INNOVATION THROUGH UNDERSTANDING OF TRANSFERRED

TECHNOLOGY IN CHINA

Lim Chen Pin Kenneth

WHAT DOES THIS MEAN?

Technology leaders

Technology transfer Understanding

the technology

Innovation

exploiting imported know-how

compete

THE PROCESS

WHY IS CHINA ABLE TO DO THIS?

GOVERNMENT’S SUPPORT AND

NATION PLAN

China’s high speed railwayhttps://www.youtube.com/watch?v=_j2yT5SIaDQ

WHAT IS A HIGH SPEED RAIL?

Rail transport that operates faster than traditional rail and runs on dedicated tracks combined with

specialised locomotives

1. JOINT VENTURE REQUIREMENT

FOREIGN TECHNOLOGY TRANSFER

• Joint venture with local companies

• conform to China’s standards and assemble units locally

• ability to self develop next generation of trains without their partner’s involvement

RAPID DEVELOPMENT• around 200 sets made in China in just 2 years

• By September 2010, trains are able to travel at 200 to 250 km/h for 2,876 km

2. RETURNS OUTWEIGH RISKS

HISTORY OF CHINA’S HSR• World’s longest network of

16,000km track length

• introduced on April 18, 2007

• 2.49 million ridership in 2014

KAWASAKI AND CSR ISSUE• ended cooperation in 2008 after 2 years into Joint

venture

• ability to build models without external assistance

• case of over-reaction as contracts are signed between Japan and China for the venture

MULTI PROJECTS AWARDED TO JV

• 2005 - Bidding for 350km/h trains by Siemens and CNR TangShan

• 2007 - 70 sets to increase transport capacity

• 2008 - 400 new generation trains from Bombardier and Siemens

• 2010 - announcement of “super speed” railway R&D

3. GOVERNMENT’S SUPPORT AND FUNDING

INVESTMENT FUNDING• $22.7 billion in 2004

• $26.2 billion in 2006 and 2007.

• $49.4 billion in 2008

• $88 billion in 2009.

• $300 billion planned expenditure to build a 25,000 km HSR network by 2020

SIGNIFICANT COMMITMENT RISK

• From 2008 to 2010, the debt-to-asset ratio increased year on year.

• In 2011, the total debt of the MOR is ¥2.09 trillion, which is ~5% of China’s GDP

• Wen Jiabao gave vote of confidence to the industry in late 2012

CHINA RAILWAY SPEED UP CAMPAIGN ( )

No. Year ≥ 120 km/h ≥ 160 km/h1st 1997 1,398 7522nd 1998 6,449 1,1043rd 2000 9,581 1,1044th 2001 13,166 1,1045th 2004 16,500 7,7006th 2007 22,000 14,000

4. RAPID ESTABLISHMENT AS GLOBAL MARKET PLAYER

CONCENTRATED RESOURCES• Merger of country’s top train manufacturers, CSR and

CNR into China Railway Rolling Stock Group

• exporting technology to countries like Mexico, Thailand, United Kingdom, India, Russia and Turkey

• Advantage of the combined rail and train industry capabilities for an all-in-one integrated project

INNOVATION THROUGH UNDERSTANDING OF TRANSFERRED TECHNOLOGY IN CHINA

1. JOINT VENTURE REQUIREMENT

2. RETURNS OUTWEIGH RISKS

3. GOVERNMENT’S SUPPORT AND FUNDING

4. RAPID ESTABLISHMENT AS GLOBAL MARKET PLAYER

MISC

OVERVIEW

• History of China’s High Speed Railway (HSR) dream

• Innovation and initiatives that made HSR successful in China

• China’s from zero to competitor story

• Challenges faced and the future of HSR

WHEELS VS MAGLEV• debate ended in 2004 with

the Mid-to-Long Term Railway Development Plan

• Lower cost

• no proprietary technology

• safety consideration

OPERATORS

CHINA RAILWAY CORPORATION