Railmaker banks on innovation to sustain earnings growth

China Railway Rolling Stock Corp will deepen State capital management reform, bolster the role of its industrial investment and financial holding companies, and utilize innovation to boost its earning strength in the years ahead.

The company is one of the country's leading railway vehicle and equipment manufacturers and exporters.

CRRC is one of 10 centrally-administered State-owned enterprises selected by the State-owned Assets Supervision and Administration Commission of the State Council to build world-class companies by the end of 2018. The group has made steady progress in mixed-ownership reform, helping to pare its excess production capacity.

Xu Zongxiang, the executive director of CRRC's board, said that since China's economy has shifted from high-speed growth to high-quality development, it has brought many opportunities for cooperation between domestic and foreign companies in China's economic transformation and upgrading, international market development, reform and development of China's SOEs.

The Beijing-headquartered group owned six listed companies such as Guizhou-based South Huiton Co Ltd and Hunan-based Zhuzhou CRRC Times Electric Co. Those firms are listed on stock exchanges in the Chinese mainland and in Hong Kong by 2018.

"To reach these goals, we have already strengthened supervision of State assets, and introduced a number of ownership reform measures to engage in and form a joint force, as well as continuously promote the professional integration of SOEs," he said.

In addition to establishing 83 overseas subsidiaries and 15 innovation centers globally, Xu added CRRC will push for information, talent and a technology sharing mechanism between CRRC's subsidiaries and efficient coordination between its industrial chain and supply chain.

Supported by 46 wholly-owned and majority-owned subsidiaries and over 180,000 employees, CRRC has exported and provided various types of trains and services to more than 100 countries and regions. It has also built a strong market presence in economies participating in the Belt and Road Initiative.

A statement by CRRC said one of its subsidiaries-CRRC Datong Co Ltd-tested a permanent magnet direct drive passenger electric locomotive in Shanxi province last month. It successfully completed more than 10 tests such as static braking performance by the permanent magnet direct drive passenger electric locomotive.

The permanent magnet direct drive electric locomotive is a new breakthrough in the field of AC electric locomotives made by China after the "fast passenger electric locomotive" and the "heavy-duty electric locomotive."

CRRC said the overall efficiency of the locomotive will be increased by more than 3 percent, saving electric energy of 200 kWh.

Permanent magnet drive technology is recognized as the next generation in the industry. This is the first time that permanent magnet direct drive technology has been applied in high-power AC drive electric locomotives, said Feng Hao, a researcher at the Institute of Comprehensive Transportation at the National Development and Reform Commission.

Weng Jieming, vice-chairman of the SASAC, said the government will vigorously adjust central SOEs' administrative and operational structure as part of its next step, speed up the transformation and upgrading of the sector, and promote the high quality of enterprise development, especially in the manufacturing sector.

Non-State capital has been introduced to two-thirds of the central SOEs and more than half of the State capital was in listed companies, said Weng.

A total of 91 listed companies controlled by 45 central SOEs have adopted an equity incentive scheme, as more flexible and efficient market operation mechanisms are being established, Weng added.

Over the long run, China will focus on key areas to enable leading companies and strategic emerging industries to deploy financial resources and manpower to compete with their foreign rivals in various business fields, said Gao Minghua, director of the Research Center for Corporate Governance and Enterprise Development at Beijing Normal University.

The combined profits of central SOEs rose 6.9 percent year-on-year to 943.19 billion yuan ($133.35 billion) in the first eight months of the year. The total revenue of central SOEs reached 19.4 trillion yuan in the same period, up by 5.4 percent from year-ago levels, data from the SASAC showed.