China Daily Global Edition (USA)
CRRC splits assets to boost efficiency
China Railway Rolling Stock Corp, the Chinese manufacturer of locomotives and rolling stock, has split its struggling freight train manufacturing business into two units to reduce competition and eliminate excess capacity, as part of a corporate restructuring.
The Beijing-headquartered CRRC said on Monday that the new units will be created under the aegis of Heilongjiang-based CRRC Qiqihar Co and Hubei-based CRRC Yangtze Co, two of its strongest freight train producers. They
US fast food giant McDonald’s plans to open more than one restaurant every day in China over the next five years to attain its goal of having 4,500 restaurants in the country by 2022, according to a top official.
The restaurant chain, which has about 2,500 outlets in the country, will become more agile and flexible to fulfill the growth potential that exists in smaller cities on the mainland, said Phyllis Cheung, CEO of McDonald’s China Co Ltd.
Cheung’s comments came on Tuesday at the McBanquet, an annual event that showcases the company’s innovation in products and services and the steps taken to ensure food safety.
Earlier in the year, the US chain agreed to sell most of its mainland and Hong Kong business to CITIC and Carlyle will also manage eight small CRRC subsidiaries making cargo trains.
Under the plan, CRRC Qiqihar will be managing companies including CRRC Shenyang Co and CRRC Shijiazhuang Co. CRRC Yangtze will be responsible for the operation of CRRC Meishan Co and CRRC Taiyuan Co in the future.
The two groups will have a combined annual capacity of producing 100,000 rail cargo vehicles. CRRC currently controls about 80 percent of the freight-train market in China in terms of orders.
The overhaul came after CRRC saw a slump in freightcar A pedestrian for up to $2.1 billion. The deal, which saw CITIC take the majority stake (52 percent) in McDonald’s China operations, has given it more freedom and resources to reach out to Chinese consumers.
“In the past when we had to invest or reinvest in China, we had a ceiling for numbers. Now we can move in a phased manner and move faster than any other region in the world, such as in the field of mobile payments,” she said.
More touchscreens, table services and delivery services will be available in the restaurants across China, as “fast” and “convenience” are redefined. By the end of 2018, some 90 percent of existing 2,500 stores will become renovated into “restaurants 2.0 version” with digital devices facilitating mobile ordering, payment, and service ratings sales, reflecting weaker demand for railway cargo transportation both at home and in overseas markets.
“The first task for these two new groups would be cutting overcapacity and overlapping services, putting resources into new products such as heavy load, special railway vehicles and railway vehicle brakes to diversify product categories,” said Zhao Jian, a professor of rail transportation at Beijing Jiaotong University.
Affected by lower coal and other commodity prices, the number of cargo trains ordered by China Railway Corp, the State railroad opera- and feedback.
“Consumers need more than just a good location and fast food. They want outstanding experiences across all channels, be it eating at the restaurant or in delivery services,” she said.
Consumers in lower-tier Chinese cities are now willing to spend in a Western style fast food chain and the lower rental and labor costs ensures good profit margins for operators, according to data from consultancy firm McKinsey.
“We are also open to more collaborations and partnership opportunities, as long as there are shared common interests. Currently most of the restaurants are rented, but we shall not rule out the possibility of buying land and developing our properties in lower-tier cities for drivethru restaurants,” she said. tor, declined from 40,000 units in 2012 to 6,000 units in 2016, according to CRRC data.
CRRC’s sales revenue dropped 5.85 percent year-onyear to 88.72 billion yuan ($13.37 billion) in the first half of 2017, partly affected by its declining freight train business.
CRRC’s rail vehicle-making subsidiaries received few or even no orders last year. Nine of the 10 companies reported net losses in 2016, including CRRC Qiqihar and CRRC Yangtze.
CRRC was created in June 2015 through the combination of the country’s two major train manufacturers — CNR and CSR, as the central government pushed for consolidation of State-owned enterprises.
CRRC Qiqihar and CRRC Yangtze were previously the biggest cargo vehicle subsidiaries of CNR and CSR by production volume. Both companies have annual capacity to produce 15,000 freight trains and repair more than 10,000 cargo cars a year.
Feng Hao, a rail transportation researcher at the National Development and Reform Commission, China’s top economic planner, said even though CRRC is dominating China’s market for high-speed trains and regular passenger trains, its freight train business has been challenged by other domestic players for many years.
Eager to seize more market share, other domestic companies such as FIRMACO Baotou Beifang Chuangye Co and Jinxi Axle Co were all actively participating in the open tenders held by China Railway Construction Investment Group for 156,000 units of freight trains last October.
FIRMACO Baotou Beifang Chuangye Co also gained orders for 750 freight train units from CRC, worth about 280 million yuan, last December.
passes an advertisement for McDonald’s in Zhengzhou, capital of Henan province. CRRC’s sales revenue in H1