Rail becomes transport of choice for Geely Group in Chengdu

Train workers busily load dozens of containers carrying cars onto the train at the station in Chengdu. But this is no ordinary freight train.

It is the only one in China that regularly sets out to the five central Asian countries of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan, running every 10 days and taking about five to seven days to pass through them to its ultimate destination.

Hou Haijing, group vice-president of Zhejiang Geely Holdings Group Co Ltd.

Geely's SUV GX 7. The SUVs made in Chengdu go to 10 countries and regions including Azerbaijan, Belarus, Brazil, Iran, Russia, Saudi Arabia and Ukraine. Photos by Peng Chao / China Daily

"Some international railways such as this one that connect Chengdu with the rest of the world are helping us build our international business," says Hou Haijing, group vice-president of Zhejiang Geely Holdings Group Co Ltd, the largest private carmaker in China.

Hou, the director of Geely in Chengdu, also known as Chengdu Gaoyuan Automobiles Industrial Co Ltd, says it has been a huge beneficiary as the railways of western China have developed.

"A railway system for a city is as critical as arteries and veins are to the human body," Hou says.

"A complete railway system is essential for a city to grow properly. The rapidly growing railways of western China have added greatly to the region's growth."

Geely's Chengdu plant covering 150,000 square meters was built at a cost of 3 billion yuan ($480 million; 424 million euros), and opened in 2011. It employs 1,500 people.

The local company is critical to the Geely group's success, Hou says.

"It is Geely's only factory that focuses on producing SUVs. All of our SUVs are made here. We started to use the Central Asian international line when it opened last year, and as a result our exports from Chengdu have risen almost 15 percent compared with 2013."

The SUVs made in Chengdu go to 10 countries and regions including Azerbaijan, Belarus, Brazil, Iran, Russia, Saudi Arabia and Ukraine.

"We plan to make full use of the international railways in Chengdu and make made-in-China vehicles world famous," Hou says.

"We don't export our cars to Europe and the United States now, but we plan to soon."

The Chengdu factory produced about 65,000 cars last year, 7.64 percent more than in 2013, and it hopes to produce about 80,000 this year, he says.

"We sold 10,000 SUVs in January alone."

Geely gained about less than one percent of the global SUV market in terms of sales.

"The market needs further consolidation," Hou says. "The Chengdu operations are growing, and our SUVs will be among the top 10 best sellers in China this year."

The company hopes more international railways such as the Central Asian one will open in the future.

"Given the absence of international railways, we now have to combine water or road transport with railways to export our products."

If it needs to urgently ship high-value added components, the company uses air freight, he says.

"That's very expensive. In addition, transporting by road and sea is a lot slower than if you do it by rail. For us, rail is the most efficient way of shipping, particularly when it comes to exports.

"SUVs are generally bigger than other cars, and you usually need a whole container to ship just one of them. We reckon there should be discounts for transporting them by train."

Hou, 42, born in a small village of Jingjiang city, Jiangsu province, became an engineer for General Motors for 1998 after studying at Shanghai Tongji University.

"I have seen the Chinese car industry grow, and that includes seeing the production of the first cars GM made in China," he says.

"I hope I can do my bit to help Chinese cars make it on the global stage."

Hou joined Geely Group in 2011 and became one of the group's vice-presidents. He was posted to Chengdu in 2012 and put in charge of the group's business development in western China.

To his mind, the dramatic changes in Chengdu over the past few years mirror the achievements China has gained since the nation's reform and opening-up began in 1978.

"When I first came to Chengdu in 2000 for the first time it was laid back compared with cities like Shanghai," Hou says. "When I got back here 12 years later the changes that had taken place amazed me.

"I don't think there is much difference between Chengdu and other big cities like Beijing and Shanghai now."

Western China has distinct advantages over eastern China such as lower labor costs and a lower cost of living, Hou says.

"Not only that, but natural resources such as land, water and electricity are cheaper."

The car industry has had tremendous local government support, he says.

"Chengdu's industrial chains here are well established and complete, and it is easy for the company to buy manufacturing components and develop new products."

The development of railways in western China means more opportunities for the region, he says.

"It creates jobs and helps attract foreign investment. It also improves people's lives. I know that personally, being a user of the high-speed train between Chengdu and Chongqing."

Of Geely's employees in Chengdu, he says: "Most are local, and they tend to stay here for a long time because the city is such a pleasant place to live in."

Geely has plans to expand its Chengdu operations, he says.

"We want to build another factory here, to develop more production lines and new products."

Geely has about 1,500 patents, not including those belonging to Volvo, which the Geely Group acquired in 2010. The group says it spends 10 percent of its revenue on research and development.

"That figure is expected to grow," Hou says. "We need to develop our research and development to compete internationally."

Pointing at a new SUV model, Hou says: "I am confident it will take no more than 10 years for the Chinese car industry to catch up with and even surpass their foreign counterparts in both sales and brand recognition. There is no doubt Geely will be one of them."

Contact the writers through huhaiyan@chinadaily.com.cn

(China Daily European Weekly 02/13/2015 page8)