Skanska has set up a joint venture with Beijing's largest contractor to bid for a 拢290m extension to the city's subway.
The contract is one of the first big steps in Skanska's drive to win work in the Chinese capital in the run-up to the 2008 Olympic Games.

Skanska's Hong Kong subsidiary, Gammon Skanska, signed an agreement on Sunday with the Beijing Zhuzong Group to create a team that will bid for the construction of the number four and number 10 lines of the subway.

Zhuzong chairman Lian Lian said his company will invest 拢4.6m and Skanska will invest 拢3.9m in the joint venture. Beijing has about 34 miles of subway in use and plans to invest 拢780m a year in the network before 2008, adding nearly 200 miles of track.

A Skanska spokesperson said the tender would be submitted in May or June next year. He said: "Our strategy over the Olympics is to look at everything that comes up, but we will tender first and foremost for the infrastructure projects rather than the sports arenas."

He added: "We will look for foreign companies that will invest in buildings and offices in China in relation to the Olympics. They often like to have western contractors because they know the quality of work they deliver."

We will tender first and foremost for infrastructure schemes

Skanska spokesperson

Mike Betts, construction analyst at JP Morgan, welcomed the joint venture. He said it reflected a more cautious approach to international expansion under chief executive Stuart Graham.

He said: "Two years ago, Skanska expanded very fast by acquisition, but I get the impression that Stuart is trying to make the company think about things a bit more before it does them."

Skanska's directors are reviewing the group's business activities worldwide, deciding which regions they should expand into, and from which they should withdraw. They plan to announce expansion plans late next month.