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FINAL REPORT

China Railway Market Study

In cooperation with

- Swiss Business Hub China - June CUI China

January 2011

SwissRail Industry Association January 2011 China Railway Market Study 2 53

List of Content

1 INTRODUCTION 4

11 Objectivehelliphelliphellip4

12 Who We Are4

2 CHINA RAILWAY MARKET 5

21 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

22 Railway Operators in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

23 Current Network Mainlines and Regional Railwayshelliphelliphelliphelliphellip6

24 Heavy Haul Transport in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

25 Highland Railway in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

3 HIGH SPEED RAILWAY 12

31 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

32 Historyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

33 Current HSR Expansionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip17

34 HSR Network and Construction Planshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip19

35 HSR Servicehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

36 Rolling Stock Order and Delivery Timetableshelliphelliphelliphelliphelliphelliphelliphellip29

37 Track Technologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip32

38 Maglev High Speed Railhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip32

39 The Fastest Trains in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33

4 MASS RAIL TRANSIT 35

41 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip35

42 Key Data of MRT Systems in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip35

5 MARKET PLAYERS 38

51 Key Chinese Railway Enterpriseshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38

52 Chinese Railway Academy RampD Institutions and Universitieshellip42

SwissRail Industry Association January 2011 China Railway Market Study 3 53

6 MARKET ENTRY HURDLES 45

61 Intellectual Propertyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip45

62 Licenses and Certification helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

63 Culture and Languagehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

7 INSIGHTS FOR THE RAIL INDUSTRY 49

71 Impact of the Global Financial Crisishelliphellip49

72 Changes and Trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip49

73 Opportunities for Swiss Rail Industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip50

8 DISCLAIMER 53

SwissRail Industry Association January 2011 China Railway Market Study 4 53

1 INTRODUCTION Global markets are shifting and the importance of the developing markets lies not only in their huge contribu-tion to global growth but also in their absolute importance The last two years of the global financial reces-sion have accelerated Chinarsquos relative importance and pushed it on the world scene China as a developing economy must invest in infrastructure to ensure the bottleneck-free flow of passengers and goods China has become one of the most tempting railway markets and is becoming a global leader in the rail industry Swiss Business Hub (SBH) China is commissioned by OSEC Business Network Switzerland to conduct a special study on China railway market especially for SwissRail Industry Association members The study is accomplished by Mrs June CUI of SBH China the results of which are summarized in the following report

11 Objective The railway supply market comprises all systems subsystems and components applied in conventional high speed and urban rail systems including infrastructure rolling stock rail control and the services required to install the systems and maintain the infrastructure and rolling stock Since the largest change in the railway supply market was observed in the infrastructure segment followed by the rolling stock segment and the main drivers are the mass orders for building Chinese very high speed railways (up to 350 kmh or higher) mainlines and urban metro networks this study will mainly focus on the railway market in China The objective of this study is to assist Swiss railway enterprises who are penetrating China railway market or developing their businesses in the market by providing first-hand overall information of the market which include mainline railway high speed railway and urban public transportation systems The study covers not only status quo of the market but also detailed information of on-going railway projects schedules and plans until 2020 It also illustrates among others the special challenges and opportunities in the targeted market for the Swiss railway and rail-related exporters especially the SMEs A sound knowledge and understanding of China railway market is essential for companies to stay on track for continued successes This market study intends to serve as a valuable source for decision-makers and stakeholders in the industry which helps to decide on business activities by focusing on opportunities in the rail sector that will bring substantial and sustained growth

12 Who We Are Swiss Business Hub China is the official representation for Swiss trade and inventment promotion in China It has a team of nine members with the main office installed in Embassy of Switzerland in Beijing and one branch office in the Consulate General in Shanghai and another one in the Consulate General in Guangzhou Mrs June CUI who conducted the market research and produced the report is the head of Swiss Business Hub Guangzhou Office She has worked as the chief representative of Swiss trade and investment promotion in South China since Consulate General of Switzerland was established in Guangzhou Railway industry is one of the sectors she is responsible for among other obligations in Swiss Business Hub China Mrs Cui was graduated from one of the famous railway universities in China ndash Central South University (for-mer Changsha Railway University) She had worked in various functions in Chinese Ministry of Railways for over fifteen years She has a good knowledge of the rail industry and still maintains good connections with Chinese railway sector Mrs Cui is quite experienced in bridging the different cultures of the East and the West which was built up through her long career path including over eight years of working for Siemens before she joined Swiss Business Hub about five years ago Contact for the market study Mrs June CUI SBH China junecuiedaadminch juncuizimmerligmailcom

SwissRail Industry Association January 2011 China Railway Market Study 2 53

List of Content

1 INTRODUCTION 4

11 Objectivehelliphelliphellip4

12 Who We Are4

2 CHINA RAILWAY MARKET 5

21 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

22 Railway Operators in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

23 Current Network Mainlines and Regional Railwayshelliphelliphelliphelliphellip6

24 Heavy Haul Transport in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

25 Highland Railway in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

3 HIGH SPEED RAILWAY 12

31 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

32 Historyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

33 Current HSR Expansionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip17

34 HSR Network and Construction Planshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip19

35 HSR Servicehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

36 Rolling Stock Order and Delivery Timetableshelliphelliphelliphelliphelliphelliphelliphellip29

37 Track Technologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip32

38 Maglev High Speed Railhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip32

39 The Fastest Trains in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip33

4 MASS RAIL TRANSIT 35

41 Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip35

42 Key Data of MRT Systems in Chinahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip35

5 MARKET PLAYERS 38

51 Key Chinese Railway Enterpriseshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip38

52 Chinese Railway Academy RampD Institutions and Universitieshellip42

SwissRail Industry Association January 2011 China Railway Market Study 3 53

6 MARKET ENTRY HURDLES 45

61 Intellectual Propertyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip45

62 Licenses and Certification helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

63 Culture and Languagehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

7 INSIGHTS FOR THE RAIL INDUSTRY 49

71 Impact of the Global Financial Crisishelliphellip49

72 Changes and Trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip49

73 Opportunities for Swiss Rail Industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip50

8 DISCLAIMER 53

SwissRail Industry Association January 2011 China Railway Market Study 4 53

1 INTRODUCTION Global markets are shifting and the importance of the developing markets lies not only in their huge contribu-tion to global growth but also in their absolute importance The last two years of the global financial reces-sion have accelerated Chinarsquos relative importance and pushed it on the world scene China as a developing economy must invest in infrastructure to ensure the bottleneck-free flow of passengers and goods China has become one of the most tempting railway markets and is becoming a global leader in the rail industry Swiss Business Hub (SBH) China is commissioned by OSEC Business Network Switzerland to conduct a special study on China railway market especially for SwissRail Industry Association members The study is accomplished by Mrs June CUI of SBH China the results of which are summarized in the following report

11 Objective The railway supply market comprises all systems subsystems and components applied in conventional high speed and urban rail systems including infrastructure rolling stock rail control and the services required to install the systems and maintain the infrastructure and rolling stock Since the largest change in the railway supply market was observed in the infrastructure segment followed by the rolling stock segment and the main drivers are the mass orders for building Chinese very high speed railways (up to 350 kmh or higher) mainlines and urban metro networks this study will mainly focus on the railway market in China The objective of this study is to assist Swiss railway enterprises who are penetrating China railway market or developing their businesses in the market by providing first-hand overall information of the market which include mainline railway high speed railway and urban public transportation systems The study covers not only status quo of the market but also detailed information of on-going railway projects schedules and plans until 2020 It also illustrates among others the special challenges and opportunities in the targeted market for the Swiss railway and rail-related exporters especially the SMEs A sound knowledge and understanding of China railway market is essential for companies to stay on track for continued successes This market study intends to serve as a valuable source for decision-makers and stakeholders in the industry which helps to decide on business activities by focusing on opportunities in the rail sector that will bring substantial and sustained growth

12 Who We Are Swiss Business Hub China is the official representation for Swiss trade and inventment promotion in China It has a team of nine members with the main office installed in Embassy of Switzerland in Beijing and one branch office in the Consulate General in Shanghai and another one in the Consulate General in Guangzhou Mrs June CUI who conducted the market research and produced the report is the head of Swiss Business Hub Guangzhou Office She has worked as the chief representative of Swiss trade and investment promotion in South China since Consulate General of Switzerland was established in Guangzhou Railway industry is one of the sectors she is responsible for among other obligations in Swiss Business Hub China Mrs Cui was graduated from one of the famous railway universities in China ndash Central South University (for-mer Changsha Railway University) She had worked in various functions in Chinese Ministry of Railways for over fifteen years She has a good knowledge of the rail industry and still maintains good connections with Chinese railway sector Mrs Cui is quite experienced in bridging the different cultures of the East and the West which was built up through her long career path including over eight years of working for Siemens before she joined Swiss Business Hub about five years ago Contact for the market study Mrs June CUI SBH China junecuiedaadminch juncuizimmerligmailcom

SwissRail Industry Association January 2011 China Railway Market Study 3 53

6 MARKET ENTRY HURDLES 45

61 Intellectual Propertyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip45

62 Licenses and Certification helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

63 Culture and Languagehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip46

7 INSIGHTS FOR THE RAIL INDUSTRY 49

71 Impact of the Global Financial Crisishelliphellip49

72 Changes and Trendshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip49

73 Opportunities for Swiss Rail Industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip50

8 DISCLAIMER 53

SwissRail Industry Association January 2011 China Railway Market Study 4 53

1 INTRODUCTION Global markets are shifting and the importance of the developing markets lies not only in their huge contribu-tion to global growth but also in their absolute importance The last two years of the global financial reces-sion have accelerated Chinarsquos relative importance and pushed it on the world scene China as a developing economy must invest in infrastructure to ensure the bottleneck-free flow of passengers and goods China has become one of the most tempting railway markets and is becoming a global leader in the rail industry Swiss Business Hub (SBH) China is commissioned by OSEC Business Network Switzerland to conduct a special study on China railway market especially for SwissRail Industry Association members The study is accomplished by Mrs June CUI of SBH China the results of which are summarized in the following report

11 Objective The railway supply market comprises all systems subsystems and components applied in conventional high speed and urban rail systems including infrastructure rolling stock rail control and the services required to install the systems and maintain the infrastructure and rolling stock Since the largest change in the railway supply market was observed in the infrastructure segment followed by the rolling stock segment and the main drivers are the mass orders for building Chinese very high speed railways (up to 350 kmh or higher) mainlines and urban metro networks this study will mainly focus on the railway market in China The objective of this study is to assist Swiss railway enterprises who are penetrating China railway market or developing their businesses in the market by providing first-hand overall information of the market which include mainline railway high speed railway and urban public transportation systems The study covers not only status quo of the market but also detailed information of on-going railway projects schedules and plans until 2020 It also illustrates among others the special challenges and opportunities in the targeted market for the Swiss railway and rail-related exporters especially the SMEs A sound knowledge and understanding of China railway market is essential for companies to stay on track for continued successes This market study intends to serve as a valuable source for decision-makers and stakeholders in the industry which helps to decide on business activities by focusing on opportunities in the rail sector that will bring substantial and sustained growth

12 Who We Are Swiss Business Hub China is the official representation for Swiss trade and inventment promotion in China It has a team of nine members with the main office installed in Embassy of Switzerland in Beijing and one branch office in the Consulate General in Shanghai and another one in the Consulate General in Guangzhou Mrs June CUI who conducted the market research and produced the report is the head of Swiss Business Hub Guangzhou Office She has worked as the chief representative of Swiss trade and investment promotion in South China since Consulate General of Switzerland was established in Guangzhou Railway industry is one of the sectors she is responsible for among other obligations in Swiss Business Hub China Mrs Cui was graduated from one of the famous railway universities in China ndash Central South University (for-mer Changsha Railway University) She had worked in various functions in Chinese Ministry of Railways for over fifteen years She has a good knowledge of the rail industry and still maintains good connections with Chinese railway sector Mrs Cui is quite experienced in bridging the different cultures of the East and the West which was built up through her long career path including over eight years of working for Siemens before she joined Swiss Business Hub about five years ago Contact for the market study Mrs June CUI SBH China junecuiedaadminch juncuizimmerligmailcom

SwissRail Industry Association January 2011 China Railway Market Study 4 53

1 INTRODUCTION Global markets are shifting and the importance of the developing markets lies not only in their huge contribu-tion to global growth but also in their absolute importance The last two years of the global financial reces-sion have accelerated Chinarsquos relative importance and pushed it on the world scene China as a developing economy must invest in infrastructure to ensure the bottleneck-free flow of passengers and goods China has become one of the most tempting railway markets and is becoming a global leader in the rail industry Swiss Business Hub (SBH) China is commissioned by OSEC Business Network Switzerland to conduct a special study on China railway market especially for SwissRail Industry Association members The study is accomplished by Mrs June CUI of SBH China the results of which are summarized in the following report

11 Objective The railway supply market comprises all systems subsystems and components applied in conventional high speed and urban rail systems including infrastructure rolling stock rail control and the services required to install the systems and maintain the infrastructure and rolling stock Since the largest change in the railway supply market was observed in the infrastructure segment followed by the rolling stock segment and the main drivers are the mass orders for building Chinese very high speed railways (up to 350 kmh or higher) mainlines and urban metro networks this study will mainly focus on the railway market in China The objective of this study is to assist Swiss railway enterprises who are penetrating China railway market or developing their businesses in the market by providing first-hand overall information of the market which include mainline railway high speed railway and urban public transportation systems The study covers not only status quo of the market but also detailed information of on-going railway projects schedules and plans until 2020 It also illustrates among others the special challenges and opportunities in the targeted market for the Swiss railway and rail-related exporters especially the SMEs A sound knowledge and understanding of China railway market is essential for companies to stay on track for continued successes This market study intends to serve as a valuable source for decision-makers and stakeholders in the industry which helps to decide on business activities by focusing on opportunities in the rail sector that will bring substantial and sustained growth

12 Who We Are Swiss Business Hub China is the official representation for Swiss trade and inventment promotion in China It has a team of nine members with the main office installed in Embassy of Switzerland in Beijing and one branch office in the Consulate General in Shanghai and another one in the Consulate General in Guangzhou Mrs June CUI who conducted the market research and produced the report is the head of Swiss Business Hub Guangzhou Office She has worked as the chief representative of Swiss trade and investment promotion in South China since Consulate General of Switzerland was established in Guangzhou Railway industry is one of the sectors she is responsible for among other obligations in Swiss Business Hub China Mrs Cui was graduated from one of the famous railway universities in China ndash Central South University (for-mer Changsha Railway University) She had worked in various functions in Chinese Ministry of Railways for over fifteen years She has a good knowledge of the rail industry and still maintains good connections with Chinese railway sector Mrs Cui is quite experienced in bridging the different cultures of the East and the West which was built up through her long career path including over eight years of working for Siemens before she joined Swiss Business Hub about five years ago Contact for the market study Mrs June CUI SBH China junecuiedaadminch juncuizimmerligmailcom

SwissRail Industry Association January 2011 China Railway Market Study 5 53

2 CHINA RAILWAY MARKET

21 Overview China is a developing country with a huge population of 1334 billion (end of 2009) and a vast territory of over 96 million kmsup2 Rail transport is the most commonly used mode of transportation especially for long haul services in the mainland China Chinas railway transportation has long fallen short of demand The increasing demand for railway transportation resulting from the fast and steady economic development 2 digits GDP in the past decades and a much more above-average growth after the outburst of the global fi-nancial crisis following the US subprime crisis in 2008 has been a key factor that drives China to continue and to speed up its railway development and construction in China The urbanization in China is proceeding faster than it has been realized The United Nations has forecasted that Chinas population will have about an equal number of people staying in the rural and urban areas by 2015 It is estimated by Chinese Ministry of Housing and Urban-Rural Development that from 2010 to 2025 300 million Chinese now living in rural areas will move into cities By 2035 nearly 70 of the population will live in urban areas The shortage of natural resources is one big challenge China has been facing such as the limited land re-source especially in the regions with Beijing Shanghai and Guangzhou as the economic powerhouses The structure of energy resources in China is unbalanced with rich coal but limited petroleum The conflict be-tween the natural resources and economic development in China is getting more serious The rising environmental awareness in China similar to other emerging markets is crucial for sustainable economic development in China China has no other choice but to continue its endeavours in environment protection certainly also as a responsible global citizen Railway transportation features high capacity high efficiency low energy consumption and environmental friendliness and is obviously the best solution for China China has never stopped its efforts in building and developing railway in China and the two main focuses are building more railways and raising the train speed With the generous economic stimulus program of more than $586 billion (yen4 trillion) due to the historic finan-cial crisis outburst in 2008 China started to accelerate dramatically its railway development and construction The total length of operational rail network reached 91rsquo000 km by the end of 2010 China plans to invest a total of more than $500 billion (yen35 trillion) in order to complete its national rail netwrok of over 120rsquo000 km by the end of its 12

th Five-Year Plan (2011-2015)

China with its ambitious plans and remarkable achievements in the railway sector especially in the past five years has entered the era of high speed railway The average operational speed of high speed trains is 350 kmh China aims to lead the world in high speed railway construction and has begun research and develop-ment on a new super-speed railway technology which will increase the average speed of trains to over 500 kmh The expansion of HSR is apparently developing China into a leading source of high speed rail building technology China has also started to head aggressively into the international railway market

22 Railway Operators in China Chinese Railways or Sinorail as it is often called in English is the national railway operator in the mainland China under the control of Chinese Ministry of Railways (MoR) which is part of the State Council of China Almost all rail operations in China are handled by the MoR The railway management in the national railway system consists of three major levels They are the MoR Railway Bureaus or Railway Group Companies and Railway Stations

SwissRail Industry Association January 2011 China Railway Market Study 6 53

There are sixteen Railway Bureaus and two Railway Group Companies under the MoR

Beijing Railway Bureau

Chengdu Railway Bureau

Guangzhou Railway Group Co Ltd

Harbin Railway Bureau

Hohhot Railway Bureau

Jinan Railway Bureau

Kunming Railway Bureau

Lanzhou Railway Bureau

Nanchang Railway Bureau

Nanning Railway Bureau

Qinghai-Tibet Railway Group Co Ltd

Shanghai Railway Bureau

Shenyang Railway Bureau

Taiyuan Railway Bureau

Wulumuqi (Uumlruumlmqi) Railway Bureau

Wuhan Railway Bureau

Xian Railway Bureau

Zhengzhou Railway Bureau There are also some local railway lines operated by local state-owned railway companies in different prov-inces in China The only private-owned railway line in mainland China is Luoding Railway in Guangdong Province

23 Current Network Mainlines amp Regional Railways Trains run by Chinese Railways link almost every town and city in the mainland China New high speed lines from 200 kmh up to 350 kmh high speed operation are constructed and many conventional lines are also upgraded to 200 kmh operation The total length of operating rail network in China is 86000 km by the end of 2009 this figure reached 91rsquo000 km by the end of 2010 according to the Minister of Railways Mr Zhijun LIU at Chinarsquos National Railway Con-ference opened on Jan 4 2011 in Beijing This means in 2010 alone China accomplished approximately 5rsquo000 km newly-built rail lines At present there are over 30rsquo000 km rail lines under construction in China China plans to have a basically complete rail netwrok of over 120rsquo000 km by the end of its 12

th Five-Year Plan

(2011-2015) among which 16rsquo448 km will be high speed lines and 50rsquo000 km rail lines will be built in the western part of the country By 2015 50 of Chinese rail network should be dual lines and 60 electrified Chinarsquos overall capacity of passenger transport should reach 3 billion persons and that of freight transport should reach 48 billion tons by then Chinarsquos total investment on railways during the 12

th Five-Year Plan is more than $500 billion (yen35 trillion)

roughly $200 billion more than the investment of $300 billion (yen22 trillion) during the 11th Five Year Plan This

means a total of $100 annual investment during the next five years

SwissRail Industry Association January 2011 China Railway Market Study 6 53

There are sixteen Railway Bureaus and two Railway Group Companies under the MoR

Beijing Railway Bureau

Chengdu Railway Bureau

Guangzhou Railway Group Co Ltd

Harbin Railway Bureau

Hohhot Railway Bureau

Jinan Railway Bureau

Kunming Railway Bureau

Lanzhou Railway Bureau

Nanchang Railway Bureau

Nanning Railway Bureau

Qinghai-Tibet Railway Group Co Ltd

Shanghai Railway Bureau

Shenyang Railway Bureau

Taiyuan Railway Bureau

Wulumuqi (Uumlruumlmqi) Railway Bureau

Wuhan Railway Bureau

Xian Railway Bureau

Zhengzhou Railway Bureau There are also some local railway lines operated by local state-owned railway companies in different prov-inces in China The only private-owned railway line in mainland China is Luoding Railway in Guangdong Province

23 Current Network Mainlines amp Regional Railways Trains run by Chinese Railways link almost every town and city in the mainland China New high speed lines from 200 kmh up to 350 kmh high speed operation are constructed and many conventional lines are also upgraded to 200 kmh operation The total length of operating rail network in China is 86000 km by the end of 2009 this figure reached 91rsquo000 km by the end of 2010 according to the Minister of Railways Mr Zhijun LIU at Chinarsquos National Railway Con-ference opened on Jan 4 2011 in Beijing This means in 2010 alone China accomplished approximately 5rsquo000 km newly-built rail lines At present there are over 30rsquo000 km rail lines under construction in China China plans to have a basically complete rail netwrok of over 120rsquo000 km by the end of its 12

th Five-Year Plan

(2011-2015) among which 16rsquo448 km will be high speed lines and 50rsquo000 km rail lines will be built in the western part of the country By 2015 50 of Chinese rail network should be dual lines and 60 electrified Chinarsquos overall capacity of passenger transport should reach 3 billion persons and that of freight transport should reach 48 billion tons by then Chinarsquos total investment on railways during the 12

th Five-Year Plan is more than $500 billion (yen35 trillion)

roughly $200 billion more than the investment of $300 billion (yen22 trillion) during the 11th Five Year Plan This

means a total of $100 annual investment during the next five years

SwissRail Industry Association January 2011 China Railway Market Study 7 53

231 Main Lines Rail is one of the principal means of transport in China The Spring Festival Travel Season is the peak railway travel season of the year During the three weeklong holidays in China known as Golden Week demand for tickets increases dramatically due to many migrant workers returning home and others using the time to travel the country The holidays are the week starting May 1

st and October 1

st and the week around Chinese

New Year also known as the ldquoChunyunrdquo season Even though the duration of the May holidays was short-ened in 2009 the holiday traffic remained strong with the record of 654 million passengers carried over the Chinese rail network on May 1 2009

The map of the railway network of all China as of March 2010 (including Taiwan as politically claimed)

North-South Directions

a Beijing-Harbin Corridor

- Main Lines

Jingqin Railway Beijing-Qinhuangdao 京秦线

Jingshan Railway Beijing-Shanhaiguan 京山线

Shenshan Railway Shenyang-Shanhaiguan 沈山线

Qinshen Passenger Railway Qinhuangdao-Shenyang 秦沈客运专线

Changda Railway Changchun-Dalian 长大线

Changbin Railway Changchun-Harbin 长滨线

Binzhou Railway Harbin-Manzhouli 滨洲线

In passenger rail service Jingshan Railway Shenshan Railway Changda Railway Changchun-Shenyang Portion and Changbin Railway are collectively called Jingha Railway (Beijing-Harbin)

SwissRail Industry Association January 2011 China Railway Market Study 8 53

- Secondary Lines and Branch Lines (Only those with passenger rail service are listed)

Jingzhang Railway Beijing-Datong 京张线

Jingtong Railway Beijing-Tongliao 京通线

Jingcheng Railway Beijing-Chengde 京承线

Chenglong Railway Chengde-Longhua 承隆线

Jincheng Railway Jinzhou-Chengde 锦承线

Weita Railway Weizhangzi-Tashan 魏塔线

Jitong Railway Jining-Tongliao 集通线

Yechi Railway Yeboshou-Chifeng 叶赤线

Nanpiao Railway Jinzhou-Nanpiao 南票线

Xinyi Railway Xinlitun-Yixian 新义线

Gaoxin Railway Gaotaishan-Xinlitun 高新线

Gouhai RailwayGoubangzi-Tangwangshan 沟海线

Yingkou Railway Yingkou-Dashiqiao 营口线

Lushun Railway Zhoushuizi-Lushun 旅顺线

Jinzhou Railway Jinzhou-Chengzidan 金城线

Chengzhuang Railway Chengzidan-Zhuanghe 城庄线 b Coastal Corridor

Changda Railway Changchun-Dalian 长大线 Shenyang-Dalian Portion(沈大段)

Yanda Railway Ferry 烟大铁路轮渡

Lanyan Railway Lancun-Yantai 蓝烟线

Jiaoxin Railway Jiaozhou-Xinyi 胶新线

Xinchang Railway Xinyi-Changxing 新长线

Xuanhang Railway Xuancheng-Hangzhou 宣杭线 Hangzhou-Changxing Portion(杭长段)

Xiaoyong Railway Xiaoshan-Ningbo 萧甬线

Yongtaiwen Railway Ningbo-Taizhou-Wenzhou 甬台温线 (Under construction)

Wenfu Railway Wenzhou-Fuzhou 温福线 (Under construction)

Fuxia Railway Fuzhou-Xiamen 福厦线 (Not constructed yet)

Yingxia Railway Yingtan-Xiamen 鹰厦线 Zhangping-Xiamen Portion(漳厦段)

Zhanglong Railway Zhangping-Longyan 漳龙线

Meikan Railway Meizhou-Kanshi 梅坎线

Guangmeishan Railway Guangzhou-Meizhou-Shantou 广梅汕线

Meilong Railway Meizhou-Shantou 梅隆线

Guangzhou-Sanshui Railway Guangzhou-Sanshui 广三线

Sanmao Railway Sanshui-Longhua 三茂线

Hechun-Maoming Railway Hechun-Maoming 河茂线

Lizhan Railway Litang-Zhanjiang 黎湛线

Hainan East Ring Intercity Rail 海南东环城际铁路

c Beijing-Shanghai Corridor

Jingshan Railway Beijing-Shanhaiguan 京山线 Beijing-Tianjin Portion(京津段)

Jingpu Railway Tianjin-Pukou 津浦线

Huning Railway Shanghai-Nanjing 沪宁线

Jinghu High Speed Railway Beijing-Shanghai 京沪高速铁路 (Under construction)

Jingshan Railway Beijing-Tianjin Portion Jingpu Railway and Huning Railway are collectively called Jinghu

Railway (京沪线) in passenger rail service

SwissRail Industry Association January 2011 China Railway Market Study 9 53

d Beijing-Kowloon Corridor

Jingjiu Railway Beijing-Kowloon 京九线 京九鐵路

Jingjiu Railway uses the same line as Guangmeishan Railway between Longchuan and Dongguan It also uses the same line as Kowloon-Canton Railway (Guangshen between Dongguan and Kowloon

e Beijing-Guangzhou Corridor

Jingguang Railway Beijing-Guangzhou 京广线

f Datong-Zhanjiang Corridor

Beitongpu Railway Datong-Fenglingdu 北同蒲线

Taijiao Railway Taiyuan-Jiaozuo 太焦线

Jiaoliu Railway Jiaozuo-Liuzhou 焦柳线

Shichang Railway Shimenxian-Changsha 石长线

Xianggui Railway Hengyang-Pingxiang 湘桂线

Yuehai Railway Guangdong-Haikou 粤海铁路

g Baotou-Liuzhou directions h Lanzhou-Liuzhou directions

Baocheng Railway Baoji-Chengdu 宝成铁路

Chengkun Railway Chengdu-Kunming 成昆铁路

i Kowloon-Canton Railway

Guangshen Railway Guangzhou-Shenzhen 广深铁路

KCR East Rail 九广铁路东铁 (temporarily operated by MTR and described as MTR East Rail Line)

East-West Directions

a Beijing-Lhasa directions

Fengsha Railway Fengtai-Shacheng 丰沙铁路

Jingbao Railway Beijing-Baotou 京包铁路

Baolan Railway Baotou-Lanzhou 包兰铁路

Lanqing Railway Lanzhou-Xining 兰青铁路

Qingzang Railway Xining-Lhasa 青藏铁路

b Transcontinental Bridge Railways

Longhai Railway Lianyungang-Lanzhou 陇海铁路

Lanxin Railway Lanzhou-Xinjiang 兰新铁路

Beijiang Railway (Northern Xinjiang Railway)Uumlruumlmqi-Alashankou (Alataw Pass)北疆铁路

Nanjiang Railway (Southern Xinjiang Railway) Turpan-Kashgar 南疆铁路

SwissRail Industry Association January 2011 China Railway Market Study 10 53

c Coastal Railway

- Northern

Ningxi Railway Nanjing-Xian 宁西铁路

Ningqi Railway Nanjing-Qidong 宁启铁路

- Southern

Guangdong-Hainan Railway Guangzhou-Haikou 粤海铁路

Wujiu Railway Wuchang-Jiujiang 武九铁路

Ningwu Railway Nanjing-Wuhu 宁芜铁

d Shanghai-Kunming Railway (Hukun Line)

Huhang Railway Shanghai-Hangzhou 沪杭铁路

Zhegan Railway Hangzhou-Zhuzhou 浙赣铁路

Xiangqian Railway Zhuzhou-Guiyang 湘黔铁路

Guikun Railway Guiyang-Kunming 贵昆铁路

e Southwestern Railways connecting to the coast

Nankun Railway Nanning-Kunming 南昆铁路

Yuehai Railway Zhanjiang-Haikou 粤海铁路

232 Regional Railways Northeast China

Qibei Railway Qiqihar-Beian 齐北铁路

Funen Railway Fuyu-Nenjiang 富嫩铁路

Nenlin Railway Nenjiang-Greater Khingan Forest District 嫩林铁路 Southwest China

Chengyu Railway Chengdu-Chongqing 成渝铁路

Chuanqian Railway Chongqing-Guiyang 川黔铁路

Xiangyu Railway Xiangfan-Chongqing 襄渝铁路

Yiwan Railway Yichang-Wanzhou 宜万铁路

Yuli Railway Chongqing-Lichuan 渝利铁路

YunnanndashVietnam Railway Kunming-Hanoi Railway 昆河铁路 Coal Transport Railways

Daqin Railway 大秦铁路

Shenhuang Railway 神黄铁路 (operated by Shenhua Group Corporation Limited)

SwissRail Industry Association January 2011 China Railway Market Study 11 53

24 Heavy Haul Transport in China Heavy haul transport in China refers to any railway with annual transport capacity of over 20 million tons or any freight train with transport capacity of over 5rsquo000 tons and axle load from 25 tons up to 30 tons Datong ndash Qinghuangdao railway represents the development of heavy haul transport in China It realized for the first time the combination of the locomotive wireless synchronous control technology and GSM-R technol-ogy and therefore ensured the operation of a large number of combined trains of 10rsquo000 tons and 20rsquo000 tons The annual transport capacity of the line increased rapidly after its designed capacity of 100 million tons was reached in 2002 until it reached 340 million tons in 2008 The expected capacity for the year 2010 is 400 million tons This line constituting less than 1 of Chinarsquos total operational railway network carries 10 of the total railway freight volume in China

25 Highland Railway in China

The QinghaindashTibet railway or QinghaindashXizang railway covering a total length of 1rsquo972 km is a high-altitude

railway that connects Xining in Qinghai Province with Lhasa in Tibet Autonomous Region The construction of the railway was part of the China Western Development strategy an attempt to develop the western prov-inces of China which are much less developed than eastern China This railway is the first to connect China proper with Tibet which due to its altitude and terrain is the last provincial level entity in mainland China to have a conventional railway The railways highest point the Tanggula Mountain Pass is 5rsquo072 meter above sea level making it the high-est railway in the world More than 960 km or over four-fifths of the railway are at an altitude of more than 4rsquo000 meters and over half of it was laid on frozen earth Because of the high altitudes carriages are sup-plied with supplemental oxygen Qinghai ndash Tibet railway crosses several world famous habitat reservation areas such as Qinghai Lake Kunlun Mountains Kekexili and Sanjiangyuan

SwissRail Industry Association January 2011 China Railway Market Study 12 53

3 HIGH SPEED RAILWAY

31 Overview High-speed rail in China refers to any commercial train service in the mainland China with an average speed of 200 kmh or higher By that measure China already has the worldrsquos longest high speed rail (HSR) network with about 8rsquo358 km of lines in service by the end of 2010 including the Beijing-Shanghai High Speed Rail-way of 1rsquo318 km with designed speed of 380 kmh which was completed on November 15 2010 and is set to open in June 2011 The main operator of regular high speed train services in the mainland China is China Railway High-Speed (CRH) At present CRH services about 1rsquo200 high speed trains per day in China With the 12

th Five-Year

Plan (2011-2015) China is going to put more than 1rsquo500 high speed trains with speed from 200 kmh up to 350 kmh into operation Chinas high speed rail lines consists of upgraded conventional rail lines newly-built high speed passenger dedicated lines (PDLs) and the worldrsquos first high-speed commercial magnetic levitation (maglev) line The country is undergoing an HSR building boom China is the first and only country in the world to have com-mercial train service on conventional rail lines that can reach 350 kmh Notable examples of completed HSR in China include

Shanghai-Hangzhou High Speed Railway an intercity express line of 202 km that opened on October 26 2010 has put the first China-designed high speed train CRH380A (8-car train set) with operational speed of 350 kmh into regular service The top speed attained during a testing run on September 28 2010 is 4166 kmh The running time of the trains is 45 minutes

The Shanghai-Nanjing High Speed Railway an intercity high speed line that opened on July 01 2010 has reduced the 310 km journey between the two largest cities in East China to 1 hour and 13 minutes The operational train speed is 350 kmh

The Zhengzhou-Xirsquoan High Speed Railway the first passenger dedicated trunk line going into West China that opened on February 06 2010 has reduced the 505 km journey between the two largest cities in cen-tral and western China to 1 hour and 58 minutes The operational train speed is 350 kmh

The WuhanndashGuangzhou High Speed Railway a passenger dedicated trunk line that opened on Decem-ber 26 2009 has reduced the 1rsquo069 km journey between the two largest cities in central and southern China to 3 hours and 16 minutes The operational train speed is 350 kmh

The Beijing-Tianjin Intercity Railway an intercity high speed line that opened on August 01 2008 has shortened the 120 km commute between the two largest cities in North China to 30 minutes The operati-onal train speed is 350 kmh

The Shanghai Maglev Train an airport rail link service that opened in 2004 travels 305 km in 7 minutes and 20 seconds averaging 2455 km and reaching top speed of 431 kmh

Chinarsquos initial high speed trains were imported or built under technology transfer agreements with foreign train makers including Siemens Alstom Bombardier and Kawasaki Heavy Industries The top speed attained by a non-maglev train in China is 4861 kmh by a first China-designed high speed train CRH380A on the Beijing-Shanghai High Speed Railway during the test run on December 03 2010

32 History State planning for Chinas high speed railway began in the early 1990s The MoR submitted a proposal to build a high speed railway between Beijing and Shanghai to the National Peoples Congress in December 1990 At that time the existing Beijing-Shanghai railway was already reaching its full capacity and the pro-posal was jointly studied by the Science amp Technology Commission State Planning Commission State Eco-nomic amp Trade Commission and the MoR In December 1994 the State Council commissioned a feasibility study for the line Policy planners debated the necessity and economic viability of high speed rail service Supporters argued that high speed rail would boost future economic growth Opponents noted that high speed rail in other countries were expensive and mostly unprofitable It was believed that overcrowding on

SwissRail Industry Association January 2011 China Railway Market Study 13 53

existing rail lines could be solved by expanding capacity through higher speed and frequency of service In 1995 Premier Li Peng announced that preparatory work on the Beijing Shanghai HSR would begin in the 9th Five Year Plan (1996-2000) but construction was not scheduled until the first decade of the 21st century

321 The Speed Up Campaigns

In 1993 commercial train service in China averaged only 48 kmh and was steadily losing market share to airline and highway travel on the countrys expanding network of expressways The MoR focused moderniza-tion efforts on increasing the service speed and capacity on existing lines through double-tracking electrifica-tion improvements in grade (through tunnels and bridges) reductions in turn curvature and installation of continuous welded rail Through five rounds of speed-up campaigns in April 1997 October 1998 October 2000 November 2001 and April 2004 passenger service on 7rsquo700 km of existing tracks was upgraded to reach sub-high speed of 160 kmh

A notable example is the Guangzhou-Shenzhen Railway which in December 1994 became the first line in China to offer sub-high speed service of 160 kmh using Chinese-made DF-class diesel locomotives The line was electrified in 1998 and Swedish-made X2000 trains increased service speed to 200 kmh After the completion of a third track in 2000 and a fourth in 2007 the line became the first in China to run high-speed passenger and freight service on separate tracks The completion of the sixth and final round of the speed up campaigns in April 2007 brought HSR service to more existing lines 846 km capable of 250 kmh train service and 6009 km capable of 200 kmh Some 14000 km of tracks could accommodate trains traveling at speeds up to 160 kmh In all travel speed was increased on 22000 km or 29 of the national rail network and the average speed of a passenger train in China improved to 70 kmh The introduction of more non-stop service between large cities also helped to reduce travel time The non-stop express train from Beijing to Fuzhou shortened the travel time from 335 to less than 20 hours The Six ldquoSpeed-Uprdquo Campaigns (1997-2007)

In addition to track and scheduling improvements the deployment of the CRH series trains raised travel speed During the sixth railway ldquospeed-uprdquo campaign 52 CRH train sets (CRH1 CRH2 and CRH5) were put into operation By the end of 2007 there were plans to have 158 CRH trainsets in operation The new trains sliced 2 hours off of the 1463 km trip between Beijing and Shanghai to a journey of just under 10 hours Tra-vel times from Shanghai to Changsha fell by 15 hour to 75 hours and the trip to Nanchang was halved Higher speed express train service allowed more trains to share the tracks and increased rail transport ca-pacity in China But high speed trains often have to share tracks with heavy freight in some cases with as little as 5 minutes headway To attain higher speeds and transport capacity railway planners in China began to consider passenger dedicated HSR lines on a grand scale

No Date

Cumulative length of track (km) that can carry trains with max speed of Average passenger trainspeed (kmh)

ge 120kmh ge 140kmh ge 160kmh ge200kmh ge 250kmh

First 1997-04-01 1rsquo398 1rsquo340 752 549

Second 1998-10-01 6rsquo449 3rsquo522 1rsquo104 552

Third 2000-10-21 9rsquo581 6rsquo458 1rsquo104 603

Fourth 2001-11-21 13rsquo166 9rsquo779 1rsquo104 626

Fifth 2004-04-18 16rsquo500 7rsquo700 1rsquo960 657

Sixth 2007-04-18 22rsquo000 14rsquo000 6rsquo003 846 702

SwissRail Industry Association January 2011 China Railway Market Study 14 53

322 The Conventional Rail v Maglev Debate The development of HSR network in China was initially held up by a debate over the type of track technology In June 1998 at a State Council meeting with the Chinese Academies of Sciences and Engineering Premier Zhu Rongji asked whether the high speed railway between Beijing and Shanghai still being planned could use maglev technology At that time Chinese planners were divided between using high-speed trains with wheels that run on conventional standard gauge tracks or magnetic levitation trains that run on special mag-lev tracks for a new national high-speed rail network Maglev received a big boost in 2000 when the Shanghai Municipal Government agreed to purchase a turnkey TransRapid train system from Germany for the 305 km rail link connecting Shanghai Pudong International Airport and the city downtown In 2004 the Shanghai Maglev Train became the worlds first commercially operated high speed maglev It remains the fastest train in China with peak speed of 431 kmh and makes the 305 km in less than 75 minutes Despite unmatched advantage in speed the maglev has not gained widespread use in Chinas high speed rail network due to high cost German refusal to share technology and concerns about safety The price tag of the Shanghai Maglev was believed to be $13 billion and was partially financed by the German government The refusal of the Transrapid Consortium to share technology and source production in China made large scale-maglev production much more costly than high speed train technology for conventional lines Finally residents living along the proposed maglev route have raised health concerns about electromagnetic radia-tion emitted by the trains These concerns have prevented construction to begin on the proposed extension of the maglev to Hangzhou Even the more modest plan to extend the maglev to Shanghais other airport Hongqiao has been stalled Instead a conventional subway line was built to connect the two airports and a conventional high-speed rail line was built between Shanghai and Hangzhou While the maglev was drawing attention to Shanghai conventional track HSR technology was being tested on the newly completed Qinhuangdao-Shenyang (Qinshen) Passenger Railway This 405 km standard gauge dual-track electrified line was built between 1999 and 2003 In June 2002 a Chinese-made DJF2 train set a record of 2928 kmh on the track The China Star (DJJ2) train followed the same year September with a new record of 321 kmh The line supports commercial train service at speed of 200ndash250 kmh and has become a segment of the rail corridor between Beijing and the Northeast China The Qinshen Line de-monstrates the greater compatibility of HSR on conventional track with the rest of Chinas standard gauge rail network In 2006 the State Council in its ldquoMid-to-Long Term Railway Network Planrdquo adopted conventional track HSR technology over maglev This decision ended the debate and cleared the way for rapid construction of stan-dard gauge passenger dedicated HSR lines in China

323 Acquisition of Foreign Technology Despite setting speed records on test tracks the DJJ2 DJF2 and other Chinese-made high speed trains were insufficiently reliable for commercial operation The State Council turned to advanced technology abroad but made it clear in directives that Chinas HSR expansion cannot only benefit foreign economies Chinas expansion must also be used to develop its own high-speed train building capacity through technolo-gy transfers The State Council the MoR and state-owned train manufacturers China South Locomotive and Rolling Stock Corporation Limited (CSR) and China North Locomotive and Rolling Stock Corporation Limited (CNR) used Chinas large market and competition among foreign train makers to induce technology transfers In 2003 the MoR was believed to favor Japans Shinkansen technology especially the 700 series which was later exported to Taiwan The Japanese government touted the 40-year track record of the Shinkansen and offered favorable financing A Japanese report envisioned a winner-take all scenario in which the winning technology provider would supply Chinas trains for over 8000 km of high speed rail However Chinese neti-zens angry with Japans World War II atrocities organized a web campaign to oppose the awarding of HSR contracts to Japanese companies The protests gathered over a million signatures and politicized the issue

SwissRail Industry Association January 2011 China Railway Market Study 15 53

The MoR delayed the decision broadened the bidding and adopted a diversified approach to adopting for-eign high-speed train technology In June 2004 the MoR solicited bids to make 200 high speed train sets that can run 200 kmh Alstom of France Siemens of Germany Bombardier Transportation based in Germany and a Japanese consortium led by Kawasaki all submitted bids With the exception of Siemens which refused to lower its demand of RMB (yen) 350 million per train set and euro390 million for the technology transfer the other three were all awarded por-tions of the contract All had to adapt their HSR train sets to Chinas own common standard and assemble units through local joint ventures or cooperate with Chinese manufacturers Bombardier through its joint ven-ture with CSRrsquos Sifang Locomotive and Rolling Stock Co Ltd (CSR Sifang) Bombardier Sifang (Qingdao) Transportation Ltd (BST) won an order for 40 eight-car train sets based on Bombardiers Regina design These trains designated as CRH1A were delivered in 2006 Kawasaki won an order for 60 train sets based on its E2 Series Shinkansen for yen93 billion Of the 60 train sets three were directly delivered from Nagoya of Japan six were kits assembled at CSR Sifang and the remaining 51 were made in China using transferred technology with domestic and imported parts They are known as CRH2A Alstom also won an order for 60 train sets based on the New Pendolino developed by Alstom-Ferroviaria in Italy The order had a similar deli-very structure with three shipped directly from Savigliano along with six kits assembled by CNRrsquos Changchun Railway Vehicles Co Ltd and the rest locally made with transferred technology and some imported parts Trains with Alstom technology carry the CRH5 designation The following year Siemens reshuffled its bidding team lowered prices joined the bidding for 300 kmh trains and won an order of 60 train sets It supplied the technology for the CRH3C based on the Velaro de-sign to CNRs Tangshan Railway Vehicle Co Ltd The transfered technology includes assembly body bo-gie traction converters traction transformers traction motors traction control brake systems and train con-trol networks

Regina Bombardier CRH1

E2 Series Shinkansen Kawasaki CRH2

SwissRail Industry Association January 2011 China Railway Market Study 16 53

Velaro Siemens CRH3

New Pendolino Alstom CRH5

324 Localization and Increasing Speed Digestion and re-innovation is one of the major considerations of the Chinese MoR when China decided to import foreign technologies With the technologies acquired from foreign companies Chinese factories are able to produce components of the vehicles Mitsubishi Electric transfer MT205 traction motor and ATM9 transformer to CSR Zhuzhou Elec-tric Hitachi transfer YJ92A traction motor to Yongji Electric Alstom transfer YJ87A Traction motor to Yongji Electric Siemens transfer TSG series pantograph to Zhuzhou Gofront Electric Most of the components of the CRH trains manufacturer by Chinese companies are from local suppliers few parts of them are imported During June 2005 and September 2005 the Chinese MoR launched bidding for high speed trains with a top speed of 350 kmh as most of the main high speed lines in China are designed with top speed of 350kmh or higher Along with CRH3C produced by Siemens and CNR Tangshan CSR Sifang bid 60 sets of CRH2C Within two years of co-operation with Kawasaki to produce 60 CRH2A sets CSR had ldquodigestedrdquo the technol-ogy required for their own manufacturing Since then CSR is no longer co-operating with Kawasaki Starting from 2008 all CRH2 trains includes CRH2B CRH2C and CRH2E were designed and manufactured under key technology developments made by CSR Sifang without Kawasaki According to CSR president Zhang Chenghong CSR made the bold move of forming a systematic development platform for high-speed loco-motives and further upgrading its design and manufacturing technology In order to provide higher capacity and more comfortable service in the Jinghu Railway as the travel time from Beijing to Shanghai is around 10 hours with top speed of 200 kmh on the upgraded railway in October 2007 the MoR ordered 70 16-car train sets from CSR Sifang and BST including 10 sets of CRH1B and 20 sets of CRH2B seating trains 20 sets of CRH1E and 20 sets of CRH2E sleeper trains

SwissRail Industry Association January 2011 China Railway Market Study 17 53

Technical support is one of the most important factors to make Bombardier the first and only company who has a Chinese-foreign Joint Venture manufacturing railway passenger cars and rolling stock in China Bom-bardier Sifang (Qingdao) Transportation Ltd (BST) was established by 1998 as an excellent example of foreign technology applied to the renewal of state-owned enterprises in China In an interview with Zhang Jianwei President and Chief Country Representative of Bombardier China he explained Bombardiers policy in China is to transfer whatever Bombardier have in the world to the joint venture to transfer what China market needs without condition Not like other series who has prototype imported from other countries all of the CRH1 trains are manufactured in BST in Qingdao Construction of China and worlds first ever high speed rail with designed speed 380 kmh the Beijing - Shanghai High Speed Railway began on April 18 2008 In the same year the Chinese Ministry of Science and the Chinese Ministry of Railways signed the Cooperation agreement on joint action plan for the inde-pendent innovation of high speed trains in China the MoR then launched three projects CRH1-350 (Bom-bardier and BST designated as CRH380CCL) CRH2-350 (CSR designated as CRH380AAL) and CRH3-350 (CNR and Siemens designated as CRH380BBL) to develop new generation of CRH trains with top operational speed of 380 kmh A total of 400 new generation trains were ordered CRH380A came into regu-lar service at the Shanghai-Hangzhou High Speed Railway by October 26 2010 which is the first high speed train designed by China

CRH380A the 1

st China-designed high speed train

On October 19 2010 the MoR declared that China has begun research and development on a new super-speed railway technology will increase the average speed of trains to over 500 kmh

33 Current HSR Expansion Chinas high speed rail expansion is entirely managed planned and financed by the government After com-mitting to conventional-track high speed rail in 2006 the state has embarked on an ambitious campaign to build passenger dedicated high speed rail lines which accounts for a large part of the governments growing budget for rail construction Total investment in new rail lines grew from $14 billion in 2004 to $227 and $262 billion in 2006 and 2007 In response to the global economic recession the government accelerated the pace of HSR expansion to stimulate economic growth Total investments in new rail lines including HSR reached $494 billion in 2008 $88 billion in 2009 and $100 billion in 2010 During Chinarsquos 12

th Five-Year Plan

(2011-2015) the state plans to spend around $280 billion (yen1875 trillion) to build 16rsquo448 km high speed rail based on the cost calculation of $17 million (yen114 million) per kilometer

SwissRail Industry Association January 2011 China Railway Market Study 18 53

331 Policy Justifications Critics both in China and abroad have questioned the necessity of having an expensive high speed rail sys-tem in a largely developing country where most workers cannot afford to pay a premium for faster travel The government has justified the expensive undertaking as promoting a number of policy objectives HSR pro-vides fast reliable and comfortable means of transporting large numbers of travelers in a densely populated country over long distances which

improves economic productivity and competitiveness over the long term by increasing the transport capacity of railways and linking labour markets Moving passengers to high speed lines frees up older railways to carry more freight which is more profitable for railways than passengers whose fares are subsidized

stimulates the economy in the short term as HSR construction creates jobs and drives up demand for construction steel and cement industries during the economic downturn Work on the Beijing-Shanghai PDL mobilized 110rsquo000 workers

promotes the growth of urban centers and limits sprawl High speed rail links city centers which are building subways These measures alleviate traffic congestion

supports energy independence and environmental sustainability Electric trains use less energy to transport people and goods on a per unit basis and can draw power from more diverse sources of energy including renewables than automobile and aircraft which are more reliant on imported petro-leum

The expansion of HSR is also developing China into a leading source of high speed rail building technology Chinese train makers have absorbed imported technologies quickly and localized production processes Six years after receiving Kawasakis license to produce Shinkansen E2 CSR Sifang is able to produce the CRH2A without Japanese input and has ended cooperation with Kawasaki on high speed rail

332 HSR Construction Financing Chinas high-speed rail construction projects are highly capital intensive They are primarily funded by state-owned banks and financial institutions which lend money to the MoR and local governments The MoR through its financing arm the China Rail Investment Corporation (CRIC) issued an estimated yen1 trillion ($150 billion in 2010) in debt to finance HSR construction from 2006 to 2010 including yen310 billion in the first 10 months of 2010 CRIC has also raised some capital through equity offerings in the spring of 2010 CRIC sold a 45 stake in the Beijing-Shanghai High Speed Railway to Bank of China for yen66 billion and a 4537 stake to the public for yen6 billion CRIC retained 562 ownership on that line As of 2010 the CRIC bonds are considered to be relatively safe investments because they are backed by assets (the railways) and impli-citly by the government

The following table shows the construction cost of the HSR lines that are already opened

250 kmh HSR

Line Length Construction cost (Total) Construction cost (per km)

Qinshen PDL 404 km 157 billion RMB (24 billon USD) 389 million RMB (59 millon USD)

Hening PDL 166 km 25 billion RMB (38 billon USD) 1506 million RMB (227 millon USD)

Jiaoji PDL 364 km 11 billion RMB (17 billon USD) 3021 million RMB (46 millon USD)

Shitai PDL 190 km 17075 billion RMB (257 billon USD) 8987 million RMB (135 millon USD)

Hewu PDL 351 km 168 billion RMB (253 billon USD) 4786 million RMB (721 millon USD)

Yongtaiwen PFL 268 km 1628 billion RMB (245 billon USD) 6075 million RMB (916 millon USD)

Wenfu PFL 298 km 18 billion RMB (271 billon USD) 604 million RMB (91 millon USD)

Fuxia PFL 275 km 15259 billion RMB (23 billon USD) 5549 million RMB (836 millon USD)

SwissRail Industry Association January 2011 China Railway Market Study 19 53

Chengguan PDL 65 km 133 billion RMB (2 billon USD) 20462 million RMB (308 millon USD)

Changjiu ICL 131 km 5832 billion RMB (088 billon USD) 4452 million RMB (67 millon USD)

350 kmh HSR

Line Length Construction cost (Total) Construction cost (per km)

Jingjin ICL 115 km 215 billion RMB (324 billon USD) 18696 million RMB (2817 millon USD)

Wuguang PDL 968 km 1166 billion RMB (1757 billon USD) 120 million RMB (1808 millon USD)

Zhengxi PDL 455 km 3531 billion RMB (532 billon USD) 776 million RMB (117 millon USD)

Huning HSR 301 km 50 billion RMB (75 billon USD) 16611 million RMB (25 millon USD)

Huhang PDL 150 km 2929 billion RMB (44 billon USD) 19527 million RMB (294 millon USD)

Large construction debt loads require significant revenues from rider fares and other sources of income such as advertising to repay Despite impressive ridership figures virtually every completed line has incurred losses in its first years of operation For example the Beijing-Tianjin Intercity Railway in its two full years of operation delivered over 41 million rides The line cost yen2042 billion to build and yen18 billion per annum to operate including yen06 billion in interest payments on its yen10 billion of loan obligations The terms of the loans range from 5-10 years at interest rates of 63 to 68 percent In its first year of operation from August 1 2008 to July 31 2009 the line carried 187 million riders and generated yen11 billion in revenues which re-sulted in a loss of yen07 billion In the second year ridership rose to 223 million and revenues improved to yen14 billion which narrowed losses somewhat to below yen05 billion To break even the line must deliver 30 million rides annually To be able to repay principal ridership would need to exceed 40 million As of September 2010 daily ridership averaged 69000 or an annual rate of 252 million The line has a capacity of delivering 100 million rides annually and initial estimated repayment period of 16 years The Shijiazhuang-Taiyuan PDL lost yen08 billion in its first year and is set to lose yen09 billion in 2010 The Southeast HSR corridor lost yen0377 billion in its first year beginning August 2009 The Zhengzhou-Xirsquoan PDL since opening in February of 2010 is expected to generate revenues of yen06 billion in its first full year but must make interest payments of yen11 billion All of these losses must be covered by the operator which is usually subsidized by local governments The MoR faces a debt-repayment peak in 2014 Some economists recommend further subsidies to lower fares and boost ridership and ultimately revenues Others warn that the financing side of the existing con-struction and operation model is unsustainable If the rail-backed loans cannot be fully repaid they may be refinanced or the banks may seize ownership of the railways To prevent that eventually the MoR is trying to improve management of its rapidly growing HSR holdings

34 HSR Network and Construction Plans China is ambitious with its HSR construction with an existing network of 8rsquo358 km by 2010 China plans to build a HSR network of over 16rsquo000 km by the end of its 12

th Five-Year Plan (2011-2015) Chinese MoR

claims to build a HSR network of 25rsquo000 km with trains reaching operational speed of 350 kmh by 2020 China plans to have the largest fastest and most technologically advanced high-speed rail system in the world by that time Chinas conventional high speed railway network is made up of four components

upgraded pre-existing rail lines that can accommodate high speed trains

a national grid of mostly Passenger Dedicated HSR Lines (PDLs)

other newly-built conventional rail lines mostly in western China that can carry high speed pas-senger and freight trains

certain regional intercity HSR lines

SwissRail Industry Association January 2011 China Railway Market Study 20 53

Most of the rail lines in the latter three categories are now under construction

Map showing the rail network of China and Taiwan with high-speed lines highlighted in color according to the speed of train service

341 Upgraded Railways Following the sixth national speed-up campaign in April 18 2007 some 6rsquo003 km of track could carry trains at speeds of up to 200 kmh Of these some 848 km could reach 250 kmh and above These include the Qinhuangdao-Shenyang (Qinshen) Passenger Railway which was initially built for 200 kmh trains when completed in 2003 and then upgraded to 250 kmh during the Sixth Speed-up Campaign and sections of the Qingdao-Jinan (Jiaoji) Shanghai-Kunming (Hukun) (between Hangzhou and Zhuzhou) Guangzhou-Shenzhen (Guangshen) Beijing-Shanghai (Jinghu) Beijing-Harbin (Jingha) Beijing-Guangzhou (Jingguang) Longhai (between Zhengzhou to Xuzhou) Railways Upgrade work continues on other lines including the Wuhan-Danyang (Handan) Hunan-Guizhou (Xianggui) and Nanjing-Nantong (Ningqi) Railways Upgraded High-Speed Rail Tracks After the Sixth Speed-Up Campaign (2007-04-18) (Capable of Accommodating Train Speeds of 200+ kmh)

Line Upgraded Section

Upgraded Track Length in km

(double track counted

twice)

Beijing-Harbin (Jingha) TongxianndashFengrun (K272ndashK1484) 2424

Beijing-Harbin (Jingha) ShanhaiguanndashHuanggutun (K319ndashK697) of which the ShanhaiguanndashTaian (K323ndashK603) section (560 km) was upgraded to 250 kmh

756

Beijing-Harbin (Jingha) CaijiagoundashWujia (K1172ndashK1226) 108

Beijing-Shanghai (Jinghu) ZhoulizhuangndashQingxian (K1624ndashK2188) 1128

Beijing-Shanghai (Jinghu) JiedindashChangzhuang (K2608ndashK3636) 2056

SwissRail Industry Association January 2011 China Railway Market Study 21 53

Beijing-Shanghai (Jinghu) GaojiayingndashFuliji (K8106ndashK859) 968

Beijing-Shanghai (Jinghu) SugravezhoundashTangnanji (K8772ndashK9182) 82

Beijing-Shanghai (Jinghu) Zhenjiang SouthndashBenniu (K12178ndashK12692) 1028

Beijing-Shanghai (Jinghu) KunshanndashShanghai (K14027ndashK1450) of which the AntingndashShanghai West (K14259ndashK1446) section (402 km) was upgraded to 250 kmh

946

Beijing-Guangzhou (Jingguang) DoudianndashCaohe (K302ndashK1231) 1858

Beijing-Guangzhou (Jingguang) YuanshindashXingtai (K3093ndashK3776) 1366

Beijing-Guangzhou (Jingguang) HebindashWeihui (K532ndashK5716) 792

Beijing-Guangzhou (Jingguang) GuantingndashLuohe (K7322ndashK8159) of which the Xuchang SouthndashMengmiao (K7641ndashK809) section (898 km) was upgraded to 250 kmh

1674

Beijing-Guangzhou (Jingguang) HuohendashChangtaiguan (K821ndashK956) of which the LuohendashSuiping (K821ndashK863) section (84 km) was upgraded to 250 kmh

270

Beijing-Guangzhou (Jingguang) LijiazhaindashChenjiahe (K11085ndashK10654) 1138

Guangzhou-Shenzhen (Guangs-hen)

XintangndashHonghai (K398ndashK614) 432

Longhai TongshanndashZhengzhou East (K2326ndashK563) 6608

Longhai XianyangndashChangxing (K1096ndashK11798) 1676

Shanghai-Kunming (Hukun) Bailutangndashtangya (K2225ndashK3446) 2442

Shanghai-Kunming (Hukun) BailongqiaondashGuixi (K3637ndashK6459) 3644

Shanghai-Kunming (Hukun) YingtanndashBinjiang (K6645ndashK9349) 5408

Shanghai-Kunming (Hukun) XicunndashBaiyuan (K9911ndashK1015) 478

Shanghai-Kunming (Hukun) YaojiazhoundashWulidun (K10357ndashK10906) 1098

Qingdao-Jinan (Jiaoji) LoushanndashLicheng (K232ndashK3452) of which the JimondashGaomi (K50ndashK86) section (72 km) was up-graded to 250 kmh

644

Wuhan-Jiujiang (Wujiu) HeliundashYangxin (K384ndashK1521) 2274

Total 60038 km (200+ kmh) including 846 km (250 kmh)

342 Natonal High Speed Rail Grid (4 + 4) The centerpiece of the MoRrsquos expansion into high speed rail is a new national high speed rail grid that is overlaid onto the existing railroad network According to the MoRs Mid-to-Long Term Railway Network Plan approved in 2006 and revised in 2008 this grid is composed of 8 high speed rail corridors 4 running north-south and 4 traversing east-west and has a total of 12rsquo000 km Most of the new lines follow the routes of existing trunk lines and are designated for passenger travel only They are known as Passenger Dedicated Lines (PDLs) Several sections of the national grid especially along the southeast coastal corridor were built to link cities which had no previous rail connections Those sections will carry a mix of passenger and freight but are sometimes mislabeled as PDLs High speed trains on PDLs can generally reach 300-350 kmh On mixed-use HSR lines passenger train service can attain peak speeds of 200-250 kmh This ambitious na-tional grid project was planned to be built by 2020 by the ldquoMid-to-Long Term Railway Network Planrdquo but Chi-narsquos Economic Stimulus Program due to the world financial crisis has expedited the timetables considerably for many of the lines In addition Jinqin Passenger Railway (Tianjin-Qinhuangdao) and Qinshen Passenger Railway (Qinhua-ngdao-Shenyang) are not the component parts of 8 main high speed rail lines but these two lines are still

SwissRail Industry Association January 2011 China Railway Market Study 22 53

included in the PDL network because they are important in linking Beijing-Harbin Line and Beijing-Shanghai Line

Map showing Chinas planned high-speed rail lines forming the national grid

Four North-South HSR Corridors and Constituent Lines (Operational lines are marked with green background)

Rail Line Route Description Designed

Speed (kmh)

Length (km)

Construction Start Date

Open Date

Beijing-Harbin PDL (Jingha Passenger Designated Line)

Main HSR corridor of Northeast China consisting of the Beijing-Shenyang amp Harbin-Dalian PDLs

and the Panjin-Yinkou spur

350 1rsquo700 2007-08-23 2014

Beijing-Shenyang PDL (Jingshen Passenger Designated Line)

Beijing-Shenyang segment of Jingha PDL via Chengde Fuxin

and Chaoyang 350 684 2010 2014

Harbin-Dalian PDL (Hada Passenger Designated Line)

PDL from Harbin to Dalian via Shenyang amp Changchun

350 904 2007-08-23 2011

Panjin-Yingkou PDL (Panying Passenger Designated Line)

Connects Yingkou to Qinhuang-dao-Shenyang HSR at Panjin

350 89 2009-05-31 2012

Beijing-Shanghai PDL (Jinghu Passenger Designated Line)

Main north-south high speed rail-way of eastern China connecting

Beijing Jinan Taian Xuzhou Bengbu Nanjing amp Shanghai

380 1rsquo302 2008-04-18 2012

Hefei-Bengbu PDL (Hebeng Passenger Designated Line)

Extends Jinghu PDL from Bengbu to Hefei

350 131 2008-01-08 2012

Beijing-Guangzhou PDL (Jinggang Passenger Designated Line)

Main north-south high speed rail corridor through central China consisting of four segments be-

tween Beijing Shijiazhuang Wu-han Guangzhou and Hong Kong

200- 350

2rsquo229 2005-09-01 2012

Beijing-Shijiazhuang PDL (Jingshi Passenger Designated Line)

HSR from Beijing to Shijiazhuang 350 281 2008-10-08 2012-10-01

SwissRail Industry Association January 2011 China Railway Market Study 23 53

Shijiazhuang-Wuhan PDL (Shiwu Passenger Designated Line)

HSR from Shijiazhuang to Wuhan via Zhengzhou

350 838 2008-10-15 2012-10-01

Wuhan-Guangzhou PDL (Wuguang Passenger Designated Line)

HSR from Wuhan to Guangzhou via Changsha

350 968 2005-09-01 2009-12-26

Southeast Coastal HSR Corridor High-speed railway linking coastal cities from Hangzhou to Shenzhen

built in five segments

200- 350

1rsquo450 2005-08-01 2011-01-01

Hangzhou-Ningbo PDL (Hangyong Passenger Designated

Line)

High-speed PDL from Hangzhou to Ningbo

350 152 2009-04 2011-

12

Ningbo-Taizhou-Wenzhou Railway (Yongtaiwen Line)

Mixed passenger amp freight HSR line along the coast of Zhejiang

Province 250 268 2005-10-27

2009-09-28

Wenzhou-Fuzhou Railway (Wenfu Line)

Mixed passenger amp freight HSR line from Wenzhou to Fuzhou

250 298 2005-01-08 2009-09-28

Fuzhou-Xiamen Railway (Fuxia Line)

Mixed passenger amp freight HSR line along the coast of Fujian Prov-

ince from Fuzhou to Xiamen via Putian amp Quanzhou

250 275 2005-10-01 2010-04-26

Xiamen-Shenzhen Railway (Xiashen Line)

Mixed passenger amp freight HSR line along the coast of Fujian and

Guangdong via Zhangzhou Shan-tou amp Huizhou

250 502 2007-11-23 2011-01-01

Four East-West HSR Corridors and Constituent Lines (Operational lines are marked with green background)

Rail Line

Route Description

Designed Speed (kmh)

Length (km)

Construction Start Date

Open Date

Qingdao-Taiyuan PDL (Qingtai Passenger Designated Line)

HSR across north China consisting of three segments connecting

Taiyuan Shijiazhuang Jinan and Qingdao

250 873 2005-06-01 2012

Qingdao-Jinan PDL (Jiaoji Line)

PDL connecting Qingdao and Jinan

250 364 2007-01-28 2008-12-20

Shijiazhuang-Jinan PDL (Shiji Passenger Designated Line)

PDL connecting Shijiazhuang amp Jinan via Dezhou

250 319 2009 2012

Shijiazhuang-Taiyuan PDL (Shitai Passenger Designated Line)

PDL connecting Shijiazhuang amp Taiyuan

250 190 2005-06-11 2009-04-01

Xuzhou-Lanzhou PDL (Xulan Passenger Designated Line)

HSR across the Yellow River Val-ley of central China consisting of

four segments connecting Xuzhou Zhengzhou Xian Baoji and Lan-

zhou

350 1rsquo363 2005-06-01 -

Zhengzhou-Xuzhou PDL (Zhengxu Passenger Designated Line)

PDL connecting Xuzhou amp Zhengzhou

350 357 2010 2013

Zhengzhou-Xirsquoan PDL (Zhengxi Passenger Designated Line)

PDL connecting Zhengzhou amp Xian

350 455 2005-09-01 2010-02-06

Xian-Baoji PDL (Xibao Passenger Designated Line)

PDL connecting Xian amp Baoji 350 148 2009-11-22 2012

Baoji-Lanzhou PDL (Baolan Passenger Designated Line)

PDL connecting Baoji amp Lanzhou 350 403 planning plan-ning

Shanghai-Wuhan-Chengdu HSR

HSR corridor through the Yangtze Valley consisting of the Shanghai-

200- 350

2rsquo078 2003-12-01 2012

SwissRail Industry Association January 2011 China Railway Market Study 24 53

Corridor (Huhanrong High-Speed Rail Corridor)

Nanjing section of the Beijing-Shanghai PDL and 7 mixed-use HSR segments connecting Nan-

jing Hefei Wuhan Yichang Lichuan Chongqing Suining amp

Chengdu

Hefei-Nanjing HSR (Hening HSR)

Mixed passenger amp freight HSR connecting Nanjing amp Hefei

250 166 2005-06-11 2008-04-19

Hefei-Wuhan Railway (Hewu Passenger Designated Line)

Mixed passenger amp freight HSR connecting Hefei amp Wuhan

250 351 2005-08-01 2009-04-01

Hankou-Yichang Railway (Hanyi Line)

Mixed passenger amp freight HSR connecting Wuhan amp Yichang

250 293 2008-09-17 2012-01-01

Yichang-Wanzhou Railway (Yiwan Railway Yichang-Lichuan

section)

Mixed passenger amp freight HSR connecting Yichang amp Lichuan

200 377 2003-12-01 2010-12-23

Chongqing-Lichuan Railway (Yuli Line)

Mixed passenger amp freight HSR connecting Lichuan amp Chongqing

200 264 2008-12-29 2012

Suining-Chongqing Railway (Suiyu Line)

Mixed passenger amp freight HSR connecting Chongqing amp Suining

200 132 2009-01-18 2012-

01

Dazhou-Chengdu Railway (Dacheng Railway Suining-Chengdu

section)

Mixed passenger amp freight HSR connecting Suining amp Chengdu

200 148 2005-05 2009-06-30

Shanghai-Kunming PDL (Shanghai-Kunming Passenger Desig-

nated Line)

PDL connecting eastern central and southwestern China It con-

sists of three sections connecting Shanghai Hangzhou Changsha

and Kunming

350 2rsquo066 2008-12-28 2014

Shanghai-Hangzhou PDL (Huhang Passenger Designated Line)

PDL connecting Shanghai Hongqiao amp Hangzhou East

350 150 2009-02-26 2010-10-26

Hangzhou-Changsha PDL (Hangchang Passenger Designated

Line)

PDL connecting Hangzhou amp Changsha

350 926 2009-12-22 2012

Changsha-Kunming PDL (Changkun Passenger Designated

Line)

PDL connecting Changsha amp Kunming

350 1rsquo175 2010 2014

343 Other High Speed Rail Lines According to the Mid-to-Long Term Railway Network Plan the MoR plans to build over 40rsquo000 km of railway in order to expand the railway network in western China and to fill gaps in the networks of eastern and central China With Chinarsquos 12

th Five-Year Plan (2011-2015) 50rsquo000 km rail lines will be built in the western part of

the country Some of these new railways are being built to accommodate speed of 200-250 kmh for both passengers and freight transport These are also considered high speed railways though they are not part of the national PDL grid or intercity high speed railways Other High Speed Passenger Dedicated Lines (Operational lines are marked with green background)

Rail Line

Route Description

Designed Speed (kmh)

Length (km)

Construction Start Date

Open Date

Guangzhou-Hong Kong PDL (Jinggang Passenger Designated Line)

Main HSR corridor on west side of the Pearl River Delta consisting of

two segments between Guang-zhou and Hong Kong

200- 350

142 2008-08-20 2016

SwissRail Industry Association January 2011 China Railway Market Study 25 53

Guangshengang XRL (Mainland Section)

HSR from Guangzhou to Shenzhen

350 116 2008-08-20 2010-12-28

Guangshengang XRL (Hong Kong Section)

HSR from Shenzhen to Hong Kong

200 26 2010 2016

Tianjin-Shenyang PDL

(Jinshen Passenger Designated Line)

Originally part of the Jingha PDL An important linkage between Tianjin and Shenyang through

Qinhuangdao

250 665 1999 2012

Tianjin-Qinhuangdao PDL (Jinqin Passenger Designated Line)

PDL connecting Tianjin amp Qinhu-angdao

350 261 2008 2012

Qinhuangdao-Shenyang PDL (Qinshen Passenger Designated Line)

PDL connecting Qinhuangdao amp Shenyang via

250 404 1999 2003-07-01

Chengdu-Guangzhou PDL (Chengguang Passenger Designated

Line)

HSR from the Pearl River Delta to the Sichuan Basin via Guiyang amp

Guilin 300-350 1rsquo376 2008-10-13 2014

Chengdu-Guiyang PDL (Chenggui Passenger Designated

Line)

PDL connecting Chengdu amp Gui-yang via Leshan Yibin amp Bijie

350 519 2010 2014

Guiyang-Guangzhou PDL (Guiguang Passenger Designated

Line)

PDL connecting Guiyang amp Guangzhou

300 857 2008-10-13 2014

Lanzhou-Xinjiang PDL

(Lanxin Passenger Designated Line)

HSR from Lanzhou to Uumlruumlmqi via Xining amp Zhangye Jiuquan Jia-

yuguan Hami amp Turpan 300 1rsquo776 2010 2014

Hefei-Fuzhou PDL (Hefu Passenger Designated Line)

HSR from the Hefei to Fuzhou via Huangshan Shangrao amp Wuyis-

han 250 806 2010-04-27 2014

Datong-Xian PDL (Daxi Passenger Designated Line)

HSR from Datong to Xian via Taiyuan

250 859 2009-12-03 2013

Xian-Chengdu HSR (Xicheng High-Speed Railway)

HSR from Xian to Chengdu via Hanzhong and Guangyuan

250 510 2010 2015

Shangqiu-Hangzhou PDL (Shanghang Passenger Designated

Line)

HSR from Shangqiu to Hangzhou via Fuyang Hefei amp Wuhu

350 770 2010 -

Class I High Speed Railways

Rail Line Length (km) Design Speed (kmh) Construction Start Date Open Date

Longyan-Xiamen 171 250 2006-12-25 2010

Nanchang-Putian (Fuzhou) 604 250 2007-11-23 2011

Guangzhou-Nanning 577 250 2008-09-11 2013

Other High Speed Rail Line Under Planning

Guangzhou-Zhanjiang HSR

344 Intercity High Speed Rail Intercity railways are designed to provide regional high speed rail service between large cities and metropoli-tan areas that are generally within the same province in China Intercity HSR service speed range from 200 to 350 kmh

SwissRail Industry Association January 2011 China Railway Market Study 26 53

Inter-city train services crossing the China-Hong Kong border (often known as through trains) are jointly op-erated by the MoR and Hong Kongs MTR Corporation Currently Hung Hom Station is the only station in the territory where passengers can catch these border-crossing trains Passengers have to go through immigra-tion and custom inspections before boarding a border-crossing train There are currently four border-crossing train services

Between Hong Kong and Beijing (Beijing-Kowloon Through Train)

Between Hong Kong and Shanghai (Shanghai-Kowloon Through Train)

Between Hong Kong and Guangzhou (Guangzhou-Kowloon Through Train)

Between Hong Kong and Zhaoqing (Zhaoqing-Kowloon Through Train) A new border-crossing service the Guangzhou-Shenzhen-Hong Kong Express Rail Link has been approved and has been granted HKD 66 billion in funding by the Hong Kong Legco finance committee The line is now under construction A new station West Kowloon Terminus will be built in Hong Kong to be served by this new railway Rail services that connect the towns in the New Territories with the city centres of Kowloon and Hong Kong Island are provided by the East Rail Line West Rail Line and Tung Chung Line

Map showing some of Chinas intercity railways including operational lines (red) and lines under construction

Intercity High Speed Rail Construction Schedule (Operational lines are marked with green background)

Line Length

(km) Design Speed

(kmh) Construction Start Date

YYYY-MM-DD Open Date

YYYY-MM-DD

BeijingndashTianjin Intercity Rail 115 350 2005-04-07 2008-08-01

Chengdu-Dujiangyan High-Speed Railway 65 220 2008-11-04 2010-05-12

ShanghaindashNanjing High-Speed Railway 301 350 2008-07-01 2010-07-01

Nanchang-Jiujiang Intercity Rail 131 250 2007-06-28 2010-09-20

Hainan East Ring Intercity Rail 308 250 2007-09-29 2010-12-30

Changchun-Jilin Intercity Rail 111 250 2007-05-13 2010

Guangzhou-Zhuhai Intercity MRT 142 250 2005-12-18 2011-01-07

SwissRail Industry Association January 2011 China Railway Market Study 27 53

Nanjing-Anqing Intercity Rail 257 250 2008-12-28 2012-06

Nanjing-Hangzhou Intercity Rail 251 350 2008-12-28 2012-12-28

Jiangyou-Mianyang-Chengdu-Leshan Inter-city Rail

319 200 2008-12-30 2012-12-30

Wuhan Megalopolis Intercity Rail

（Wuhan-Xiaogan Huangshi Xianning and

Huanggang）

160 200 2009-03-22 2011-10-01 2013

Beijing-Tangshan Intercity Rail 160 350 2009 2012

Tianjin-Baoding Intercity Rail 145 250 2009 2012

Qingdao-Rongcheng Intercity Rail 299 250 2009-11-30 2012-12

Harbin-Qiqihar Intercity Rail 286 250 2008-11-25 2011

Beijing-Zhangjiakou Intercity Rail 174 200 2009 2013

Chongqing-Wanzhou Intercity Rail 250 350 2009 2013

Shenyang-Dandong Intercity Rail 208 350 2009 2013-9

Chengdu-Chongqing Intercity Rail 305 300 2009

Changsha-Zhuzhou-Xiangtan Intercity Rail 955 200 2010-07-02 2014-07-02

Hangzhou-Huangshan High Speed Railway 262 250 2010-xx-xx 2013

35 HSR Service Chinese Railways the MoRs national railway service operator provides high speed train service called

China Railway High-speed (CRH) (中国铁路高速) on upgraded conventional rail lines national high speed

railways and intercity high speed lines The CRHs high speed trains are also called Harmony (和谐号) At

present CRH services about 1rsquo200 high speed trains per day in China China plans to put more than 1rsquo500 high speed trains from 200 kmh up to 350 kmh into service during its 12

th Five-Year Plan (2011-2015)

351 CRH Service on Upgraded Conventional Lines

As of September 2010 there is a total of 2rsquo876 km of upgraded conventional railways in China that can ac-commodate trains running at speed of 200 to 250 kmh Over time with the completion of the national high speed passenger dedicated rail network more CRH service will shift from these lines to the high speed dedi-cated lines

A Intercity service (typically listed in schedules as C-series or D-series trains)

Beijing-Beidaihe Qinhuangdao

Beijing-Tianjin Tanggu

Beijing-Shijiazhuang Taiyuan

Shanghai-Kunshan Suzhou Wuxi Changzhou Nanjing Hefei Xuzhou

Shanghai-Hangzhou Yiwu Jinhua Quzhou

Nanjing-Hangzhou

Guangzhou-Shenzhen

Wuhan-Zhengzhou Changsha

Changsha-Nanchang

Xian-Baoji

SwissRail Industry Association January 2011 China Railway Market Study 28 53

B Long-haul service (typically listed in schedules as G-series or D-series trains)

Beijing-Shenyang Changchun Harbin

Beijing-Jinan Qingdao Shanghai

Beijing-Zhengzhou Wuhan

Shanghai-Zhengzhou Qingdao Shenyang

Shanghai-Nanchang

Wuhan-Changsha-Guangzhou

The table below lists the upgraded conventional railways that run 10 or more CRH high speed trains per day

Route Railway Distance Trains per day (aggregation of both direction)

Trains in service

Guangzhou-Shenzhen Guangshen line 147 km 220 CRH1A

Ningbo-Hangzhou Hangning line 149 km 50 CRH1ABE CRH2ABE

Beijing-Shijiazhuang Jingguang line 277 km 46 CRH2A CRH5A

Beijing-Shenyang Jingha line 703 km 24 CRH5A

Beijing-Jinan Jinghu line 495 km 22 CRH2A CRH5A

Chongqing-Chengdu Chengyu line amp Dacheng line 315 km 22 CRH1A

Beijing-Shanghai Jinghu line 1454 km 18 CRH1E CRH2E

Wuhan-Nanchang Wujiu line amp Changjiu PDL 337 km 16 CRH2A

Shijiazhuang-Zhengzhou Jingguang line 412 km 14 CRH2A

352 CRH Service on High Speed Lines The following table lists the frequency of CRH service on 14 HSR lines as of October 26 2010 In some cas-es CRH trains must still share the HSR lines with slower non-high speed trains which are not listed in the table Chinas first HSR the Qinshen PDL services as part of the Jingha Railway

Line (route)

Length (main line)

Travel time (By fastest

train)

Trains per day (aggregation of both directions)

Designed speed

Trains in service

Wuguang PDL (Wuhan-Changsha-

Guangzhou) 968 km 3h 14m 180 350 kmh CRH2C CRH3C

Huhang PDL (Shanghai-Hangzhou)

169 km (Shanghai Hongqiao ndash Hangzhou)

45min 160 350 kmh CRH1ABE

CRH2ABCE CRH3C CRH380A

Huning PDL (Shanghai-Nanjing)

296 km (Shanghai Hongqiao ndash Nanjing)

1h 13min 174 350 kmh CRH1AB

CRH2ABC CRH3C CRH380A

Jingjin ICL (Beijing-Tianjin)

117 km 30min 152 350 kmh CRH3C

Zhengxi PDL (Zhengzhou-Xian)

456 km 1h 57min 18 350 kmh CRH2C

Yongtaiwen PFL (Ningbo-Taizhou-Wenzhou)

268 km 1h 13min 58 250 kmh CRH1BE

CRH2ABE

Wenfu PFL (Wenzhou-Fuzhou)

298 km 1h 26min 44 250 kmh CRH1ABE CRH2ABE

Shitai PDL (Shijiazhuang-Taiyuan)

190 km (Shijiazhuang NorthndashTaiyuan)

1h 6min 26 250 kmh CRH5A

SwissRail Industry Association January 2011 China Railway Market Study 29 53

Fuxia PFL (Fuzhou-Xiamen)

275 km 1h 21min 114 250 kmh CRH1ABE CRH2AE

Changjiu ICL (Nanchang-Jiujiang)

135 km 45min 38 250 kmh CRH1A CRH2A

Hewu PFL (Hefei-Wuhan)

351 km 1h 58min 20 250 kmh CRH1AB CRH2AB

Jiaoji PDL (Qingdao-Jinan)

362 km 2h 13min 42 250 kmh CRH2A CRH5A

Hening PFL (Hefei-Nanjing)

156 km 54min 24 250 kmh CRH1AB CRH2AB

Chengguan PDL (Chengdu-Guanxian)

67 km 30min 44 250 kmh CRH1A

36 Rolling Stock Order and Delivery Timetables China Railway High-speed runs different electric multiple units (EMUs) ie train sets the designs of which all are imported from other nations and given the designations CRH-1 through CRH-5 CRH train sets are in-tended to provide fast and convenient passenger travels between cities Some of the train sets are manufac-tured locally through technology transfer a key requirement in exchange for Chinarsquos huge railway market The signalling track and support structures control software and station design are developed domestically but with foreign elements as well so the system as a whole could be called Chinese China currently holds many new patents related to the internal components of these train sets since they have re-designed major components so the trains can run at a much higher speed than the original foreign train designs

A 16-car CRH1 train set in Shenzhen CRH3rsquos 1st class car on Beijing-Tianjin Intercity

CRH service on ShanghaindashNanjing HSR A CRH380A train on Shanghai-Hangzhou HSR

SwissRail Industry Association January 2011 China Railway Market Study 30 53

CRH1 produced by Bombardier Sifang (Qingdao) Transportation Ltd (BST) CRH1A amp CRH1B nick-name of Metro or Bread derived from Bombardier Regina CRH1E nickname Lizard is Bombard-iers ZEFIRO 250 design

- CRH1A train sets consists of 8 cars maximum operation speed of 250 kmh - CRH1B a modified 16-car version maximum operation speed of 250 kmh - CRH1E a 16-car high-speed sleeper version maximum operation speed of 250 kmh

CRH2 nickname Hairtail derived from E2 Series 1000 Shinkansen - CRH2A a modified version of the Japanese Shinkansen E2-1000 series - CRH2B a modified 16-car version of CRH2 maximum operation speed of 250 kmh - CRH2C (Stage one) modified version of CRH2 maximum operation speed up to 300 kmh by re-placing two intermediate trailer cars with motored cars - CRH2C (Stage two) a modified version of CRH2C (Stage one version) maximum operation speed up to 350 kmh by replacing motors with more powerful ones - CRH2E a modified 16-car version of CRH2 with sleeping cars

CRH3C nickname Rabbit derived from Siemens Velaro 8-car train sets maximum operation speed of 350 kmh

CRH5A nickname French donkey derived from Alstom Pendolino ETR600 8 car train sets maximum operation speed of 250 kmh

CRH380A maximum operating speed of 380 kmh manufactured by CSR Sifang Locomotive and Rolling Stock in service in 2010

- CRH380A 8-car version - CRH380AL 16-car version

CRH380B upgraded version of CRH3 maximum operation speed of 380 kmh manufactured by CNRrsquos Tangshan Railway Vehicle amp Changchun Railway Vehicles planned to be in service in 2010

- CRH380B 8-cars version - CRH380BL 16-cars version

CRH380C also named Zefiro 380 maximum operation speed of 380 kmh manufactured by Bombardier Sifang (Qingdao) Transportation Ltd (BST) planned to be in service in 2012

- CRH380C 8-cars version - CRH380CL 16-cars version

CRH1ABE CRH2ABE and CRH5A are designed for operation speed of 200 kmh and up to 250 kmh CRH3C and CRH2C designs have operation speed of 300 kmh and up to 350 kmh with a top design speed of over 380 kmh Chinese CRH Train Sets and Years in Service

Designation Top speed in test Designed

Speed Seating Capacity Formation

Power (under 25 kV)

Enter Service

CRH1A 278 kmh 250 668 or 611 or 645 5M3T 5rsquo300 kW 2007

CRH1B 292 kmh 250 1rsquo299 10M6T 11rsquo000 kW 2009

CRH1E 250 618 10M6T 11rsquo000 kW 2009

CRH2A 278 kmh 250 588 or 610 4M4T 4rsquo800 kW 2007

CRH2B 275 kmh 250 1rsquo230 8M8T 9rsquo600 kW 2008

CRH2C Stage 1 3942 kmh 300 610 6M2T 7rsquo200 kW 2008

CRH2C Stage 2 350 610 6M2T 8rsquo760 kW 2010

CRH2E 250 630 8M8T 9rsquo600 kW 2008

CRH3C 3943 kmh 350 556 or 600 4M4T 8rsquo800 kW 2008

CRH5A 250 586 or 622 5M3T 5rsquo500 kW 2007

CRH380A 4166 kmh 380 494 6M2T 9rsquo600 kW 2010

CRH380AL 4861 kmh 380 1rsquo027 14M2T 20rsquo440 kW 2010

CRH380B 380 unknown 4M4T 9rsquo200 kW 2011 (plan)

CRH380BL 457 kmh 380 1rsquo004 8M8T 18rsquo400 kW 2010 (plan)

SwissRail Industry Association January 2011 China Railway Market Study 31 53

CRH380D 380 664 5M3T 10rsquo000 kW 2012 (plan)

CRH380DL 380 1rsquo336 10M6T 20rsquo000 kW 2012 (plan)

CRH6 220 unknown 4M4T unknown 2011 (plan)

Chinese CRH Train Sets Order Timetable

Date of Order Supplier Speed Le-

vel Designation

Quantity (set)

Quantity (car)

Amount

Oct 10 2004 Alstom

250 kmh CRH5A 3 24

620 million ERU CNR Changchun 57 456

Oct 12 2004 BST 250 kmh CRH1A 20 160 350 million USD

Oct 20 2004 Kawasaki

250 kmh CRH2A 3 24

9rsquo300 million RMB CSR Sifang 57 456

May 30 2005 BST 250 kmh CRH1A 20 160 350 million USD

June 2005 CSR Sifang 300 kmh CRH2C Stage one 30 240

8rsquo200 million RMB 350 kmh CRH2C Stage two 30 240

Nov 20 2005 Siemens

350 kmh CRH3C 3 24

13rsquo000 million RMB CNR Tangshan 57 456

Oct 31 2007 BST 250 kmh CRH1B 20 320

1rsquo000 million ERU CRH1E 20 320

Nov 2007 CSR Sifang 250 kmh CRH2B 10 160 1rsquo200 million RMB

Nov 2007 CSR Sifang 250 kmh CRH2E 6 96 900 million RMB

Dec 6 2008 CSR Sifang 250 kmh CRH2E 14 224 2rsquo100 million RMB

Sep 23 2009 CNR Changchun 250 kmh CRH5A 30 240 4rsquo800 million RMB

Mar 16 2009 CNR Tangshan

380 kmh CRH380BL 70 1rsquo120

39rsquo200 million RMB CNR Changchun 30 480

Sep 28 2009 CSR Sifang 380 kmh CRH380A 40 320

45rsquo000 million RMB CRH380AL 100 1rsquo600

Sep 28 2009 BST 380 kmh CRH380C 20 160

27rsquo400 million RMB CRH380CL 60 960

Sep 28 2009 CNR Changchun 380 kmh CRH380B 40 320

23rsquo520 million RMB CRH380BL 40 640

Sep 28 2009 CNR Tangshan 350 kmh CRH3C 20 160 3rsquo920 million RMB

July 16 2010 BST 250 kmh CRH1A 40 320 5rsquo200 million RMB

Sep 14 2010 CSR Sifang 250 kmh CRH2A 20 160 3rsquo400 million RMB

Oct 13 2010 CNR Changchun 250 kmh CRH5A 20 160 2rsquo700 million RMB

Total 880 10rsquo000

Chinese CRH Train Sets Delivery Timetable (Based on data published by Sinolink Securities some small changes were made according to the most recent news)

Designation 2006 2007 2008 2009 2010 (plan)

2011 (plan)

2012-2014 (plan)

Total

CRH1A 8 18 12 2 20 20 80

CRH2A 19 41 15 5 80

CRH5A 27 29 4 30 20 110

SwissRail Industry Association January 2011 China Railway Market Study 32 53

CRH1B 4 9 7 20

CRH1E 3 8 9 20

CRH2B 10 10

CRH2E 6 14 20

CRH2C 10 20 30 60

CRH3C 7 36 37 80

CRH380A 40 40

CRH380AL 6 94 100

CRH380B 20 20 40

CRH380BL 11 49 80 140

CRH380C 20 20

CRH380CL 60 60

Total 27 86 78 88 204 217 180 880

accumulate 27 113 191 279 483 700 880 880

all CRH380B contracts to be delivered before 2012

all CRH380C contracts to be delivered before 2014

37 Track Technology Many of the Passenger Dedicated Lines use ballastless tracks which allow for smoother train rides at high speeds and can withstand heavy use without warping The ballastless track technology imported from Ger-many carries higher upfront costs while reduces maintenance costs Typical Application of Track Technology in China High Speed Lines

Type Classify Technology Line

CRTSIs slab track RTRI Japan Hada PDL

CRTSIIs slab track Max Boumlgl Germany Jingjin ICL

CRTSIIIs slab track CRCCChina Chengguan PDL

CRTSIb ballastless track Railone Germany Wuguang PDL

CRTSIIb ballastless track Zuumlblin Germany Zhengxi PDL

38 Maglev High Speed Rail

China has only one maglev high-speed train line in operation The Shanghai Maglev Train (上海磁浮示范运营

线) a turnkey Transrapid maglev demonstration line 305km long The trains have a top operational speed of

430 kmh and can reach a top non-commercial speed of 501 kmh It has shuttled passengers between Shanghais Longyang Road Metro Station and Shanghai Pudong International Airport since March 2004 Service was briefly interrupted by an electrical fire in 2006 Shanghai authorities have been trying without success to extend the 305 km maglev line An intercity link with Hangzhou was approved by the central gov-ernment in 2006 but construction was postponed Work on a shorter extension to Shanghai Hongqiao Inter-national Airport was also stalled With the opening of Shanghai-Hangzhou High Speed Railway on October 26 2010 the original plan of constructing the maglev intercity link between Shanghai and Hangzhou which was newly approved in March 2010 does not look like going to happen in the near future

SwissRail Industry Association January 2011 China Railway Market Study 33 53

39 The Fastest Trains in China The fastest train commercial service can be defined alternatively by a trains top speed or average trip speed

The fastest train service measured by peak operational speed is the Shanghai Maglev Train which can reach 431 kmh Due to the limited length of the Shanghai Maglev track (30 km) the maglev trains aver-age trip speed is only 2455 kmh The Shanghai Maglev also holds the record for the top speed in tests of 501 kmh

The fastest train service measured by average trip speed is on the Wuhan-Guangzhou High-Speed Rail-way where the CRH3CRH2 coupled-train sets average 3125 kmh on the 1rsquo069 km route from Wuhan to Guangzhou North It is the fastest commercial train service in the world

The top speed attained by a non-maglev train in China is 4861 kmh by a first China-designed high speed train CRH380AL (16-car train set) on the Beijing-Shanghai High-Speed Railway during the test run on December 03 2010

Speed records of Chinarsquos rolling stock (non-maglev)

Date Train Type Track Speed

1997-01-05 SS8 (Note 1) Electric locomotives Beijing Circular Railway 2126 kmh

1998-06-24 SS8 (Note 2) Electric locomotives Jingguang Line 240 kmh

1998-07-29 X2000 New Speed Electric Multiple Unit (EMU) Guangshen Line 200 kmh

1999-09 DDJ1 White Shark EMU Guangshen Line 223 kmh

1999-10-01 NZJ1 New Aurora Diesel Multiple Unit (DMU) Huning line 194 kmh

2000-11 DJJ1 Blue Arrow EMU Guangshen Line 235 kmh

2001-11-11 DJF2 Pioneer EMU Guangshen Line 2496 kmh

2002-09-10 DJF2 Pioneer EMU Qinshen PDL 2928 kmh

2002-11-27 DJJ2 ldquoChina Starrdquo EMU Qinshen PDL 3215 kmh

2002-12-09 NZJ2 Shenzhou DMU Qinshen PDL 2107 kmh

2008-04-24 CRH2C (Note 3) EMU Jingjin ICL 370 kmh

2008-06-24 CRH3C (Note 4) EMU Jingjin ICL 3943 kmh

2009-12-09 CRH3C (Note5) EMU Wuguang PDL 3942 kmh

2010-09-28 CRH380A (Note 6) EMU Huhang PDL 4166 kmh

2010-12-03 CRH380AL (Note 7) EMU BeijingndashShanghai High Speed Railway 4861 kmh

SwissRail Industry Association January 2011 China Railway Market Study 34 53

Notes

1 SS8 locomotive with two passenger carriages 2 SS8 locomotive with five passenger carriages It remains the recordholder for Chinese electric loco-

motives 3 CRH2-061C 4 CRH3-001C 5 The pair of CRH3 EMUs (CRH3-013C+CRH3-017C) also set a world record for double-link EMUs 6 The CRH380A-6001 also holds the record for shorter length Chinese EMUs 7 The CRH380A-6041L also holds the record for extended length Chinese EMUs

SwissRail Industry Association January 2011 China Railway Market Study 35 53

4 MASS RAIL TRANSIT

41 Overview Mass rail transit (MRT) in China encompasses a broad range of urban and suburban electric passenger rail mass transit systems including subway light rail tram and even maglev The first subway in China was built in Beijing in 1969 The Tianjin Metro followed in 1984 Chinarsquos largest urban metro system is located in Shanghai which is also the longest network in the world where the first metro line opened in 1995 Hong Kongrsquos MTR was developed autonomously by the city-state The MTR now has investment and management stakes in the rapid transit systems of several mainland Chinese cities Since 2000 the growth of MRT systems in Chinese cities has been accelerated From 2009 to 2015 China plans to build 87 mass rail transit lines totaling 2500 km in 25 cities at the cost of $150 (yen1 trillion) MRT construction projects in China are approved by Chinese central government while the construction and management are executed by the state-owned metro corporations under the local commissions of the Minis-try of Construction

Map of Greater China Cities with Mass Rail Transit Systems

42 Key Data of MRT Systems in China List of Mass Rail Transit systems (MRT) in China by Network Length (Transit systems with light blue background are not yet operational but under construction) (Transit systems with dark blue background are in the planning stage)

MRT System Chinese Name Abbrev City Began Oper

Lines in

Oper

Number of

Stations

Network Length

(km)

Daily ridership

Shanghai Metro 上海轨道交通

（上海地铁） SHM Shanghai 1995 12 233 423 708 million

Beijing Subway 北京地铁 BJS Beijing 1971 9 126 228 563 million

SwissRail Industry Association January 2011 China Railway Market Study 35 53

4 MASS RAIL TRANSIT

41 Overview Mass rail transit (MRT) in China encompasses a broad range of urban and suburban electric passenger rail mass transit systems including subway light rail tram and even maglev The first subway in China was built in Beijing in 1969 The Tianjin Metro followed in 1984 Chinarsquos largest urban metro system is located in Shanghai which is also the longest network in the world where the first metro line opened in 1995 Hong Kongrsquos MTR was developed autonomously by the city-state The MTR now has investment and management stakes in the rapid transit systems of several mainland Chinese cities Since 2000 the growth of MRT systems in Chinese cities has been accelerated From 2009 to 2015 China plans to build 87 mass rail transit lines totaling 2500 km in 25 cities at the cost of $150 (yen1 trillion) MRT construction projects in China are approved by Chinese central government while the construction and management are executed by the state-owned metro corporations under the local commissions of the Minis-try of Construction

Map of Greater China Cities with Mass Rail Transit Systems

42 Key Data of MRT Systems in China List of Mass Rail Transit systems (MRT) in China by Network Length (Transit systems with light blue background are not yet operational but under construction) (Transit systems with dark blue background are in the planning stage)

MRT System Chinese Name Abbrev City Began Oper

Lines in

Oper

Number of

Stations

Network Length

(km)

Daily ridership

Shanghai Metro 上海轨道交通

（上海地铁） SHM Shanghai 1995 12 233 423 708 million

Beijing Subway 北京地铁 BJS Beijing 1971 9 126 228 563 million

SwissRail Industry Association January 2011 China Railway Market Study 36 53

Guangzhou Metro 广州地铁 GZMTR Guangzhou 1999 6 107 205 784 million

Hong Kong Mass Transit Railway

港铁 MTR Hong Kong 1910 10 85 175 376 million

Nanjing Metro 南京地铁 NJM Nanjing 2005 2 55 87 051 million

Beijing Suburban Railway 北京市郊铁路 BCR Beijing 2008 1 6 77 20rsquo000

Shenzhen Metro 深圳地铁 SZM Shenzhen 2004 2 25 22 063 million

Dalian Metro 大连轨道交通

（大连地铁） DLM Dalian 2003 1 18 64

Changchun Light Rail Transit

长春轻轨 CLRT Changchun 2001 2 48 52

Tianjin Binhai Mass Transit 濱海快速 BMT Tianjin 2004 2 24 42

Wuhan Metro 武汉轨道交通

（武汉地铁） WHM Wuhan 2004 1 27 27

Shenyang Metro 沈阳地铁 SYM Shenyang 2010 1 22 27

Tianjin Metro 天津地铁 TJM Tianjin 1984 2 26 22

Chongqing Rail Transit 重庆轨道交通 CRT Chongqing 2005 1 18 19

Chengdu Metro 成都地铁 CDM Chengdu 2010 1 16 18

FMetro 佛山地铁 FM Foshan 2010 1 14 20

Guangzhu Intercity Mass Rapid Transit

广珠城际轨道交通

（广珠城轨） GZIMRT

Guangzhou Foshan

Jiangmen Zhongshan

Zhuhai

2011 1 27 142

Hangzhou Metro 杭州轨道交通 HZM Hangzhou 2011

Xian Metro 西安地鐵 XAM Xian 2011

Harbin Metro 哈尔滨地铁 HRBM Harbin 2012

Suzhou Subway 苏州轨道交通 SZS Suzhou 2012

Kunming Rail Transit 昆明地铁 KMRT Kunming 2012

Zhengzhou Subway 鄭州地鐵 ZZS Zhengzhou 2013

Nanchang Rail Transit 南昌轨道交通 NCRT Nanchang 2014

Ningbo Rail Transit 宁波轨道交通 NBRT Ningbo 2014

Qingdao Metro 青岛地铁 QDM Qingdao 2014

Changsha Metro 长沙地铁 CSM Changsha 2015

Wuxi Metro 无锡轨道交通 WXM Wuxi 2015

Fuzhou Metro 福州轨道交通 FZM Fuzhou 2015

Uumlruumlmqi Light Rail Transit 乌鲁木齐轻轨 ULRT Uumlruumlmqi 2015

Dongguan Metro 东莞轨道交通 DGM Dongguan 2015

Nanning Rail Transit 南宁轨道交通 NNRT Nanning 2015

Hefei Metro 合肥地铁 HFM Hefei 2015

Guiyang Urban Rail Transit 贵阳轨道交通 GURT Guiyang 2017

Macau Light Rail Transit 澳門輕軌系統 MLRT Macau 2013

Taiyuan Metro 太原地铁 TYM Taiyuan 20xx

Changzhou Metro 常州地铁 Changzhou 20xx

Datong Metro 大同地铁 Datong 20xx

Huizhou Metro 惠州地铁 Huizhou 20xx

SwissRail Industry Association January 2011 China Railway Market Study 37 53

Hohhot Metro 呼和浩特地铁 Hohhot 20xx

Jiaxing Metro 嘉兴地铁 Jiaxing 20xx

Jinan Metro 济南地铁 Jinan 20xx

Lanzhou Metro 兰州地铁 Lanzhou 20xx

Nanning Metro 南宁地铁 Nanning 20xx

Quanzhou Metro 泉州地铁 Quanzhou 20xx

Shijiazhuang Metro 石家庄地铁 Shijiazhuang 20xx

Weifang Metro 潍坊地铁 Weifang 20xx

Wenzhou Metro 温州地铁 Wenzhou 20xx

Xiamen Metro 厦门地铁 Xiamen 20xx

Xuzhou Metro 徐州地铁 Xuzhou 20xx

Zibo Metro 淄博地铁 Zibo 20xx

Notes

Lines in operation include the number of main lines only

Every interchange stationstations connected by transfers are counted as a single station unless other-wise noted

Network length refers to track length shared track between lines are counted once only

The Shanghai Metro is the longest network in the world See David Barboza Expo Offers Shanghai a New Turn in the Spotlight httpwwwnytimescom20100430worldasia30shanghaihtml retrieved on April 29 2010

The first line of the Beijing Subway was completed in 1969 but did not open for trial operation until 1971 and it was restricted to riders with credential letters The subway was fully opened to the public without credential letters in 1981

When the MTR opened in 1910 as the (KCR) while the pre-merged MTR open on 1979 Hong Kong

was not part of China The system was electrified in 1983 and merged with the (九广铁路) in 2007

The Tianjin Metro closed down for upgrades in 2001 and reopened in 2006

SwissRail Industry Association January 2011 China Railway Market Study 38 53

5 MARKET PLAYERS

51 Key Chinese Railway Enterprises Chinese railway enterprises develop at a dramatic speed in recent years The large Chinese railway players are all stateowned and state-backed The manufacturers of railway equipment and systems have been sepa-rated from the national railway operators under the control of the MoR At present the key Chinese railway enterprises are under the supervision of the State-owned Assets Supervision and Administration Commission

of the State Council (国务院国有资产监督管理委员会)

China Railway Group Ltd (CREC) 中国中铁股份有限公司 or China Railway Engineering Corporation 中

国铁路工程总公司 wwwcreccn

The corporation runs a spectrum of businesses covering surveying and designing construction and installa-tion manufacturing research and development technical consulting capital management as well as interna-tional business activities Its headquarter is in Beijing

CREC is the third largest civil construction enterprise in the world and the largest railway road and tunnel construction contractor in China and Asia It is in a leading position in Chinas construction market and parti-cipated in many large scale infrastructure projects abroad (especially in countries of Southeast Asia and Afri-ca) Fortune magazine in the United States reported that CREC ranked 342 in the 500 worlds largest enter-prises in 2007

CREC consists of 31 entities including

- 16 large construction enterprises

China National Overseas Engineering Corporation

China Railway Resources Co Ltd

China Railway First Group Corporation

China Railway Erju Group Corporation (China Railway Second Group Corporation)

Third Engineering Group Co Ltd

China Tiesiju Civil Engineering Group Co Ltd (China Fourth Group Civil Engineering Group Co Ltd)

China Railway Wuju Group Corporation (China Railway Fifth Group Corporation)

China Railway Sixth Group Co Ltd

China Railway Seventh Group Co Ltd

China Railway Eighth Civil Engineering Group Corporation

China Railway No 9 Group Co Ltd

China Railway No 10 Group Corporation

China Zhongtie Major Bridge Engineering Group Co Ltd (China Railway Major Bridge Engineering Group Co Ltd)

China Railway Tunnel Group

China Railway Electrification Bureau Co Ltd

China Railway Construction Engineering Group

- 3 large surveying and designing enterprises

SwissRail Industry Association January 2011 China Railway Market Study 39 53

Second Survey and Design Institute of China Railway

China Railway Engineering Consultants Group

China Major Bridge Survey and Design Institute

- 3 RampD enterprises

Northwest Research Institute

Southwest Research Institute of CREC

Engineering Machinery Research and Design Institute

- 5 manufacturing enterprises

China Railway Shanhaiguan Bridge Group Co Ltd

China Railway Turnout Bridge Inc

China Railway Bus Co Ltd

Wuhan Engineering Machinery Works of CREC

Hengping Trust and Investment Co Ltd

In addition there are 17 subsidiaries and 4 Postdoctor Workstations directly run by the headquarter CRECs construction teams are found in over 1000 cities throughout China except Taiwan

China Railway Construction Corporation Ltd (CRCC) 中国铁道建筑股份有限公司 or China Railway

Construction Corporation 中国铁道建筑总公司 wwwcrcccn

Formerly the railway arm of the Peoples Liberation Army CRCC is the second largest state-owned construc-tion enterprise in China With its headquarter in Beijing it is engaged in construction contracting surveying designing research and development industrial manufacturing consultation real estate capital operation and logistics It is currently one of Chinas largest and the worlds sixth largest construction contractor CRCC consists of 32 enties including

China Civil Engineering Construction Co Ltd

China Railway 11th Bureau Group Co Ltd

China Railway 12th Bureau Group Co Ltd

China Railway 13th Bureau Group Co Ltd

China Railway 14th Bureau Group Co Ltd

China Railway 15th Bureau Group Co Ltd

China Railway 16th Bureau Group Co Ltd

China Railway 16th Bureau Group Co Ltd

China Railway 17th Bureau Group Co Ltd

China Railway 18th Bureau Group Co Ltd

China Railway 19th Bureau Group Co Ltd

China Railway 20th Bureau Group Co Ltd

China Railway 21th Bureau Group Co Ltd

China Railway 22th Bureau Group Co Ltd

China Railway 23th Bureau Group Co Ltd

China Railway 24th Bureau Group Co Ltd

China Railway 25th Bureau Group Co Ltd

SwissRail Industry Association January 2011 China Railway Market Study 40 53

Zhong Tie Construction Group Co Ltd

China Railway Construction Electrification Bureau Group Co Ltd

China Railway Construction Group Co Ltd

The 1st Survey and Design Institute of Chinese Railways Co Ltd

China Railway Siyuan Survey and Design Group Co Ltd

China Railway Wuyuan Survey and Design Group Co Ltd

China Railway Design Group Co Ltd

Beijing TIECHEN Construction Consultant Co Ltd

China Railway Related Material Group Co Ltd

China Railway Large Maintenance Machinery Co Ltd

China Railway Track System Co Ltd

China Railway Real Estate Group Co Ltd

China South Locomotive and Rolling Stock Corporation Limited (CSR) 中国南车股份有限公司wwwcsrgccomcn formerly known as China South Locomotive and Rolling Stock Industry (Group) Corpora-tion

In 1986 the China National Railway Locomotive amp Rolling Stock Industry Corporation (LORIC) was formed comprising 35 production sites and 4 research centres In 2002 LORIC was separated from the MoR and China South Locomotive and Rolling Stock Industry (Group) Corporation (CSRG) was formed Its main com-petitor the China North Locomotive and Rolling Stock Industry (Group) Corporation was formed two years earlier in 2000 In 2002 the group manufactured the 270 kmh China Star high speed EMU at its Zhuzhou Electric Locomotive Works in Zhuzhou of Hunan Province ndash the so-called ldquoChinarsquos Cradle of Electric Locomo-tivesrdquo In 2007 China South Locomotive amp Rolling Stock Corporation Limited (CSR) was formed The companys H shares were first traded on the Hong Kong stock market on 21 August 2008 the companys A shares also began trading on August 18 2008 on Shanghai Stock Exchange $157 billion was raised in the share offers 40 stake in the company was offered in total on the two exchanges Between 2004 and 2007 CSR had about 50 of the internal Chinese market for locomotives and around 80 of the market for electric multiple units (by volume) as well as 50 market share in locomotive and wagon refurbishment In the same period overseas sales accounted for about 7-8 of revenue CSR is the worldrsquos largest manufacturer of electric locomotives and rolling stock today CSR consists of 16 subsidiaries including

CSR Yangtze Rolling Stock Co Ltd

CSR Zhuzhou Electric Locomotive Co Ltd

CSR Ziyang Locomotive Co Ltd

CSR Qishuyan Locomotive Co Ltd

CSR Sifang Locomotive amp Rolling Stock Co Ltd

CSR Sifang Rolling Stock Co Ltd

CSR Nanjing Puzhen Rolling Stock Co Ltd

CSR Meishan Rolling Stock Co Ltd

CSR Chengdu Locomotive amp Rolling Stock Co Ltd

CSR Feb 7th Rolling Stock Co Ltd

CSR Shijiazhuang Rolling Stock Co Ltd

CSR Investment amp Leasing Co Ltd

CSR Zhuzhou Electric Locomotive Research Institute Co Ltd

SwissRail Industry Association January 2011 China Railway Market Study 41 53

CSR Qishuyan Locomotive amp Rolling Stock Technology Research Institute Co Ltd

CSR Luoyang Electric Locomotive Co Ltd

CSR (Hong Kong) Co Ltd CSR has 2 Joint Ventures

Bombardier Sifang (Qingdao) Transportation Ltd

Qingdao Sifang Kawasaki Rolling Stock Technology Co Ltd

China North Locomotive and Rolling Stock Corporation Limited (CNR) 中国北车股份有限公司 or

China CNR Corporate Limited 中国北车集团 wwwchinacnrcom formerly known as China North Locomotive

and Rolling Stock Industry (Group) Corporation

In 2000 the China Northern Locomotive amp Rolling Stock Industry (Group) Corporation (also known as China Beiche Group) was formed from China National Railway Locomotive amp Rolling Stock Industry Corporation (LORIC) which was comprised of 35 production sites and 4 research centres Its main competitor the China South Locomotive and Rolling Stock Industry (Group) Corporation was formed two years later in 2002 In 2008 the group was reorganised into the China North Locomotive and Rolling Stock Corporation Limited (or China CNR Corporation Limited) with a minority shareholding contributed by China ChengTong Holdings Group and China Huarong Asset Management Corp The company made an IPO of $2 billion in 2009 on the Shanghai Stock Exchange CNR consists of 20 subsidiaries including

Qiqihar Railway Rolling Stock Co Ltd

Harbin Railway Rolling Stock Co Ltd

Changchun Railway Coach Co Ltd

Changchun Railway Vehicle Co Ltd

CNR Dalian Locomotive amp Rolling Stock Co Ltd

Tangshan Railway Vehicle Co Ltd

Tangshan Railway Transportation Equipment Co Ltd

Tianjin LJ Railway Transport Equipment Ltd

Beijing Feb 7th Railway Transportation Equipment Co Ltd

Beijing Nankou Railway Transportation Machinery Co Ltd

CNR Datong Electric Locomotive Co Ltd

Taiyuan Railway Rolling Stock Co Ltd

Yongji Xinshisu Electric Equipment Co Ltd

Jirsquonan Railway Rolling Stock Co Ltd

Xirsquoan Railway Rolling Stock Co Ltd

Lanzhou Jinniu Railway Transportation Equipment Co Ltd

CNR Dalian Locomotive Research Institute Co Ltd

Qingdao Sifang Rolling Stock Research Institute Co Ltd

CNR Logistic Development Corp Ltd

LORIC Import amp Export Corp Ltd

SwissRail Industry Association January 2011 China Railway Market Study 42 53

China Railway Signal amp Communication Corporation (CRSC) 中国铁路通信信号集团公司

wwwcrsccn

CRSC was originated from 1953 The earliest founding of the CRSCrsquos factory can be traced back to100 years ago As a large group in the rail transit communication and signal industry CRSC is active in research amp de-velopment design manufacturing and installation With its strength of system integration and turn-key pro-jects CRSC is now expanding its business from railway signal amp communication to transportation information and control integration in different sectors of mainline railway mass rail transit seaports airports and high-ways The products and services of CRSC are sold not only in China but also in more than 20 countries and regions in the world It is one of the biggest suppliers of rail traffic control system in China

CRSC has established joint ventures and laboratories with partners home and abroad The most successful example is the Chinese-American Signal Company (CASCO) in Shanghai joined by General Railway Signal Company (GRS) in 1986 which produces products and systems for railways in China GRS is now a part of Alstom Transport and no longer an independent company

CRSC has 12 subsidiaries and 9 manufacturing sites including

Beijing National Railway Research and Design Institute of Signal and Communication

China Railway Signal amp Communication Shanghai Engineering Co Ltd

Beijing Nera Stentofon Communication Equipment Co Ltd

CASCO Signal Ltd

CRSC Shanghai Rail Transport Engineering RampD Center

CRSC Beijing GUOTIE Urban Rail Engineering Co Ltd

Beijing Railway Signal and Communication Whole-Set Equipment Corporation

Beijing LUYANG Signal and Communication Corporation

Beijing GUOTIE HUACHEN Signal and Communication Technology Corporation

Beijing Modern Signal and Communication Engineering Consultant Corporation

Zhongxin Diantong Co Ltd

CRSC Beijing Dianwu Technology Development Center

Beijing Railway Signal Factory

Shenyang Railway Signal Factory

Xirsquoan Railway Signal Factory

Tianjin Railway Signal Factory

Shanghai Railway Communication Factory

Beijing Feb 7th Communication Factory

Chengdu Railway Communication Equipment Factory

Jaiozuo Railway Cable Factory

Tianshui Railway Cable Factory

52 Chinese Railway Academy RampD Institutions and Universities China has very strong railway RampD resources due to its long history and continuous efforts on RampD and de-sign institutions as well as on higher education of railway science and technology There is no other country in the world that has as many railway academy RampD institutions and universities as China has and they are all state-owned Almost all the RampD institutions in China also function as commercial entities and are able to conduct business deals All of them undertake different RampD and engineering projects even production jobs assigned by the MoR They are cooperation partners in some projects while competitors in others

SwissRail Industry Association January 2011 China Railway Market Study 43 53

521 Major Chinese Railway Academy and RampD Institutions

China Academy of Railway Sciences (CARS) 中国铁道科学研究院 carsrailscomcn in Beijing is the main

advisor of railway science and technology for the MoR CARS consists of RampD institutes and centers that are specialized in all kinds of railway technologies

Other major railway RampD institutions as listed above are either under CREC CRCC CSR CNR CRSC in China

The 1st Railway Survey and Design Institute 铁道第一勘察设计院 in Xian of Shanxi Province

The 2nd

Railway Survey and Design Institute 铁道第二勘察设计院 in Chengdu of Sichuan Province

The 3rd

Railway Survey and Design Institute 铁道第三勘察设计院 in Tianjin of Hebei Province

The 4th

Railway Survey and Design Institute 铁道第四勘察设计院 in Wuhan of Hubei Province

The 5th

Railway Survey and Design Institute 铁道第五勘察设计院 in Beijing

CSR Zhuzhou Electric Locomotive Research Institute CSR 株洲电力机车研究所 in Zhuzhou of Hunan

Province

CSR Qishuyan Locomitive amp Rolling Stock Technology Research Institute CSR 戚墅堰机车车辆工艺

研究所 in Qishuyan of Jiansu Province

CSR State Engineering Research Center of Converters CSR 株洲变流技术国家工程研究中心 in

Zhuzhou of Hunan Province

CSR State Engineering Laboratory of High Speed Train System Integration CSR 高速列车系统集成

国家工程实验室 in Qingdao of Shandong Province

CRSC Beijing National Railway Research and Design Institute of Signal and Communication

CRSC 北京全路通信信号研究设计院 in Beijing

522 Major Chinese Railway Universities Before the education reform in China during 2000ndash2003 similar to other sectors in China all the railway

universities were under the supervision of the MoR After the education reform the names of the universities were changed and they were combined with other universities in China and are now under the supervision of the Ministry of Education

Beijing Jiaotong University 北京交通大学 in Beijing (former Northern Jiaotong University)

Tongji University 同济大学 in Shanghai (former Shanghai Railway University)

Central South University 中南大学 in Changsha (former Changsha Railway University)

Lanzhou Jiaotong University 兰州交通大学 in Lanzhou (former Lanzhou Railway University)

Dalian Jiaotong University 大连交通大学 in Dalian (former Dalian Railway University)

Southwest Jiaotong University 西南交通大学 in Chengdu

East China Jiaotong University 华东交通大学 in Nanchang

The universities in China that have railway related colleges and departments in many cases serve as spe-cialized RampD institutions and undertake RampD projects assigned by the MoR These specialized RampD centers or laboratories are designated by the state but supported and managed by the universities

State Key Laboratory of Rail Traffic Control and Safety 轨道交通控制与安全国家重点实验室 affiliated

to Beijing Jiaotong University

SwissRail Industry Association January 2011 China Railway Market Study 44 53

State Key Laboratory of Traction Power 牵引动力国家重点实验室 affiliated to Southwest Jiaotong

University

523 China Railway Society

China Railway Society 中国铁道学会 is a national institution of railway science and technology funded by

Chinese government It collects well-established and influential railway specialists stepping back in the railway sector Its main tasks are Developing programs of academic exchanges including seminars investigation and study tours Strengthening ties with international academic personnel and institutions by organizing international con-

ferences lectures and exhibitions as well as overseas study and training tours Organizing technology and science exchange activities and continuation of education Providing technical consultancy including proposals on policy-making research and development tech-

nology transfer and technical services Doing the appraisals on research results and to offer certifications of technical qualifications as well as to

work on technical policy and standards as entrusted by relevant government departments Publishing railway periodicals books and papers in accordance with relevant regulations Issuing recognitions and rewards to achievements in railway science and technology and to technical

personnel who have made outstanding accomplishments in the field of railway science and technology giving recommendation of railway talents as approved by the relevant government departments

SwissRail Industry Association January 2011 China Railway Market Study 45 53

6 MARKET ENTRY HURDLES China is a huge potential market and it is also a big difficulty Overestimating it strategically is as unwise as underestimating it tactically The last 2 years of worldwide economic difficulties have accelerated Chinarsquos relative importance and pushed it on the world scene China has become the biggest car and wind power markets worldwide From the fifth place China jumped to the second market for Swiss machinery exporters just after Germany And it has become the most tempting railway supply market in the world In the coming decade more far-reaching changes will be seen worldwide as China transforms its labour intensive production facilities into locally pro-duced automation and home-grown technologies For all international enterprises big and small this evolu-tion will probably be the source of most opportunities as well as changes in the way how their business is done China railway market has been developing at a very fast pace in recent years Nevertheless it remains a complicated and difficult market for the western companies Apart from the general difficulties of trade barri-ers (tariff and non-tarrif) and complicated tax and accounting rules competition is getting more and more intense in the market especially from the Chinese competitors Chinese Railways as the national railway operator is strictly under the control of the MoR and all Chinese railway enterprises are state-owned and state-backed Western companies have to realize that when they meet Chinese railway people they are fac-ing Chinese government officials as well In such a situation time-consuming bureaucracy and corruption are not uncommon phenomena The major challenges for Swiss companies especially the railway suppliers are being illustrated subsequently

61 Intellectual Property No market is a safe place so to speak especially in a huge and sophisticated developing country like China Intellectual property infringement is what concerns many foreign companies about China However a recent research study indicates that it is actually not any more a top concern of the western companies already op-erating in China Since joining the World Trade Organization (WTO) China strengthened its legal framework and amended its IPR related laws and regulations to comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) In the IP field the relevant Chinese authorities have done a lot to improve the legislation with the release of the ldquoNational Strategy for Intellectual Propertyrdquo in 2008 and the recent promulgation of new laws in different domains eg the Patent Law The aim of these rules is to guarantee a secure and trustworthy innovation environment as such measures barely existed before Joint efforts have been made on IP protection by both the State Intellectual Property Office wwwsipogovcn and the Ministry of Commerce (MOFCOM) wwwchinaiprgovcn IP complaints can be made online both at the country level wwwiprgovcn provincial (eg Guangdong Province wwwgdipogovcn) and municipal (eg Guangzhou wwwgzipogovcn) level Despite stronger statutory measures China still needs to do more to protect intellectual property rights mainly in the area of law enforcement The Embassy of Switzerland in Beijing and the Consulates General in Shanghai and Guangzhou are in regular contact with Swiss companies doing business in China and offer their support to those having difficulties with the Chinese administration at different levels or with the tribunals On May 29 2007 a ldquoMemorandum of Understanding of the SwitzerlandndashChina Joint Commission on Com-merce and Trade on Establishing a Working Group on Intellectual Propertyrdquo was signed between China and Switzerland The discussions and cooperation of the Working Group are focused on

Institutional aspects of intellectual property rights

Legislative aspects of intellectual property rights

Civil administrative and criminal enforcement of intellectual property rights

Technical assistance cooperation in intellectual property

SwissRail Industry Association January 2011 China Railway Market Study 45 53

6 MARKET ENTRY HURDLES China is a huge potential market and it is also a big difficulty Overestimating it strategically is as unwise as underestimating it tactically The last 2 years of worldwide economic difficulties have accelerated Chinarsquos relative importance and pushed it on the world scene China has become the biggest car and wind power markets worldwide From the fifth place China jumped to the second market for Swiss machinery exporters just after Germany And it has become the most tempting railway supply market in the world In the coming decade more far-reaching changes will be seen worldwide as China transforms its labour intensive production facilities into locally pro-duced automation and home-grown technologies For all international enterprises big and small this evolu-tion will probably be the source of most opportunities as well as changes in the way how their business is done China railway market has been developing at a very fast pace in recent years Nevertheless it remains a complicated and difficult market for the western companies Apart from the general difficulties of trade barri-ers (tariff and non-tarrif) and complicated tax and accounting rules competition is getting more and more intense in the market especially from the Chinese competitors Chinese Railways as the national railway operator is strictly under the control of the MoR and all Chinese railway enterprises are state-owned and state-backed Western companies have to realize that when they meet Chinese railway people they are fac-ing Chinese government officials as well In such a situation time-consuming bureaucracy and corruption are not uncommon phenomena The major challenges for Swiss companies especially the railway suppliers are being illustrated subsequently

61 Intellectual Property No market is a safe place so to speak especially in a huge and sophisticated developing country like China Intellectual property infringement is what concerns many foreign companies about China However a recent research study indicates that it is actually not any more a top concern of the western companies already op-erating in China Since joining the World Trade Organization (WTO) China strengthened its legal framework and amended its IPR related laws and regulations to comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) In the IP field the relevant Chinese authorities have done a lot to improve the legislation with the release of the ldquoNational Strategy for Intellectual Propertyrdquo in 2008 and the recent promulgation of new laws in different domains eg the Patent Law The aim of these rules is to guarantee a secure and trustworthy innovation environment as such measures barely existed before Joint efforts have been made on IP protection by both the State Intellectual Property Office wwwsipogovcn and the Ministry of Commerce (MOFCOM) wwwchinaiprgovcn IP complaints can be made online both at the country level wwwiprgovcn provincial (eg Guangdong Province wwwgdipogovcn) and municipal (eg Guangzhou wwwgzipogovcn) level Despite stronger statutory measures China still needs to do more to protect intellectual property rights mainly in the area of law enforcement The Embassy of Switzerland in Beijing and the Consulates General in Shanghai and Guangzhou are in regular contact with Swiss companies doing business in China and offer their support to those having difficulties with the Chinese administration at different levels or with the tribunals On May 29 2007 a ldquoMemorandum of Understanding of the SwitzerlandndashChina Joint Commission on Com-merce and Trade on Establishing a Working Group on Intellectual Propertyrdquo was signed between China and Switzerland The discussions and cooperation of the Working Group are focused on

Institutional aspects of intellectual property rights

Legislative aspects of intellectual property rights

Civil administrative and criminal enforcement of intellectual property rights

Technical assistance cooperation in intellectual property

SwissRail Industry Association January 2011 China Railway Market Study 46 53

Since the key strength of most Swiss companies is connected with IP it is always wise to stay alert by taking protective measures such as to limit IP knowledge to only a few reliable persons to register patents and trademarks with the appropriate Chinese authorities to set up wholly owned foreign enterprises (WOFEs) instead of joint ventures (JVs) and to consult experienced experts and lawyers when encountering IP issues What is more important for staying in a successful position in the market is development and innovation ie try to keep the products of Swiss companies in the techonology forefront and spare no effort in innovation in the respective fields

62 Licenses and Certification In China it is mandatory to apply import licenses for purchasing mechanical and electrical equipment and

systems manufactured in foreign countries which is so-called ldquoJi Dian Shenrdquo (机电审) The MoR wwwchina-

morgovcn is the right organization to submit such applications The Ministry of Commerce (MOFCOM) wwwmofcomgovcn is the authority that controls and monitors all the imported products including issuing import licenses for mechanical and electrical equipment applied in the rail sector The MoR however has been delegated by MOFCOM to issue import licenses for some of the railway-related mechanic and elec-tronic products supplied by foreign manufacturers China Customs wwwcustomsgovcn is the right organiza-tion where people check and verify information such as import amp export duties Many foreign suppliers including Swiss companies received false information that they are supposed to have their products certified by Chinese authorities before they can be sold in the China railway market It is impor-tant knowledge that the responsibility of applying import licenses lies with the Chinese buyers ie the poten-tial Chinese customers of foreign suppliers It is also important knowledge that import licenses are required only for importing mechanical and electrical equipment by Chinese buyers To apply import licenses for mechanical and electrical equipment and systems Chinese railway buyers under the direct supervision of the MoR have only one channel that is to apply at the International Cooperation Department of the MoR Other Chinese railway buyers such as the locomotive and rolling stock manufactur-ers under CSR and CNR that are located in differents cities in China can apply import licenses either at the MoR or at the relevant local authorities which is the Mechanical and Electrical Products Import and Export Division at the Bureau of Foreign Trade and Economy Cooperation (BOFTEC) of the municipalities This is because CSR and CNR are now under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council as mentioned before Foreign companies supplying rail-related equipment and products planning to set up either WOFEs or JVs in China are required to apply for approvals and business licences at the International Cooperation Department of the MoR

63 Culture and Language

631 Culture Differences China is a rather special market compared with the western markets It is normally necessary to take into consideration the geographical distance between Europe and China as well as Chinarsquos vast territory and huge population Chinese culture is quite diversified with its 56 ethnic groups which is very different from that of the western world Consequently Chinese business behaviors are also very different from those of the western markets Actually they are even different from region to region in China Due to culture differences Europeans normally find it difficult to communicate with Chinese One of the fre-quently asked questions by Europeans is ldquoWhy I ask ten questions but cannot get one direct answer from the Chineserdquo The simple answer to the question is that traditional and educated Chinese prefer not to be too straightforward during communications and they always try to avoid confrontations These behaviors are normally considered to be rude and impolite ldquoHarmonyrdquo ldquogood willrdquo and ldquocommon interestrdquo have been very

SwissRail Industry Association January 2011 China Railway Market Study 47 53

much encouraged through the long history in China while individualism and creative thinking are more en-couraged in the western world Swiss companies doing business or going to do business in China are recommended to get themselves more ready for the very different Chinese culture and business environment Only when you are able to face them could you grant yourself a chance to handle them Your targets are to make business achievements and your chances are under your own control According to a recent survey among Swiss companies in China the flexibility to adapt to local customs ldquoGuanxirdquo (connections) and networking are among top success factors for foreign companies For westerners it is almost impossible to make a deal without having ldquoZhongjianrenrdquo (in-termediary) and it is advisable to use a Chinese go-between for the meetings In China a personrsquos reputa-tion and social standing rest on ldquoMianzirdquo (saving face) If westerners cause Chinese embarrassment or losing face it can be a disaster for their business In the huge and complex market of China there are more risks in certain regions than others For example Shenzhen in Guangdong Province a neighboring city of Hong Kong and a ldquofishing villagerdquo over twenty years ago is a city of immigrants with the majority of its population migrated from the inland China As an economic miracle in China it has been developed into a modern industrial and financial city through Chinarsquos economic reform and opening-up to the world Nevertheless too many people in Shenzhen just want to make quick money and become rich overnight Quite a few Swiss SMEs experienced scams in Shenzhen in the past years Being approached by Chinese ldquobuyersrdquo and offered with ldquobig ordersrdquo the Swiss companies were so overwhelmed that they did whatever the Chinese ldquocustomersrdquo ask them such as paying notary fee for con-tracting or visiting them in China etc Some Swiss companies made payments without even knowing whether their low-price Chinese ldquosuppliersrdquo were mainland Chinese companies or Hong Kong companies which could be easily checked out by an expert or insider from the legal papers provided When faced with perplexity few of the Swiss SMEs consulted experts or sought assistance from official rep-resentations of Switzerland working in China ie Swiss Business Hub with local trade officers based in differ-ent cities in China who could help them avoid their mistakes In most cases the SBH heard from them only when they were already in troubles It is our hope that more Swiss SMEs will try to prevent possible mistakes by seeking help from the experts and insiders before they make them

Lessons learnt by the Swiss SMEs indicate that handling business in China in a same way as what they do in the western markets will sooner or later put their businesses into troubles It seems that they often forget that they are doing business in a long-distance huge and different emerging market of China in another continent of Asia Some Swiss SMEs could have avoided their mistakes if they would just take the normal legal meas-ures in doing international business eg by proper contracting and order-processing In general they should be more cautious in all developing markets including China

632 Language Barrier Chinese is one of the most difficult languages in the world There are four tunes for each Chinese character and many Chinese characters share one same pronunciation The written Chinese has no relevance to the spoken Chinese indicated in ldquoPinyinrdquo When the name of a local Chinese company or the company address is provided only in Chinese Pinyin it is simply impossible to convert them back into correct Chinese name and address in written This means it is alomost impossible to find or check back on a Chinese company in ques-tion if the written Chinese company name and address are not provided Mainland China uses simplified written Chinese while Hong Kong Macao and Taiwan use traditional written Chinese If you know the differences between simplified and traditional Chinese you can judge from the legal papers provided if the company in question is a mainland Chinese company or a company registered in Hong Kong or Macao Europeans tend to underestimate the difficulties created by language barrier in China when they first start to approach the market In many cases without European business people realizing it some unqualified trans-lators can mislead important meetings and negotiations to such an extent that precious time in business is wasted and even commercial losses are made

SwissRail Industry Association January 2011 China Railway Market Study 48 53

Inspite of the fact that more and more Chinese are able to use English as a foreign language for communica-tion language remains a big issue for international suppliers to penetrate the market and to do business in China Chinese mandarin is the only official language in China An example of language barrier is that the official website of the MoR is provided in Chinese only The simple fact is that the majority of Chinese popula-tion still cannot communicate in English especially in the inland cities

SwissRail Industry Association January 2011 China Railway Market Study 49 53

7 INSIGHTS FOR THE RAIL INDUSTRY

71 Impact of the Global Financial Crisis

According to the comprehensive World Rail Market Study for UNIFE the immediate fate of the rail industry depends on the world economy that is still recovering from the historic financial crisis The mature economies that have been the industryrsquos main markets are expected to have slow economies with tight public spending limits while the emerging economies are enjoying faster growth and their spendings on rail equipment are obviously rising The financial crisis did not have a real severe impact on the rail industry and the two-speed world economy is expected to have a big influence on public spending to which infrustructure investment is very much linked Such a tendency can be evidently observed in Chinarsquos Economic Stimulus Program compared with the ldquoMid-to-Long Term Railway Netwrok Planrdquo approved in 2006 and revised just before the outburst of the global fi-nancial crisis in 2008

Chinese Railway

Development Plans

Chinarsquos Mid-to-Long Term Railway Network Plan

Chinarsquos Economic Stimulus Program

By 2010 By 2020 By 2010 By 2020

Total Operational Rail Network

90000 km 120000 km 100000 km 180000 km

Passenger Dedicated High Speed Line (PDL)

7000 km 16000 km 18000 km 25000 km

In order to stimulate Chinese economy the railway construction schedules have been substantially acceler-ated in China China railway industry develops at an exceptional fast speed in the past two years with plans to take the worldrsquos leading position of high speed railway technology

72 Changes and Trends Railway operators seperated from their equipment suppliers Traditionally the infrastructure and rolling stock are owned and operated by the same company This has often been by a national railway while other countries have had private railways Since the 1980s there has been an increasing tendency to split up railway companies with separate companies owning the rolling stock from those owning the infrastructure particularly in Europe where this is required by the European Union This has allowed open access by any train operator to any portion of the European railway network One of the many big changes under way in the worldrsquos railway industry is that the once-close partnership between the big train makers and their big customers has become more adversarial Instead of designing and assembling rolling stock themselves most national railways in the world in recent years have handed over the responsibilities to big manufacturers like Siemens Alstom and Bombardier These multinationals are be-coming global designers builders and maintainers of trains modelled on the big automobile or aircraft mak-ers Besides new technology is also forcing operators and suppliers to revise their standards and ways of working The pace of change is picking up faster in the developing world than in the developed In China the big rail-way groups of CREC CRCC CSR CNR and CRSC were separated since years from the MoR which is the owner of the infrastructure and the supervisor of the national railway operator Chinese Railways As men-tioned above all the railway manufacturers are now under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council The performances of these state-owned railway groups are strictly measured by the state and competitions among them have been created as well

SwissRail Industry Association January 2011 China Railway Market Study 48 53

Inspite of the fact that more and more Chinese are able to use English as a foreign language for communica-tion language remains a big issue for international suppliers to penetrate the market and to do business in China Chinese mandarin is the only official language in China An example of language barrier is that the official website of the MoR is provided in Chinese only The simple fact is that the majority of Chinese popula-tion still cannot communicate in English especially in the inland cities

SwissRail Industry Association January 2011 China Railway Market Study 49 53

7 INSIGHTS FOR THE RAIL INDUSTRY

71 Impact of the Global Financial Crisis

According to the comprehensive World Rail Market Study for UNIFE the immediate fate of the rail industry depends on the world economy that is still recovering from the historic financial crisis The mature economies that have been the industryrsquos main markets are expected to have slow economies with tight public spending limits while the emerging economies are enjoying faster growth and their spendings on rail equipment are obviously rising The financial crisis did not have a real severe impact on the rail industry and the two-speed world economy is expected to have a big influence on public spending to which infrustructure investment is very much linked Such a tendency can be evidently observed in Chinarsquos Economic Stimulus Program compared with the ldquoMid-to-Long Term Railway Netwrok Planrdquo approved in 2006 and revised just before the outburst of the global fi-nancial crisis in 2008

Chinese Railway

Development Plans

Chinarsquos Mid-to-Long Term Railway Network Plan

Chinarsquos Economic Stimulus Program

By 2010 By 2020 By 2010 By 2020

Total Operational Rail Network

90000 km 120000 km 100000 km 180000 km

Passenger Dedicated High Speed Line (PDL)

7000 km 16000 km 18000 km 25000 km

In order to stimulate Chinese economy the railway construction schedules have been substantially acceler-ated in China China railway industry develops at an exceptional fast speed in the past two years with plans to take the worldrsquos leading position of high speed railway technology

72 Changes and Trends Railway operators seperated from their equipment suppliers Traditionally the infrastructure and rolling stock are owned and operated by the same company This has often been by a national railway while other countries have had private railways Since the 1980s there has been an increasing tendency to split up railway companies with separate companies owning the rolling stock from those owning the infrastructure particularly in Europe where this is required by the European Union This has allowed open access by any train operator to any portion of the European railway network One of the many big changes under way in the worldrsquos railway industry is that the once-close partnership between the big train makers and their big customers has become more adversarial Instead of designing and assembling rolling stock themselves most national railways in the world in recent years have handed over the responsibilities to big manufacturers like Siemens Alstom and Bombardier These multinationals are be-coming global designers builders and maintainers of trains modelled on the big automobile or aircraft mak-ers Besides new technology is also forcing operators and suppliers to revise their standards and ways of working The pace of change is picking up faster in the developing world than in the developed In China the big rail-way groups of CREC CRCC CSR CNR and CRSC were separated since years from the MoR which is the owner of the infrastructure and the supervisor of the national railway operator Chinese Railways As men-tioned above all the railway manufacturers are now under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council The performances of these state-owned railway groups are strictly measured by the state and competitions among them have been created as well

SwissRail Industry Association January 2011 China Railway Market Study 49 53

7 INSIGHTS FOR THE RAIL INDUSTRY

71 Impact of the Global Financial Crisis

According to the comprehensive World Rail Market Study for UNIFE the immediate fate of the rail industry depends on the world economy that is still recovering from the historic financial crisis The mature economies that have been the industryrsquos main markets are expected to have slow economies with tight public spending limits while the emerging economies are enjoying faster growth and their spendings on rail equipment are obviously rising The financial crisis did not have a real severe impact on the rail industry and the two-speed world economy is expected to have a big influence on public spending to which infrustructure investment is very much linked Such a tendency can be evidently observed in Chinarsquos Economic Stimulus Program compared with the ldquoMid-to-Long Term Railway Netwrok Planrdquo approved in 2006 and revised just before the outburst of the global fi-nancial crisis in 2008

Chinese Railway

Development Plans

Chinarsquos Mid-to-Long Term Railway Network Plan

Chinarsquos Economic Stimulus Program

By 2010 By 2020 By 2010 By 2020

Total Operational Rail Network

90000 km 120000 km 100000 km 180000 km

Passenger Dedicated High Speed Line (PDL)

7000 km 16000 km 18000 km 25000 km

In order to stimulate Chinese economy the railway construction schedules have been substantially acceler-ated in China China railway industry develops at an exceptional fast speed in the past two years with plans to take the worldrsquos leading position of high speed railway technology

72 Changes and Trends Railway operators seperated from their equipment suppliers Traditionally the infrastructure and rolling stock are owned and operated by the same company This has often been by a national railway while other countries have had private railways Since the 1980s there has been an increasing tendency to split up railway companies with separate companies owning the rolling stock from those owning the infrastructure particularly in Europe where this is required by the European Union This has allowed open access by any train operator to any portion of the European railway network One of the many big changes under way in the worldrsquos railway industry is that the once-close partnership between the big train makers and their big customers has become more adversarial Instead of designing and assembling rolling stock themselves most national railways in the world in recent years have handed over the responsibilities to big manufacturers like Siemens Alstom and Bombardier These multinationals are be-coming global designers builders and maintainers of trains modelled on the big automobile or aircraft mak-ers Besides new technology is also forcing operators and suppliers to revise their standards and ways of working The pace of change is picking up faster in the developing world than in the developed In China the big rail-way groups of CREC CRCC CSR CNR and CRSC were separated since years from the MoR which is the owner of the infrastructure and the supervisor of the national railway operator Chinese Railways As men-tioned above all the railway manufacturers are now under the direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council The performances of these state-owned railway groups are strictly measured by the state and competitions among them have been created as well

SwissRail Industry Association January 2011 China Railway Market Study 50 53

Domestic companies emerged to challenge global multinationals Eight megatrends summarized in the World Rail Market Study for UNIFE are considered to impact the rail industry within the next 10 years and almost all of them have close relevance to China especially urbaniza-tion increased mobility energy scarcity enviornmental concerns increased political support and rise of RDE (rapidly developing economies) With the growth of the RDE domestic companies have emerged to chal-lenge global multinationals Having started either by serving their domestic market or exporting low-cost items overseas they are now trading up and starting to conquer the global marketplace These challengers can leverage structural advantages in competition with established multinationals For example CSR and CNR have grown with their home market to significant sizes CSR had a turnover of around euro45 billion in 2009 Both CSR and CNR have started to compete globally selling urban and freight rolling stock abroad inlcuding Singapore and Australia At the same time Chinese construction companies under CREC and CRCC are already bidding for and delivering infrastructure projects in Asia North Africa and Latin America Chinese railway players are all state-owned and state-backed which makes them financially powerful and more and more technologically competitive They have their nation behind them with an overall country strat-egy The global multinationals find no choice but to face the sophistication and determination of Chinese rail-way industry They have to adjust their approach toward Chinese railway enterprises their customers in China market meanwhile their competitors andor their partners in the world market On top of that the indus-try universally also expects a large-scale effort by Chinese manufacturers to break into many of the worldrsquos most important markets Boosted by stimulus investments China is catching up fast to become a technology innovator

With a better intellectual property environment and with China on track to develop its own technology more

and more foreign companies are now directing their resources to suit local needs and tastes in order to sell in

China They have realized that not only should they develop the right products for a market that starts to

serve its higher end needs by itself but they should also offer these products at competitive prices and with

the right services To do so they have to count on local product development Indeed according to a recent

survey two third of European companies have set-up local RampD centers in China or are planning to do so in

the next 3 years

Under these new circumstances to participate fully in the development of China foreign companies need more and more to develop their products in China in order to be able to produce at local costs Adjusting products to the market and to the local production circumstances are the two top reasons for companies to do RampD in China If foreign companies fail to adjust to the new realities of China markets will be left to Chinese competitors already existing or yet to be born China started its latest race towards innovation about 5 years ago slowly but steadily Western companies are still ahead and have the opportunities to keep both a top position in world markets and to continue devel-oping the technologies and products of tomorrow Still they will maintain this position only if they acquire a top position in China as well To do so they have to start racing at full speed now with no hesitation and break

73 Opportunities for Swiss Rail Industry New entrants are roaring out of the sidings China has apparently entered a new era of railway development When the major rail lines of Chinas high-speed rail network are completed by 2020 ie 25rsquo000 km high speed lines with operational train speed of 350 kmh passengers can reach all provincial capitals from Bei-jing in 8 hours by train except Urumqi of Xinjiang Autonomous Region Lhasa of Tibet Autonomous Region and Haikou of Hainan Province Chinas high speed rail network will become the largest fastest and most technologically advanced high speed railway system in the world

SwissRail Industry Association January 2011 China Railway Market Study 51 53

China is also becoming an increasingly important global player in the rail sector as its railway-related exports have been rising fast in the past years Chinese train makers and rail builders have signed agreements to build HSRs in Turkey Venezuela and Argentina and they are bidding on HSR projects in the United States Russia Saudi Arabia Brazil (Satildeo Paulo to Rio de Janeiro) and Myanmar and some other countries They are competing directly with the established European and Japanese manufacturers and sometimes partner-ing with them In Saudi Arabias Haramain High Speed Rail Project Alstom partnered with China Railway Construction Corp to win the contract to build phase I of the Mecca to Medina HSR line and Siemens has joined CSR to bid on phase II China is also competing with Japan Germany South Korea Spain France and Italy to bid for Californias high-speed rail line project which would connect San Francisco and Los An-geles In November 2009 the MoR signed preliminary agreements with the United States high speed rail authority and General Electric (GE) under which China would license technology provide financing and fur-nish up to 20 percent of the parts with the remaining sourced from American suppliers and final assembly of the rolling stock will be in the United States In July 2010 $10 billion railway deals were signed with Argentina when Argentine President Cristina Fernandez de Kirchner visited Beijing Starting from 2011 China is going to build high speed railway to Singapore via Laos Thailand Malaysia It is important to realize that the same trends listed in the World Rail Market Study for UNIFE supporting the rise of RDE challengers at the same time have created and will continue to create tremendous opportunities for the rail supply industry in the developed economies Chinarsquos ambitious railway development plans over the next ten years and aggressive expansion into the world railway markets create opportunities for the rail-way enterprises home and abroad Technolog transfer from developed world does not mean China has everything they need and that there are no more difficulties and problems for the railway development in China When China announced lately to the world that they planned to develop super-high speed train of 500 kmh China need to further develop and upgrade its existing high speed technology and China certainly cannot do everything on its own China is buying and will need to buy either products or transfer technologies from outstanding enterprises in the field in order to fill in the gaps in the big systems and machines It is common knowledge that many important components mechanical and electrical equipment hardware and software that are installed in the big sys-tems and machines provided by the big brands are normally outsourced and supplied by the SMEs All these open opportunities and support growing demand for products of the rail supply industry in developed econo-mies Switzerland is well reputed for cutting-edge technologies and high quality components in the world market especially with its niche products Swiss companies are good at working on details in big machines and equipment Swiss rail industry is able to play a similar role in China as it has been playing in other markets In fact quite a few Swiss SMEs have been proceeding successfully in China railway market What is interesting

SwissRail Industry Association January 2011 China Railway Market Study 51 53

China is also becoming an increasingly important global player in the rail sector as its railway-related exports have been rising fast in the past years Chinese train makers and rail builders have signed agreements to build HSRs in Turkey Venezuela and Argentina and they are bidding on HSR projects in the United States Russia Saudi Arabia Brazil (Satildeo Paulo to Rio de Janeiro) and Myanmar and some other countries They are competing directly with the established European and Japanese manufacturers and sometimes partner-ing with them In Saudi Arabias Haramain High Speed Rail Project Alstom partnered with China Railway Construction Corp to win the contract to build phase I of the Mecca to Medina HSR line and Siemens has joined CSR to bid on phase II China is also competing with Japan Germany South Korea Spain France and Italy to bid for Californias high-speed rail line project which would connect San Francisco and Los An-geles In November 2009 the MoR signed preliminary agreements with the United States high speed rail authority and General Electric (GE) under which China would license technology provide financing and fur-nish up to 20 percent of the parts with the remaining sourced from American suppliers and final assembly of the rolling stock will be in the United States In July 2010 $10 billion railway deals were signed with Argentina when Argentine President Cristina Fernandez de Kirchner visited Beijing Starting from 2011 China is going to build high speed railway to Singapore via Laos Thailand Malaysia It is important to realize that the same trends listed in the World Rail Market Study for UNIFE supporting the rise of RDE challengers at the same time have created and will continue to create tremendous opportunities for the rail supply industry in the developed economies Chinarsquos ambitious railway development plans over the next ten years and aggressive expansion into the world railway markets create opportunities for the rail-way enterprises home and abroad Technolog transfer from developed world does not mean China has everything they need and that there are no more difficulties and problems for the railway development in China When China announced lately to the world that they planned to develop super-high speed train of 500 kmh China need to further develop and upgrade its existing high speed technology and China certainly cannot do everything on its own China is buying and will need to buy either products or transfer technologies from outstanding enterprises in the field in order to fill in the gaps in the big systems and machines It is common knowledge that many important components mechanical and electrical equipment hardware and software that are installed in the big sys-tems and machines provided by the big brands are normally outsourced and supplied by the SMEs All these open opportunities and support growing demand for products of the rail supply industry in developed econo-mies Switzerland is well reputed for cutting-edge technologies and high quality components in the world market especially with its niche products Swiss companies are good at working on details in big machines and equipment Swiss rail industry is able to play a similar role in China as it has been playing in other markets In fact quite a few Swiss SMEs have been proceeding successfully in China railway market What is interesting

SwissRail Industry Association January 2011 China Railway Market Study 52 53

to know is that without too much marketing and sales efforts some Swiss products have been sold for years in China railway market which is a similar case with other industries in other markets Opportunities are always accompanied by challenges It is never easy to enter the China market and to com-pete with both international suppliers and local ones Some foreign suppliers including Swiss companies en-tered China market together with the big players such as ABB Bombadier Alstom and Siemens with their components installed in the systems of the big brands which is an easy way to enter a market It is of course also easier to further expand their business in the market from that stage because they have better connec-tions and references Those SMEs who are not so lucky that they cannot team up with the big players should try to manifest as much as possible their successful projects in other markets promoting actively their prod-ucts to their potential Chinese customers One fact that Swiss railway suppliers have realized through doing business in China is that Swiss railway products and technologies are almost unknown in the market In order to better promote Swiss rail industry Swiss companies who are interested in China railway market and also able to explore the market should join forces and be more initiative and aggressive with their marketing and sales activities in the market instead of selling at random without clear strategies and leaving the opportunities in the market to their competitors The projected Swiss railway business delegations to the targeted markets including China is a good idea for building up the necessary image of Swiss rail industry in the markets which certainly will help the SMEs in accessing the huge potential railway market in China It is high time to promote Swiss quality products and high technologies to the railway industry in China

SwissRail Industry Association January 2011 China Railway Market Study 53 53

8 DISCLAIMER The information in this report were gathered and researched from sources believed to be reliable and are written in good faith Osec and its network partners cannot be hold liable for data which might not be com-plete accurate or up-to-date nor for data which are from internet pagessources on which Osec or its net-work partners do not have any influence The information in this report do not have a legal or juridicial charac-ter unless specifically noted

SwissRail Industry Association January 2011 China Railway Market Study 53 53

8 DISCLAIMER The information in this report were gathered and researched from sources believed to be reliable and are written in good faith Osec and its network partners cannot be hold liable for data which might not be com-plete accurate or up-to-date nor for data which are from internet pagessources on which Osec or its net-work partners do not have any influence The information in this report do not have a legal or juridicial charac-ter unless specifically noted