April 22-29, the Gothenburg Executive MBA 2016-2018 class experienced executive education, business and culture in China first-hand, during a residency shared between the Chinese cities Hangzhou and Shanghai. Two of our participants, Jens Björkman, Head of Ferrous Trade at Stena Metal International AB and Johan Burtus, CEO at Kaifa AB, share their impressions from their trip to China. Here’s Johan Burtus’ blog post:
Anyone who occasionally or on regular basis travel by train in Sweden – or elsewhere in Europe – may get frustrated by lack of comfort, delays, worn down train cars or train stations offering only a limited selection of food and beverages. Yet, most of us understand the role and importance of a well-functioning railway network, both for goods and people transport. Infrastructure, communication and transportation is a vital part of our supply chain and thus a parameter that to a various degree enables or disables growth. In this context, I think many western countries, municipalities and major infrastructure players should take a closer look at the Chinese railway network. Doubtless, there are things we can learn from how the size and expansion speed of the Chinese railway network may facilitate financial wealth.
In 2015 China had a railway network exceeding 121.000 kilometres – the second biggest in the world. This includes some 19.000 kilometres of high speed rails (HSR), which constitutes the longest HSR network in the world. In 2015 alone, more than 9.000 km was added, targeting to reach the long-term vision to have more than 272.000 km by 2050 (source: en.wikipedia.org, 2017).
In comparison with domestic air travel, having frequent delays due to weather conditions or air space restrictions, train travels in China is mostly a reliable and convenient form of transportation. The distance from Beijing to Shanghai is around 1.300 kilometres and the fastest HSR connection takes around five hours. Ticket prices on this connection vary from 25 to around 200 USD depending on travel class.
An absolute majority of the train network is operated by the state, which may impact ticket prices as the state-owned body may set them freely – or implement subvention – to promote or restrict traffic. One could also argue whether this is causing competitive friction with the unregulated air travelling network in China. One benefit however of having only one operator is the ease of ordering and picking up tickets. Through CRH websites (China Railway Corporation) or travel agents such as Ctrip ordering systems are available in both Chinese mandarin and English. Foreigners can easily order tickets and pay online using the Ctrip web or smartphone app. Tickets may be fetched at any train or subway station.
Many Chinese train stations are massive buildings, reminding more of an airport, with numerous gates connecting departure and arrival hall with the tracks. Typically, there is a good selection of restaurants, cafés and small grocery stores available. The tidiness and cleanliness sometimes reminds you of a Swedish hospital.
Knowing the unparalleled growth of Chinese economy, I cannot help thinking how much the rail network expansion has contributed. As for any financial ecosystem, having an efficient supply chain for transport of goods – and people – is a prerequisite to growth and success.
Founder and CEO
Gothenburg Executive MBA class 2016-2018