-Interview with Li Changjin, President of China Railway Corporation.
China Railway is the largest multi-functional comprehensive construction group in Asia. It has an outstanding development history, a long business history and an excellent brand renowned at home and abroad, and occupies a prominent leading position in international infrastructure and other business fields. As China Railway is about to be listed on the A-share market in the domestic capital market, the A-share market will add blue chips. Our reporter interviewed Li Changjin, president of China Railway Corporation.
Reporter: As the largest multi-functional comprehensive construction group in Asia, China Railway has a leading industry advantage in the world. China Railway's A-share listing has also attracted the attention of investors, who are generally full of expectations. Mr. Li, can you tell us in detail what the company's main advantages are?
Li Changjin: The advantages of China Railway are: firstly, we are the largest multi-functional comprehensive construction group in China and Asia. According to the annual ranking of total project contracting revenue, the company was the fourth and third largest construction contractor in the world in 2005 and 2006 respectively. We have a long business history and well-known corporate brands at home and abroad. The company ranked 342nd in the list of "Top 500 World Brands" published by Fortune magazine in 2006 and 2007, and 4th17th in the list of "Top 500 World Brands" published by World Brand Lab in 2007. We are one of the contractors with the widest coverage in the global construction industry. We have a series of professional qualifications for construction projects, including special qualifications for railway, highway and housing construction, first-class qualifications for municipal engineering, water conservancy and hydropower, port and coastal engineering, and a number of first-class qualifications for survey, design, consultation and foreign project contracting. The company's prominent position and market reputation in the construction industry will surely win us new contracts in the field of construction and engineering services, and help us expand our brand advantages to other related industries.
Secondly, we have enough ability to actively grasp the opportunity of rapid growth in the global infrastructure construction industry, and the company's market development prospects are broad. The sustained economic growth in the world and China and the rapid development of urbanization in China have promoted the growth of investment in infrastructure and municipal construction. We have the ability to fully grasp the market opportunities brought by the sustained economic growth of the world and China, especially the business opportunities brought by the rapid growth of the railway and highway construction market and the rapid development of the real estate development market in China.
Third, we have rich business experience at home and abroad, and have long-term good cooperative relations with domestic and foreign government departments and customers in all aspects. Over the years, China Railway has won the trust and support of the Ministry of Railways and other government regulatory authorities in the construction industry in China with its excellent performance and good reputation record. In addition, we have rich experience in cooperation with foreign governments and government agencies. The reputation and business relations established by the company among relevant institutions and customers are conducive to future business development and help us to further explore international business.
Fourth, we have a strong management team and strong professional and technical personnel. The company has a senior management team with rich knowledge, management skills and operation experience in the construction industry, as well as a group of technicians with rich professional knowledge in the industry, with efficient project execution ability and the ability to use innovative technologies and methods to complete complex and important projects. In addition, the long-term accumulation of corporate culture has also made the company have a strong cohesion.
Therefore, please rest assured that relying on the vast capital platform at home and abroad and the strong support of investors, we will definitely give play to our own advantages and consolidate and improve our leading position in the global industry.
Reporter: Does China Railway's ability to provide customers with comprehensive "one-stop" solutions make the company more competitive in participating in large and complex projects? Many engineering projects undertaken and participated by China Railway belong to large and complex projects. What is the secret for the company to win and successfully implement these large and complex projects?
Li Changjin: Yes, as the largest comprehensive construction group in China, China Railway has a wide range of business and strong service capabilities. Compared with smaller global similar enterprises, our competitive advantage is obvious. The company's infrastructure projects cover railways, highways, bridges, tunnels, municipal engineering, housing construction, water conservancy and hydropower, port and coastal engineering, etc. In addition to infrastructure construction, survey and design and consulting services, the company is also engaged in engineering equipment and parts manufacturing, real estate development, mineral resources development and finance. Therefore, we can provide customers with all-round comprehensive services at different stages of the project and provide "one-stop" solutions, so we have obvious advantages in bidding for large and complex projects.
Apart from our one-stop service capability, the main reasons why we can participate in large and complex projects are:
First of all, the company has strong technical strength. We have 5 research institutes, 3 postdoctoral workstations and 15 technical center, and are preparing to build a national engineering laboratory and a railway equipment research and development center. It has more world-leading technologies and the highest level of professional design, construction and manufacturing capabilities. Up to June 30th, 2007, it has won 72 National Invention Awards for Scientific and Technological Progress, 70 Luban Awards for Construction Projects, 64 National Excellent Engineering Awards, 25 Zhan Tianyou Civil Engineering Awards, 67 National Excellent Survey and Design Awards, 202 patent rights, 6 national construction methods, and 359 provincial and ministerial construction methods.
Secondly, the company has good technical capabilities. In terms of equipment, there are 48 shield machines, the key equipment in subway and tunnel construction, the hoisting ship "Tianyi No.11" with the highest lifting capacity in Asia, and most domestic track-laying machines, bridge erecting machines and catenary construction equipment, which are used for new railway construction and electrified railway construction respectively.
Reporter: China Railway has rich experience in overseas operations. As early as 1970s, the company participated in the aid construction project of Tanzania-Zambia Railway in Africa. What is the development of the company's overseas market at present? What is the future overseas market development and business planning?
Li Changjin: China Railway enjoys a long-standing reputation in the international construction market. In the 1970s, we independently built the Tanzania-Zambia railway project with a length of 1, 86 1km, and then gradually went overseas. Up to now, we have undertaken more than 230 overseas projects in more than 55 countries and regions, providing global customers with railway, expressway, highway, bridge, tunnel, housing construction, dredging, airport and municipal engineering projects and related services. By June 30, 2007, the company had 96 overseas business organizations and 152 projects under construction in 52 countries on five continents. China Railway enjoys a good reputation in the international construction market, especially in Africa, Southeast Asia, Pacific island countries, the Middle East and South America.
At the present stage, China government has issued a number of policies to encourage international contracting, and promised to make greater contributions to infrastructure construction in Africa, which will provide more overseas development opportunities for China contractors and promote China contractors to actively expand overseas. Therefore, we regard overseas expansion as a part of the company's development strategy to further increase the business scale of infrastructure construction business. We will continue to develop our business in Africa, the Middle East, South America and Pacific island countries, and enter the European and American markets. With good government policies, China Railway's overseas business experience and good reputation, we will focus on developing lucrative international construction projects and mineral resources projects. Of course, while actively exploring overseas business, we will certainly maintain a prudent attitude and strengthen risk control.
Reporter: How has the company's real estate development business developed in recent years? Will the company increase investment in real estate opening in the future?
Li Changjin: China Railway's real estate development business mainly includes the development, sales and management of housing and commercial housing for middle-and high-income buyers. As of September 30, 2007, China Railway had 47 projects at different stages of development, with a total area of about 3,743,643 square meters and a total construction area of about 63,08816 square meters.
China Railway mainly operates real estate development business through its wholly-owned subsidiary, China Railway Real Estate Group Co., Ltd., established in 2007 and several subsidiaries or associated companies. The goal of China Railway is to develop "China Railway Real Estate" into one of the leading real estate development brands in China. With the strength of the leading infrastructure construction industry, we plan to continue to engage in real estate development business in cities in the Pearl River Delta, Yangtze River Delta and Bohai Bay, as well as other provincial capitals. The company will definitely increase its investment in real estate, which we expect will bring us rich returns. Part of the funds raised by our A-share issuance will be invested in real estate development.
Reporter: Please tell us about the company's business development plan in the next few years.
Li Changjin: In the next few years, China Railway will seize the opportunity, accelerate its development, further become superior and stronger, strengthen its leading position in the Asian construction industry, and truly become a construction group with outstanding reputation and international competitiveness. Therefore, we are prepared to start from the following aspects:
First of all, we must continue to consolidate our leading position in the construction industry and strive to expand our market share. Increase investment in infrastructure construction, especially high-speed railways, heavy-haul railways, electrified railways and highways. In order to achieve this goal, we have made specific plans, including training our own professional technical team, improving the construction technology of high-speed railways, bridges and tunnels, constantly strengthening quality control and improving project management level, and reducing project costs. Relying on the great opportunities brought by the National Medium and Long-term Railway Planning Network and the "7-9- 18" expressway network project, we will certainly strive for more railway, highway and expressway construction contracts. Especially the beijing-shanghai railway project and Harbin-Dalian railway project, we will strive for a bigger share. In addition, we also plan to maintain our advantages in the urban rail transit and municipal engineering construction market, and at the same time increase the construction of ports, airports and environmental protection projects on this basis.
The second is to engage in large-scale complex projects and operate high-profit products. We will pay more attention to high-profit projects and products, such as using advanced tunnel boring machines to build subways and tunnels, and manufacturing high-speed railway products and construction equipment. At the same time, we will continue to focus on large-scale projects, which will not only make full use of China Railway's powerful R&D capabilities, but also enable us to provide comprehensive solutions at different stages of the project. These high-end large-scale projects have high profit margins. Relying on our own scientific and technological strength, we will make full use of various resources to develop advanced technologies, maintain high-level technical knowledge, and focus on developing related key technologies such as high-speed railways, heavy-haul railways, railway speed increase, bridges and tunnels, railway communication and signals, and railway electrification projects.
The third is to use the experience of infrastructure construction industry to expand real estate development, infrastructure investment and operation, mineral resources development and other related businesses to meet the development needs of the industry, improve profitability and diversify business risks.
Fourth, relying on government policies, the company's overseas business experience and good reputation, we will continue to explore overseas markets, focusing on the development of lucrative international construction projects, including municipal engineering projects such as railways, highways, bridges, communication and signal systems, and manufacturing projects of railway switches and other parts. Geographically, we will focus on developing markets in Africa, Southeast Asia and South America. Of course, while actively exploring overseas business, we will continue to maintain a prudent attitude and strengthen risk control. The company plans to set up a subsidiary "China Railway International" to jointly manage all overseas joint-stock company-level businesses of the company with China Overseas.
Fifth, take various measures to reduce operating costs and improve operating efficiency. We will comprehensively optimize the management system to improve operation and information flow, strengthen enterprise management and financial control, establish an effective allocation and sharing mechanism of internal resources, strengthen enterprise informatization construction through scientific and technological means, and establish a mechanism to reduce the impact of raw material price fluctuations, so as to achieve the purpose of cutting costs and improving operating efficiency and profitability.
We believe that our strategy and planning are feasible, and that in the near future, a brand-new, more powerful and world-leading China railway will be presented to investors and friends at home and abroad.