China moves up the ex­ports value chain

An ADB re­port shows that the coun­try has over­taken Ja­pan, South Korea, Malaysia

China Daily (Canada) - - LIFE - By GAO YUAN, ZHONG­NAN and LYUCHANG

About 20 kilo­me­ters south of Kuala Lumpur, on the plat­forms of Sri Petaling light rail sta­tion, pas­sen­gers ea­gerly wait for China-made rakes that can carry them to the heart of theMalaysian cap­i­tal.

A bunch of state-of-the-art six-car rakes made by China’s CRRC Zhuzhou Elec­tric Lo­co­mo­tive Co have been op­er­at­ing on the line since Oc­to­ber 2015. Hy­draulic brakes pro­vide a quicker and safer stop mech­a­nism to the rakes, which are China’s first high­tech rail­way ex­ports to amember of the As­so­ci­a­tion of South­east AsianNa­tions.

The light rail sys­tem sym­bol­izes China’s evo­lu­tion on the ex­ports value chain, a De­cem­ber 2015 re­port of the Asian De­vel­op­ment Bank shows.

Ex­ports of high-tech prod­ucts arenowa key driver of the Chi­nese econ­omy, the ADB said in the re­port.

By 2014, China had be­come the largest ex­porter of high­tech prod­ucts in Asia with a 43.7 per­cent share, over­tak­ing Ja­pan, which had a 30 per­cent share nearly a decade ago. They are fol­lowed by South Korea andMalaysia.

About one-third of ex­ports from China were of high-tech prod­ucts, ac­cord­ing to the ADB re­port.

Chi­nese tech­nolo­gies re­lated to rail­ways, nu­clear power, ship­build­ing and telecom­mu­ni­ca­tions are now pop­u­lar in over­seas mar­kets Here’s a run­down on the China’s bright­en­ing man­u­fac­tur­ing prow­ess:

Tele­com equip­ment ex­ports to Asia drive Chi­nese man­u­fac­tur­ers’ prof­its th­ese days.

Huawei Tech­nolo­gies Co Ltd, the world’s big­gest tele­com equip­ment maker, is help­ing phone com­pa­nies in Asia to build net­works. It also sells smart­phones and smart­watches in de­vel­oped mar­kets, aim­ing to chal­lenge Ap­ple Inc and Sam­sung Elec­tron­ics Co Ltd in the con­sumer tele­com mar­ket.

Li Jin’ge, pres­i­dent of Huawei Asia Pa­cific, said tele­com tech­nolo­gies, par­tic­u­larly broad­band, cloud com­put­ing, and big data, are al­ready driv­ing the dig­i­ti­za­tion of all in­dus­tries, which is making Asian economies vi­brant.

“Th­ese tech­nolo­gies are also pro­mot­ing im­prove­ments in plan­ning and con­struc­tion, man­age­ment and oper­a­tions, liv­able en­vi­ron­ments, giv­ing a hu­man touch to cities around the world.”

In Cen­tral Asia, Huawei is pro­vid­ing prod­ucts and ser­vices to a num­ber of oil and gas com­pa­nies, in­clud­ing Beineu Bo­zoi Shymkent Gas Pipe­line in Kaza­khstan, Asia Trans Gas in Uzbek­istan and Amu Darya in Turk­menistan. The area is the world’s third-largest oil­field and plays an im­por­tant role in the global oil and gas in­dus­try.

The Chi­nese com­pany said its “dig­i­tal pipe­line” tech­nol­ogy, which im­proves ef­fi­ciency, re­duces en­ergy consumption, and en­hances op­er­a­tional safety of oil pipes by re­search­ing op­er­a­tional data, has been ap­plied to a to­tal of 4,623 kilo­me­ters of gas pipe­lines in Cen­tral Asia.

Huawei’s key projects in­clude the Kaza­khstan-China nat­u­ral gas pipe­line, called the AB line, which is the world’s first and long­est dig­i­tal nat­u­ral gas pipe­line.

MikeHan, pres­i­dent ofHuawei’s Cen­tral Asia and Cau­ca­sia En­ter­prise Busi­ness, said: “Since we es­tab­lished our busi­ness in Cen­tral Asia in 1997, Huawei has been pro­vid­ing com­pet­i­tive com­mu­ni­ca­tion prod­ucts and ser­vices to tele­com car­ri­ers, en­ter­prises, and con­sumers by bring­ing cut­ting-edge com­mu­ni­ca­tions tech­nolo­gies and prod­ucts.”

In the con­sumer tele­com mar­ket, Huawei sells smart­phones in emerg­ing Asian mar­kets, but it has been out­paced by some of the smaller ven­dors.

For in­stance, Xiaomi Corp, a Beijing-based smart­phone maker, sells its own smart­phones in In­dia, In­done­sia and other Asian coun­tries via lo­cal shop­ping web­sites.

In May 2015, Xiaomi part­nered with Tai­wan-based con­tract man­u­fac­turer Fox­conn Tech­nol­ogy Group to open its first over­seas smart­phone man­u­fac­tur­ing plant near the southern Sri City in Andhra Pradesh state.

It is the five-year-old com­pany’s first over­seas man­u­fac­tur­ing site.

Len­ovo Group Ltd, the big­gest per­sonal com­puter maker, quickly fol­lowed suit. It has started to as­sem­ble de­vices in the east­ern port city of Chennai. Mean­time, Len­ovo is aim­ing to let the newly ac­quired Mo­torola Mo­bil­ity unit to tap into the high-end smart­phone mar­kets such as Sin­ga­pore, Ja­pan and South Korea.

Fiber­home Tech­nol­ogy Group, a net­work equip­ment maker that de­vel­ops met­ro­pol­i­tan broad­band In­ter­net Pro­to­col com­mu­ni­ca­tions tech­nolo­gies, said the ex­pand­ing de­mand for op­ti­cal fiber ca­bles in over­seasmar­ket, pro­vides a good op­por­tu­nity for theWuhan-based com­pany.

Lyu Weip­ing, vice-pres­i­dent of Fiber­home, said its tech­nol­ogy ad­van­tage is help­ing the com­pany edge those mar­kets have huge po­ten­tial for growth with in­creas­ing de­mand for in­fra­struc­ture con­struc­tion,” said Zeng Guang’an, pres­i­dent of Li­uGong.

The Chi­nese heavy ma­chin­ery mar­ket, which used to be dom­i­nated by for­eign play­ers, had started to pick up steam around 2000 and saw its golden era af­ter 2008 when China rolled out a 4-tril­lion-yuan stim­u­lus pack­age.

But the whole in­dus­try has been shrink­ing as a re­sult of over­sup­ply and a slow­ing econ­omy.

Zeng said the only way out is to make in­roads into over­seas mar­kets, es­pe­cially those along the Belt and Road Ini­tia­tive, which are likely to give a boost to the slug­gish in­dus­try.

He was re­fer­ring to the blueprint un­veiled by Pres­i­dent Xi Jin­ping in 2013.

The Belt and Road Ini­tia­tive is a trade-and-in­fra­struc­ture net­work that in­cludes the Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road.

The net­work con­nects Asia, Europe and Africa, and passes through more than 60 coun­tries and re­gions with a pop­u­la­tion of about 4.4 bil­lion.

Li­uGong set up its re­gional head­quar­ters in Sin­ga­pore to man­age a dis­tri­bu­tion net­work, sup­port for lo­cal dis­trib­u­tors and af­ter-sales ser­vices for ma­jor projects.

Last year, 178 ex­ca­va­tors and cranes from Li­uGong worth $14 mil­lion were ex­ported to Uzbek­istan and Cam­bo­dia, the com­pany said.

While Li­uGong is plan­ning ahead to grab a share in the heavy equip­ment mar­ket of South­east Asia, some oth­ers are switch­ing their fo­cus to the farming in­dus­try by rolling out trac­tors in­stead of ce­ment mix­ers to bag for­eign or­ders.

For in­stance, Zoom­lionHeavy In­dus­try Science and Tech­nol­ogy De­vel­op­ment Co said it is ex­pand­ing its over­seas pres­ence in the farm­ing­ma­chin­ery in­dus­try, tar­get­ing South­east Asian and Cen­tral Asian coun­tries such as Cam­bo­dia, Viet­nam, Pak­istanandKaza­khstan.

The cur­rent over­seas oper­a­tions, how­ever, ac­count for a small share of the com­pany’s over­all busi­ness, Zhang Jian­jun, a se­nior ex­ec­u­tive at the com­pany, said.

But the fig­ure will grow to about 40 per­cent by 2020, he said.

Zhang said Asian coun­tries’ de­mand­for­farm­ing­ma­chi­ne­sis surg­ing due to rapid mod­ern­iza­tion in re­cent years.

Chi­nese com­pa­nies are com­pet­i­tive in terms of ad­vanced tech­nol­ogy, re­li­a­bil­ity and lower prices, he said. “We be­lieve the agri­cul­tural equip­ment mar­ket will be a ma­jor force in driv­ing our­com­pany’s growth.”

As the global ship­build­ing in­dus­try was hit by de­clin­ing de­mand in re­cent years, Shan­dong-basedCIMCRaf­fles Off­shore Ltd shifted its sights to ex­port of off­shore oil rigs and engi­neer­ing ves­sels.

The sub­sidiary of China

Miao Qian­jun, sec­re­tary-gen­eral of the Global Nav­i­ga­tion Satel­lite Sys­tem and Lo­ca­tion­based Ser­vices As­so­ci­a­tion of China, said an­nual turnover of China’s satel­lite nav­i­ga­tion mar­ket will reach 400 bil­lion yuan ($61 bil­lion) by 2020.

Ac­cord­ing to the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy, Bei­dou will be able to pro­vide po­si­tion­ing ac­cu­racy of less than 10 me­ters and a tim­ing ac­cu­racy of 20 nanosec­onds — a strong chal­lenger to the Global Po­si­tion­ing Sys­tem or GPS de­vel­oped In­ter­na­tion­alMarine Con­tain­ers (Group) Ltd, the coun­try’s trans­porta­tion equip­ment pro­ducer, reg­is­tered $1.8 bil­lion in sales of off­shore engi­neer­ing prod­ucts from in­ter­na­tional mar­kets in 2014. En­ergy com­pa­nies from Malaysia, Nor­way and Rus­sia were its main clients.

Yu Ya, pres­i­dent of CIMC Raf­fles, said Chi­nese ship­yards should look at high-tech ar­eas to keep growth as lowend mar­kets yield no prof­its for them.

“De­vel­op­ing mar­itime engi­neer­ing ves­sels and equip­men­tand rac­ing against South Korean and Ja­panese com­peti­tors will be key to Chi­nese ship­yards,” Yu said.

Sta­tis­tics from the China As­so­ci­a­tion of the Na­tional Ship­build­ing In­dus­try show Chi­nese ship­yards re­ceived or­ders for new ves­sels with a col­lec­tive ca­pac­ity of 11.19 mil­lion dead weight tons in the first half of 2015, ac­count­ing for 27.6 per­cent global mar­ket share.

CRRC Zhuzhou Elec­tric Lo­co­mo­tive, maker of light rail rakes op­er­at­ing in Malaysia, built a man­u­fac­tur­ing and main­te­nance plant in the state of Perak in that coun­try.

It be­gan oper­a­tions in July 2015. The plant makes trains for the en­tireASEANre­gion. It has an­nual pro­duc­tion ca­pac­ity of 100 rakes, in­clud­ing lo­co­mo­tives and light rail cars.

Zhou Qinghe, pres­i­dent of CRRC ZELC, said as the Chi­nese rail­way net­work ex­pands, it is time for ex­port­ing tech­nol­ogy, ex­per­tise and ser­vices.

“Be­cause most coun­tries in South­east Asia have just kicked off con­struc­tion of newrail­way lines, the de­mand for tech­no­log­i­cal sup­port from China is very high,” said Zhou. “We can also share our ex­pe­ri­ence in daily oper­a­tions, main­te­nance and staff train­ing.”

CRRC ZELC, a sub­sidiary of China Rail­way Rolling Stock Corp, the largest train man­u­fac­turer in the coun­try, has bagged 8 bil­lion yuan worth of deals in five rail equip­ment and ser­vice projects in Malaysia, in­clud­ing a 200-kilo­me­ter high-speed rail line be­tween Kuala Lumpur and the north­ern city of Ipoh.

The Chi­nese com­pany now owns three sub­sidiaries in Malaysia. Around 90 per­cent of its employees are lo­cals. Col­lec­tively, the sub­sidiaries make up the big­gest rail trans­porta­tion equip­ment provider in­Malaysia, ac­count­ing for 85 per­cent mar­ket share.

Luo Chongfu, CRRC ZELC’s vice-gen­eral man­ager, said even though ex­port of trains is a prof­itable busi­ness, the com­pany is try­ing to reach out to its arms for main­te­nance ser­vices, to en­sure long-term gains.

China’s Belt and Road Ini­tia­tive has been fu­el­ing the sales.”

Lan Lan in Beijing con­trib­uted to this story.

Con­tact the writ­ers at gaoyuan@chi­nadaily.com.cn, zhong­nan@chi­nadaily.com and lvchang@ chi­nadaily.com.cn. by the United States.

“Bei­dou and GPS will be fight­ing each other in the next five to 10 years,” Du said. “The GPS dom­i­nates the global mar­ket, but Bei­dou has been quickly ex­pand­ing in re­cent years.”

Op­tics Val­ley Bei­dou said it will try to bring down the price of its prod­ucts and de­velop more de­vices for end-users this year.

Con­tact the writ­ers at gaoyuan@chi­nadaily.com. cn and liukun@chi­nadaily. com.cn

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