November 1, 2017
In October 2017, Chinese state-owned enterprise CCCC International Holding Ltd. (CCCI) made a CAD $1.5-billion bid to buy Aecon Group Inc., a leading construction, procurement, and engineering firm that built many of “Canada's most famous landmarks – from the CN Tower and St. Lawrence Seaway, to the Vancouver Sky Train and Halifax Shipyards” (CBC, 2017). Such deal, if realized, would be the single largest Chinese investment in the Transportation and Construction sector in Canada, according to data collected by the China Institute’s investment tracker.
Founded by Adam Clark in 1877, Aecon Group Inc. has grown into one of Canada’s largest construction and infrastructure development companies, employing over 12,000 people across the country. With head offices in Calgary, Vancouver, and Toronto, the company operates in four sectors: infrastructure, energy, mining, and concessions.
CCCC International Holding Ltd. is a subsidiary of China Communications Construction Co.. CCCC was the “ﬁrst large state-owned transportation infrastructure group entering the overseas capital market” (CCCC International). The company employs 118,000 employees in 140 countries with a total revenue of US$62 billion and an EBITDA of US$5 billion in 2016. The Company and its subsidiaries are engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing business.
The company has been at the center of controversy in recent years. According to CBC, “The World Bank banned it from bidding on construction projects for eight years until this past January because of a bid-rigging scandal in the Philippines” (2017). The company has also been linked to construction of “artificial islands in the South China Sea, which has created high tension between China and several Asian countries”(2017).
The deal is still in its early stages, and would need to undergo a government review under the Investment Canada Act. While clearly defined review processes will continue to be needed for large foreign investment by SOEs and transactions that may raise security concerns, it is in Canada’s interest to be open to foreign investment in a wide range of sectors from diverse source countries, including China, given the weak economic growth and uncertainly regarding future trade with the US.