Hong Kong metro CEO to kick off "Journey to the West"

The Hong Kong Mass Transit Railway Corporation (MTRC)'s CEO Jay Walder said the city's railway runner is "looking west" in developing Chinese mainland market. He also looks forward to incorporating the "railway plus community" model when working with his Chinese mainland counterparts.

Walder told the APD that he had indelible memories when using metros on the Chinese mainland.

"People use it, they depend on it, they need it, as the system can support the amount of business and leisure activities taking place in those cities," he said.

Statistics of the National Development and Reform Commission of the Chinese government show that China's subway into the cities total 2000 Km. This figure is set to surge to 3000 Km by the end of the 12th "Five Year Plan".

According to the Transportation Department of the Chinese government, railway transport in China carried more than 8.7 billion passengers across the country in 2012; central Chinese city Wuhan opened its Metro Line 2, with more than 300 million customer flow a day; Hangzhou Metro Line 1 greeted its 10 millionth passenger in shortly two months after it is in use.

On the other hand, Walder, who had prior experiences of managing railways in New York and London, said he is trying to bring something special under the "rail plus community" model. The essence of the model, is to inject suitable elements to the surroundings, and look at the contextual to where it is taking place.

"Every system deals with the environments and circumstances in which it finds itself," Walder said. "London and New York are the two old underground train systems in the world, but they are also the best, even without brand new facilities."

He took the design of the Beijing Metro as an example. Although the capital is equipped with over 400 km-long railway, local people have always been unhappy about the long traveling time with the metro.

Walder said this is not a question about the frequency of train arrivals, but the convenience of interchange stations.

"It could be a frustration for a sea of people to walk a long way to change from one line to anothe," said Walder.

He said that lying at the heart of this issue is the planning prior to construction of the railways and stations.

"Looking at the Hong Kong system, passengers just literally walk across the platforms when there is an interchange. The interchange stations are planned from the very beginning."

He said such problems are also existing in some of the areas in older railway systems in New York and London, and is not easy to fix. But the railway runners on the Chinese mainland should plan ahead about how to get into the thousands of kilometers of railways in the future, and make the journeys seamless.

Walder added that railway operators cannot just look at the trains and railways per se. Hong Kong MTR has demonstrated excellent integration of the system with the community, seeing the development of the community right on top of the railways and depots.

The MTR network comprises of nine railway lines covering the Hong Kong Island, Kowloon and the New Territories. In addition, a Light Rail Transit network serves the local communities of Tuen Mun and Yuen Long in the New Territories while a fleet of buses provide convenient feeder services.

The MTRC also operates the Airport Express, a dedicated high-speed rail link connected to the Hong Kong International Airport.

From Hong Kong, passengers can travel to Guangdong province, Beijing and Shanghai using the MTR's intercity railway services.

Maintenance of high standard services

The Hong Kong MTR has earned good reputation worldwide for its efficiency in services provision: during the morning peak hours, eight-car trains with a capacity for 2,500 passengers will run at 2.1 minute intervals, carrying 70,000 passengers per hour per direction on the Tsuen Wan Line; the East Rail Line during the morning peak hours will operate 12-car trains, each with a capacity for 3,750 passengers, run at 3.5 minute intervals, carrying approximately 64,000 passengers per hour per direction.

Walder said, as the public transportation with the highest rate of use in the world which carries about 5 million people a day, the first and foremost mission of the MTRC is to maintain the best conditions of its facilities and hardware, in support of the long term top notch services.

To ensure maximum safety and reliability, trains are operated with automatic signal control and protection systems which regulate the distance between trains, determine the optimal rates of acceleration and braking, as well as the coasting speeds on different sections of a line. The MTRC spends about five billion Hong Kong dollars a year toupkeep the system.

"New York and London got terrific systems, but each of them went through difficult times in which they didn't have the resources to support the system, to make investment to maintain it in a truly first rate condition. When that happens, the transit system suffered," said Walder.

Many metro lines on the Chinese mainland are also facing the setback of insufficiency of capital.

This is especially so given the public service nature of the metro, that they cannot charge as much as the commercial organizations do.

Therefore, most of the metro lines are operating at huge losses: Beijing Metro loses about 1 billion yuan a year, while Shenzhen saw red at about 200 million yuan in 2010, according to Chinese media's reports.

To keep their underground trains up and running, the Shenzhen government paid about 831 million yuan in 2010 to do so; the capital's government splashed out 17 billion yuan in support of all of its transportation systems.

Walder said different countries subsidize their transportation systems differently, and it is fine as long as they manage to uphold a high threshold of service standard.

But the ugly balance sheets of the Chinese mainland metro companies have been increasingly alarming to railway operators. Therefore many of them are trying to pick up the concept of management of the MTRC- the "rail plus property model".

Alongside railway businesses, the MTRC also involves into property development, rental and management business along its railway lines.

It is currently owning, managing and developing 38 properties in Hong Kong, including hotels, residential housings, shopping malls and commercial offices. Seven other property projects are under construction or planning.

The profits stemmed from property development amounted to over 3.2 billion Hong Kong dollars, while that from property rental management businesses was over 2.7 billion dollars in 2012.

It is not barrier free to put the "rail plus property" model in practice: lands on the Chinese mainland are conveyed publicly, unlike MTRC which can secure the lands around its stations directly from the government at relatively lower costs. Again, metro lines on the Chinese mainland are managed by the local governments' transportation departments, whilst the construction departments being responsible for land sales. Difficulties arise from time to time in inter-department coordination in the course of planning and construction.

Nonetheless, many Chinese mainland metro runners, such as Shenzhen, Changsha and Guangzhou governments, are still moving towards the direction of "rail plus property", in a bid to make an above-turn in profit and loss.

Journey to the west

The MTRC is operating a few rail lines on the Chinese mainland: The Beijing Metro Line 4, Daxing Line of Beijing Line 4, Longhua Line of the Shenzhen Metro and Hangzhou Metro Line 1, with Beijing Line 14 is pending finalization of agreement.

Walder is scheduled to pay his first visit to the Western Chinese city Chengdu to attend a forum in early June.

He said that Western China is one big market that the MTRC would like to explore.

"The Eastern China has been well developed for the time being, but it is not the case in the Western China, where we see ample untapped potential," Walder said.

He noted that environmental-friendliness and booming urbanization are also major momentums for them to kick off the "Journey to the West".

According to the report of the China Council for International Cooperation on Environment and Development (CCICED),an advisory bodyon environmental issues approved by the Chinese government, this region is storing 81.1 percent of extractable tidal resources of the country, 171 kinds of mineral resources, 65.4 percent of renewable resources and 67 percent of chemical energy.

From the economic perspective, over the past decade, annual GDP growth in Western China provinces hit 17.2 percent, which was above the mean of the national level. In 2010, the four western and southwestern provinces Guizhou, Sichuan,Inner Mongolia and the megacity Sichuan were among the top five in terms of economic growth in the country. In the contrary, traditional economic powerhouses like Beijing, Guangdong, Shanghai, Zhejiang and Shandong's economic growth was the slowest amongst all provinces and municipalities.

"The cities (in the West) are large, complex and support a large amount of businesses, fit what MTR likes to be and what we can do," said Walder.

Walder said the Chinese government has committed to development metros in 26 new cities. Length of railways increase to about 4000 km in the next decade or so. "There's no place in the world making such an commitment to the use of public transportation, on the size and the scale that China is making right now," he said. "We have shown our ability in forming partnership ,and we would like to extend that partnership."

He said that government officials from various Chinese mainland cities come to Hong Kong seeking cooperation opportunities with the MTRC every now and then. "We have to see where we have the strongest partnership, so that we can work together and deliver the biggest benefit."