Full steam ahead

Local touch: Zhang Jianwei (front left) is dubbed Bombardier’s secret weapon in China

Zhang Jianwei will this year celebrate his second decade with the Canadian firm Bombardier. Since 1999 the graduate of Tianjin University has run its China operation with a workaholic zeal. By his own admission he lives a life without weekends or holidays, thinking nothing of making phone calls to North America in the middle of the night.

We first profiled Zhang back in May 2009 (see WiC17), during a period when China was in the midst of a railway boom that boosted Bombardier’s bullet train sales. His main fear back then was that his business had peaked. He told Southern People Weekly he likened this worry to watching the flowers grow in his Beijing garden: “Like them, it becomes difficult to reach higher when you have arrived at a certain height.”

As it happened, this turned out to be something of a premonition. Two years later a tragic train crash occurred in Wenzhou, killing 35 passengers. Involved in this 2011 incident was a high-speed train made by Bombardier and its local joint venture partner CSR. This led to the suspension of fresh orders for the CRH380D train.

However, last month Zhang told Reuters that his bullet train division was now ready to resume its growth path. He said he expected the CRH380D to receive its new safety certificate any day – having completed 600,000km of test operations. This will enable Bombardier to deliver 80 of the trains (first ordered in 2009) worth an estimated $2 billion. He also hinted to Reuters that after certification sales would likely surge: “Frankly speaking, I cannot say too much, but I’ve already got a [new] order.”

The past few years have not been easy for those in China’s railway industry. In the wake of the Wenzhou crash it also emerged that rail minister Liu Zhijun was guilty of extensive corruption. He and various underlings were jailed (see WiC202), while the once omnipotent railway ministry was reformed.

Then again, as Zhang told Canadian magazine Maclean’s, the turmoil has vindicated his approach to winning business. Born to an ordinary family, Zhang’s rise had less to do with high-level connections, it says, than dogged persistence. An energetic salesman, he refuses to use middlemen to win contracts. As a result, Bombardier has sidestepped the corruption scandal entirely, points out Maclean’s. In a statement that smacks of a clear conscience, Zhang said of the graft investigations: “You see nothing about Bombardier – zero,” adding that the company won its orders because of its superior technology and attentiveness to its customers.

But as Maclean’s also points out, doing business in China’s rail sector is becoming more complicated. “So complex and cutthroat is China’s rail business that firms frequently become friends and enemies at the same time. CSR is Bombardier’s partner and a major competitor. One of CSR’s affiliates has partnered with the Japanese firm Kawasaki, a Bombardier nemesis,” it comments.

The competitive landscape is getting tougher too thanks to the government’s plan to merge the country’s two dominant trainmakers, CSR and CNR (see WiC259). Bombardier has a joint venture with the latter too, in this case to make subway trains. Zhang’s fear must be that once the two are merged, he may find he has less leverage in dealing with the new giant.

Tencent Finance has been conjuring up the ‘friends and enemies’ theme too. It recently reported that Bombardier is now among the favourites to win the contract to supply high-speed trains in Mexico, after a Chinese consortium including CSR saw its winning bid cancelled late last year (amid claims its local partner had behaved corruptly). If Bombardier does win, that may grate with CSR.

However, as online newspaper Jiemian notes, Bombardier has been seeking to diversify its relationships in China. In February it struck a deal with the private sector rail firm New United Group (NUG) to make signal systems, with both partners holding 50%. Bombardier has indicated that the move is designed to take advantage of the growth in subway construction across China’s urban areas. “The new joint venture is one of the strategies for Bombardier to ensure continued success in this huge yet highly competitive Chinese market,” says Zhang.

Changzhou-based NUG was founded in 2002 by entrepreneur Zhou Licheng, who is also a vice-chairman of the China Rail Transportation Association and a member of the city’s legislative body. NUG provided the air-conditioning units for China’s first bullet train in 2008. It also has close links with another major rail industry player in Changzhou, KTK Group (Zhou Licheng is the son-in-law of KTK’s boss).

The Sino-Canadian partnership may be designed to take advantage of Beijing’s desire to rebalance the economy away from the state sector. Indeed, while the merger of CSR-CNR will create a state behemoth (the purpose of which is mainly to stop one undercutting the other on price in foreign markets), it may create an opportunity in the domestic market for overseas and privately-owned players. How so? Well, as a means of diluting CSR-CNR’s influence, reformers may wish to see preference given to bids from such joint ventures.

According to Jiemian, the NUG-Bombardier alliance could be competitive: “Bombardier will bring its own public transportation and construction experience into China, and NUG will provide its extensive experience in the Chinese market, as well as its relationship with the local government.”

Nor is it the first time the pair have worked together. Zhang formed a JV with the same Chinese party in 2003 named BCP Propulsion. This specialised in rail traction systems and according to local TV reports in Wujin, it was involved in several subway projects.

Now Zhang will add pitching for subway signalling contracts to his workaholic schedule.

Of course, he’ll still be trying to sell trains too (as well as Bombardier’s other major product, aircraft). For some executives this wide-ranging workload would be too much. But as the magazine Maclean’s observes in Zhang’s case it helps that his “only vice, it appears, is an appetite for very long days”.

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