request for interim injunction was rejected immediately after filing. We also invoked the EU commission, but were referred to the local courts,\u201d said Jakl. A consortium of the Italian Astaldi and Turkish CT Ictas companies also sent a complaint to the state commission challenging the decision to reject their bid due an invalid bank guarantee. This complaint was also dismissed<\/a>.<\/p>\n

Excluding VAT, the China Road and Bridge Corporation\u2019s bid was the cheapest<\/a>, at \u20ac279 million, while Strabag\u2019s bid totalled \u20ac351 million and Astaldi\u2019s came in at \u20ac343 million.<\/p>\n

\"Peljesac<\/a>
\nChina Road and Bridge Corporation employees at the Pelje\u0161ac bridge site, March 2019 (Image: Alamy)<\/span><\/p>\n

Based on Strabag\u2019s complaint, the Croatian newspaper Jutarnji list (The Morning Paper) reported<\/a> that the Chinese company allegedly set the price for hydro isolation and asphalt at \u20ac428,000 and the disposal of excavated soil at \u20ac75,700. Strabag\u2019s price for these services was almost \u20ac3.1 million and \u20ac1.9 million respectively. China Dialogue asked Strabag to confirm the figures listed in the complaint and reported by Jutarnji list but had not received a reply prior to publication.<\/p>\n

Though there was concern that the China Road and Bridge Corporation\u2019s lower bid would translate into higher environmental costs, no wrongdoing has been detected. Vjeran Pir\u0161i\u0107, director of Croatian environmental organisation Eko Kvarner, said that oyster farmers in the bay of Ston, south of the bridge location, feared construction might impact water quality. \u201cBut so far nothing like that has happened,\u201d he says. Zelena Akcija<\/a> (Green Action), one of the most active environmental organisations in Croatia, confirmed in an email that they had not been aware of any environmental malpractice linked to the bridge construction.<\/p>\n

Gateway to the EU market<\/h2>\n

In Croatia, CRBC has been praised for its efficiency and rapid work, with bridge parts being fabricated in China and assembled on site. When China Dialogue visited the construction site back in February 2019, the chief Croatian engineer Jeroslav \u0160egedin who was overseeing construction at the site, compared the process to a Lego game. \u201cThe pilots are almost 129 metres long and weigh over 230 tons. The floating crane that mounts and fixes them in the seabed is the largest in the world,\u201d he explained.<\/p>\n

He also claimed that \u201cno European company would have been able to do such a project in such a short time\u201d. For Sini\u0161a Malus, head of communication of the Chinese Southeast European Business Association (CSEBA), an organisation based in Zagreb aiming to facilitate Chinese investments in Europe and Central Asia, this project is less about making profit, and more about entering the EU market. \u201cThey wanted to show that they could do it,\u201d he claims, adding that CSEBA assisted CRBC in preparing the documentation for the tender.<\/p>\n

Such partnerships between big Chinese companies and local facilitators might be crucial in securing future contracts, especially at European tenders.<\/p>\n

Matt Ferchen, head of Global China Research at Mercator Institute for China Studies, explains that he\u2019d seen many projects \u201cdone poorly because the Chinese side was unwilling to partner up with capable local partners, whether it was on legal issues, public relation issues or environmental impact assessments.\u201d<\/p>\n

\u201cRecently, however, we see more Chinese companies willing to pay more attention to the local circumstances, the legal environment and concerns and interests of the local community,\u201d he adds.<\/p>\n

Louise Curran, professor at Toulouse Business School, who has researched the collaboration between Europe and China in renewables<\/a> says many Chinese companies opt to leave the local management in place and take a hands-off approach, especially when investing in cutting-edge technologies. \u201cEurope is a leader in particular when it comes to the industry of wind, and they also have an advantage in solar, so the Chinese investment in those sectors is perfectly reasonable. They will trust the local management and leave them in place, and eventually learn how to integrate the process a bit more,\u201d she explains.<\/p>\n

Following the successful bid for the Pelje\u0161ac bridge, various Chinese companies have expressed interest in several other projects in Croatia<\/a>, such as in modernising and building railways, buying a hotel complex, and a concession for a freight terminal at the country\u2019s biggest port, Rijeka. Malus also notes that \u201cChinese investors are interested to invest in the field of wine production and health tourism.\u201d<\/p>\n

So far, none of these investments have materialised and business activities in Croatia have been disrupted by the Covid-19 pandemic. However, the global crisis has not stopped works at the Pelje\u0161ac bridge, confirmed Hrvatske Ceste, state-owned road management company, in an email. The bridge construction is still expected to be completed as planned, by February 2022.<\/p>\n","protected":false},"excerpt":{"rendered":"

The 2.4km Pelje\u0161ac bridge is key infrastructure for Croatia, and a showcase for China in Europe<\/p>\n","protected":false},"author":3092,"featured_media":60845,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758],"tags":[510,556],"hashtags":[],"country":[20000110,50041550],"class_list":["post-37005","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-china-in-the-world","tag-infrastructure","country-china","country-croatia"],"acf":[],"yoast_head":"\nIn Croatia, China\u2019s building its bridge to Europe | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"The 2.4km Pelje\u0161ac bridge is key infrastructure for Croatia, and a showcase for China in Europe\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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