Processing Equipment Manufacture

1. Introduction to the Project
1.1 Project Background
1.1.1 Product Introduction
During operation of CRH trains, besides everyday maintenance and overhaul, three-grade, four-grade and five-grade maintenance should be conducted based on actual operation mileage. Siemens and Alston technical series CHR trains enter a maintenance process every 1.5 years. Japanese technical series CHR trains enter a maintenance process every year. Ministry of Railways requests the corresponding manufacturers to conduct the maintenance task, so the first three-grade and four-grade maintenance of CRH3 and CRH5 should be completed by OEMs, the following three-grade maintenance should be completed by the four maintenance bases under construction, and all four-grade and five-grade maintenance tasks should be completed by OEMs. Based on this, in accordance with the CHR trains order quantity that Changchun Railway Vehicles Co., Ltd. has produced and quantity of those with signed orders in production, there are 270 trains after converting into short groups. According to the actual application and maintenance schedule, by 2015, Changchun Railway Vehicles Co., Ltd. should complete three-grade maintenance of 270 CRH trains, four-grade maintenance of 270 CRH trains, and five-grade maintenance of 46 CHR trains. Therefore, in current condition, railway vehicle's four-grade and five-grade maintenance project in Changchun City will be developed and constructed.
This project plans to get social capital by investment attraction, and will be completed by establishing maintenance industrial cluster by taking Changchun Railway Vehicles Co., Ltd. as its main body.
1.1.2 Market Prospects
High-speed railway, as a new transport mode in modern society, has extremely obvious advantages in aspects of safety, convenience, economy, and environment protection. Since entering into the new century, to meet the rapid economic development in China, China has decided high-speed passenger railways as the main direction of modernization realization. Relying on self-dependent innovation, China's high-speed railways have possessed the railway network with the largest scale and the fastest speed in the world.
In accordance with Medium and Long-term Railway Network Plan issued by the Ministry of Railways, in 2015, China railway service mileage reached over 110,000km, and “four-vertical and four-horizontal” special passenger railway network has preliminarily formed. Around 2015, 19 large-sized cities in China will plan to construct 70 rail transit lines with total length of 2,100km and total investment over 800 billion yuan, and China will become the world's largest railway and urban railway transit market. Facing this huge market, an industrial chain of rail equipment manufacturing involves more than 20 fields is being upgraded as a whole. In addition, the increasing demand of China railway passenger vehicles and urban railway vehicles drove the research and development and manufacturing level of related enterprises, and sped up rail vehicles manufactured in China entering the international market.
Changchun Railway Vehicles Co., Ltd. produces about 100 high-speed rails every year. Changchun Railway Vehicles Co., Ltd. has an advantage over other main manufacturers that it can produce alpine high-speed CRH trains. The average price of each vehicle is over 200 million yuan, resulting in annual total contract amount of around 20 billion yuan, including 40% of subways with contract amount of 6-7 billion yuan. Annual contract amount of exported subways and ordinary passenger railways is about $600 million. In the following years, Changchun Railway Vehicles Co., Ltd. will get a contract of about 100 high-speed trains and 1,000 urban trains each year, annual export amount is about $600 million. In the coming years, at least in the following two or three years, annual contract amount is around 30 billion yuan. Based on demand of Ministry of Railways on CRH trains and domestic CRH trains orders that Changchun Railway Vehicles Co., Ltd. is expected to get in the next decade, as well as the maintenance schedule, since 2014, Changchun Railway Vehicles Co., Ltd. will undertake four-grade and five-grade maintenance task of 150 CRH trains (1,200 vehicles). Based on the analysis on CRH trains maintenance demand, Changchun Railway Vehicles Co., Ltd. annually maintains at least 120 CRH trains (960 vehicles). In addition to the production of new CRH trains, the supporting equipment maintenance suppliers should have the annual supporting capacity of 1,920 vehicles, with total output value about 24 billion. As Changchun Railway Vehicles Co., Ltd. develops rapidly, its demand for laboratories becomes increasingly strict. Therefore, the project will have broad developing potential.
In accordance with the State's latest information, China CNR and China CSR Corporation have merged, and the future market competition will be more intense, bringing more development space to this project.
1.1.3 Technical Analysis
This project plans to cooperate with Changchun Railway Vehicles Co., Ltd. and the enterprises with equal technical strength. The introduced production technology is mature and strong, occupying a leading position in China.   
1.1.4 Advantageous Conditions of Project Construction
(1) Policy advantage
The Government of Jilin Province has published Opinion on Accelerating the Supporting Passenger Railway Vehicles Industries, including 28 supporting measures and preferential policies. Several Opinions of the State Council on Speeding up and Revitalizing Equipment Manufacturing Industry has listed this industry into the 16 major areas to be developed. Passenger railway vehicles industry has also become a symbolic project in revitalizing equipment manufacturing industry and a new economic growth point in Jilin Province. Opinions include 7 aspects, including development direction and aim, powerful support of fast development of backbone enterprises, promotion of rail equipment industrial park construction, strong support of its supporting industries and construction of a favorable developing environment.
(2) Industrial advantage
Changchun City possesses an array of competitive products and leading enterprises with industrial influence. It has a group of domestic first-rate competitive products among automotive technological equipment, passenger railway vehicles, complete metallurgical electrical furnace equipment, and photoelectric apparatus and equipment. CNR Changchun Railway Vehicles Co., Ltd., Changchun Institute of Optics, Fine Mechanics and Physics, Chinese Academy of Sciences, Changchun Yuheng Optics Co., Ltd., Changchun CNC Machine Tool Co., Ltd., and Changchun Electric Furnace Co, Ltd. are leading enterprises in the industry, which have basically formed high and new technical equipment and product development innovation capability. The group of large or medium-sized enterprises of Changchun equipment manufacture industry includes 1 national key laboratory, 1 national-level technical center, and 23 province-level technical centers. 12 enterprises have drafted and formulated over 40 national standards, including testing machine and meteorological instrument; Focusing on key areas, including photoelectron, it possesses an array of professional universities and scientific research institutions and national-level and province-level major laboratories and relevant disciplines. It has strong research and development strength, as well as the foundation and capacity for the research and development, design, and manufacture of significant technical equipment.
(3) Location advantage
This project was established in Changchun Rail Transmit Equipment Industrial Development Zone that was established on the basis of Changchun Luyuan Economic Development Zone with the approval of People's Government of Jilin City on June 12, 2010. After the development zone is established, it will be capable of producing 1,000 CRH trains, 1,200 urban rail passenger cars, and 500 passenger railway vehicles each year, realizing an annual output value of 50 billion, and becoming the manufacturing, exporting and maintaining base with the world's strongest production capacity, product quality, testing and detection capability and maintenance capability of high-speed trains and urban railway vehicles. In the meantime, 50 enterprises supporting for passenger railway vehicles have joined in the development zone. The support rate of spare parts that Jilin Province offers to Changchun Railway Vehicles Co., Ltd. also has risen from 28% in 2009 to present 40%. Aggregation effect of main engine industry has preliminarily appeared, providing strong foundation and guarantee for the project development. This project is carried out in the existing development zone with complete public infrastructure, "six accesses and one leveling" (accesses to power supply, water supply, heat supply, water drainage, telecommunication, road and site leveling) infrastructure conditions and good external supporting facilities, laying a solid foundation for the project construction and saving construction investment.
(4) Talent advantage
The development zone has favorable geological location and convenient traffic, which is the traffic hub in the northwest of Changchun City, having complete public utilities. The zone's infrastructure construction of road, telecommunication, power supply, heat supply, water supply, and water drainage has been completed. It has abundant scientific and technological resources and has long-term cooperative relation with 23 colleges and universities, including Jilin University, Northeast Normal University, Changchun Vocational Institute of Technology, Institute of Biological Production in Changchun of the Ministry of Health, and Changchun Agricultural and Scientific Academy. It has favorable service environment, follows the concept of "you develop, and I serve" to simplify procedures, improve service efficiency and provide whole-process tracing services from discussion, site selection, and procedures handling to construction, production, and operation for the enterprises stationed in the zone. Furthermore, Changchun Railway Vehicles Co., Ltd. and its two enterprises have over 1,100 professional technicians, resulting in abundant talent resources and strong research and development capacity. They have mastered the world's leading rail transmit equipment manufacturing technology through technological cooperation with some international well-known enterprises, including Bombardier, Alston, and Siemens. Especially, after the national-level engineering testing center project was constructed and used, the product quality of Changchun Railway Vehicles Co., Ltd. can be effectively ensured in technological aspect. The enterprises promote research and development capacity, occupy the highest technical position of domestic CRH trains, participate in the formulation and assessment of rail transmit equipment industrial specifications and technological standards, and consolidate and strengthen the core position and fundamental research status of Changchun Railway Vehicles Co., Ltd. and even Changchun City in domestic rail transmit equipment manufacturing industry.
1.2 Content and Scale of Project Construction
1.2.1 Product Scale
It annually completes four-grade and five-grade maintenance of 150 high-speed CRH trains (1,200 vehicles).
1.2.2 Content of Project Construction
The project has floor area 30,000m2, and constructs plant, office building and warehouse.
1.3 Total Investment of the Project and Capital Raising
Total investment of the project is 100 million yuan, including construction investment 80 million yuan.
  Table 1: Summary Table of Total Investment of the Project  Unit: RMB10,000
No.    Expense Name    Amount of Investment    Proportion of Total Investment %    Remarks      
1    Construction investment    8000    80          
2    Interest incurred during construction    0    0          
3    Circulating capital    2000    20          
    Total investment of the project (1+2+3)    10000    100.00         
1.4 Financial Analysis and Social Evaluation
1.4.1 Main Financial Indexes
After this project reaches the production capacity, it has annual sales income 111.47 million yuan, profit 25 million yuan, period for recovery of all investments 5 years (after tax, including 1 year of construction period), and ROI 25%.
Table 2: List of Major Indexes for Forecast of Financial Benefits

No.    Name    Unit    Index    Remarks      
1    Sales income    RMB10,000/a    11147    Normal year      
2    Total profit    RMB10,000/a    2500    Normal year      
3    FIRR of all investments    %    20    After income tax       
4    FNPV (Ic=10%)     RMB10,000    2343.37    After income tax (operation period 10 years)       
5    Period for recovery of all investments (after tax)     a    5    Including 1 year of construction period      
6    ROI    %    25         
Note: "RMB10,000" in the Table shall be RMB.
1.4.2 Social Evaluation
After the project is finished, it will lift the development of pillar industries in Changchun City, upgrade industry, drive downstream industrial development, powerfully boost the local social development, and bring huge tax benefits to local government; after it is put in production, the labor demand will have positive significance for improving employment of people in surrounding areas and relieve employment difficulties of local people, having obvious social effects and powerfully boosting the development of pillar industries in Changchun City.
1.5 Cooperative Ways
Sole proprietorship and cooperation
1.6 What to be Invested by Foreign Party
1.7 Construction Site of the Project
No.7777, Changbai Highway, Luyuan District, Changchun City, Jilin Province, Changchun Luyuan Economic Development Zone Rail Transmit Equipment Industrial Park.
1.8 The On-going Condition of Project
Land has been expropriated.

2. Introduction to Partner
2.1 Basic Conditions
Name: Management Committee of Luyuan Economic Development Zone, Changchun
Address: No.7777, Changbai Road, Luyuan District, Changchun City
Legal Representative: Hou Wei
2.2 Overview
Changchun Luyuan Economic Development Zone is the province-level development zone established on June 30, 2003, with the approval of the provincial government, which has planned area 21.5km2; on June 12, 2010, the plate of Changchun Rail Transmit Equipment Industrial Development Zone was hung with approval of the government of Jilin Province. It has been awarded as advanced development zone by the Provincial Government for 9 consecutive years, and was determined as the National New-type Industrialization Demonstration Base by the National Ministry of Industry and Information Technology in February 2012. In January 2013, it was denominated as provincial-level characteristic industrial park by the government of Jilin Province.
The development zone has Changchun-Baishan Highway, Changchun-Zhengjiatun Highway, Changchun-Nong'an Highway, Changchun Belt Expressway and West Fourth Ring Road passing through, which is 15min drive from Harbin-Dalian High-speed Railway Changchun West Railway Station, and 40min drive from Changchun Longjia International Airport.
The development zone takes CRH trains base of Changchun Railway Vehicles Co., Ltd. as its center, and has attracted 50 passenger railway vehicles enterprises, including Shanghai Tanda Railway Vehicle Seat System (Changchun) Co., Ltd., Hitachi Yonge Electric Equipment (Changchun) Co., Ltd. and Changchun YEAL Electric Appliance Co., Ltd. In 2013, the zone newly produced 1,541 vehicles (high-speed train, urban railway and exported vehicles); 872 high-speed trains under three-grade or four-grade maintenance, and completed industrial value of rail transit equipment 26.5 billion yuan. By the end of the Thirteenth Five-Year Plan, the development zone will be built into the high-speed trains and urban railway vehicles manufacturing, exporting and maintaining base with the world's strongest production capacity, product quality, testing and detection capability and maintenance capability.
2.3 Contact Method:
Contact Person of Project Unit: Hou Zhixiang
Tel: +86-431-87889999
Fax: +86-431-87889999
Postal Code: 130113

Contact information of city (prefecture) of project:
Contact Unit: Changchun Economic and Technical Cooperation Bureau
Contact Person: Bo Zhanlin
Tel:0431-82763933  82765252
Website of city or prefecture:


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