In 2005, Sino - French Culture Year (the largest ever cultural exchange activity between China and France) concluded. From October 2003 to September 2005, China and France has hosted cultural-display activities successfully in the other country. Through this culture year, we deeply understand that culture is the global power which is longer lasting and more inspiring than power politics and violence. It represents "kingcraft" spirit rather than "hegemony" spirit.
　　Sino - French Culture year does not only touch us ideologically but also conducts deeper level of business and trade cooperation in a wide range of areas. Ferraz Shawmut promptly laid out the future development strategy in China during the Culture Year that Ferraz Shawmut would further expand its investment in China in the next two years. Through the formation of localized production base, Ferraz Shawmut strives to provide faster and more economic products and services to the customers of local market and the Asian regional market.
　　It has been almost two years since 2005. When we were informed that Ferraz Shawmut (Kun Shan) Co., Ltd had been established, we went to Kun Shan to have an interview again with Mr. Alexandre HONG (Marketing & Sales Director, Greater China) in order to sincerely review the success of Ferraz Shawmut in China.

　　The Engagement with China - building the strategic core of Asia-Pacific expansion

　　Journalist (Lucy Hwang): Back in 2005, Ferraz Shawmut had announced to prepare for the creation of a new company in China in order to assemble CCD (Current Collecting Device), ERCU (Earth Return Current Unit), Fuse Box, and High Current Switch to its global customers (particularly the customers in Asia).
　　Ferraz Shawmut did not forget the commitment to Chinese customers. Presently, Ferraz Shawmut (Kun Shan) Co., Ltd. has been established. Does that mean Ferraz Shawmut has carried out its promise?

　　Mr. Hong: In fact, the engagement with China is an important part of Ferraz Shawmut's overall development strategy.
　　Firstly, the profound understanding of Chinese market potential is the key starting point of Ferraz Shawmut development strategy. In particular, the development of Chinese rail transportation industry is in the key stages of significant growth. The prospect of Chinese rail transit construction shows that Chinese subway construction investment will reach 200 billion Yuan RMB with the completion of approximately 450 km of rail transit line in total during the "tenth five-year plan" period (the data provided by State Planning Commission and the Ministry of Construction). There will be more than 550 km subway line to be completed in 2020; and there will be 2000 km light rail and subway lines in 2050. For the national point of view, there are more than 20 cities which have or will have subway lines. (Some have existing subway lines and intend to build subway network; some have subway lines under construction; and some are preparing to apply for new subway construction projects.) The cities which intend to build subway lines are mostly located in the centers of various regions, and they are in good economic development situation. As far as we know, There are cities which have existing subway lines and also intend to build subway networks, or some have subway lines under construction such as Beijing, Shanghai, Guangzhou, Tianjin, Dalian, Shenzhen, Nanjing, Wuhan, Chongqing, and Chuangchun, etc. There are more and more cities which are planning to build subway lines such as Chendu, Hangzhou, Shenyang, Xian, Haerbing, Qingdao, Suzhou, Xiamen, and Urumchi, etc. Ferraz Shawmut is very optimistic about the development prospects of Chinese rail transportation market, and has the confidence in the development of Chinese market. We are going to thoroughly explore Chinese rail transportation market, and commit ourselves to provide services to global customers.
　　Looking to the future, in a very long period of time, China is still the fastest growing economy. STANDARD & POOR'S report "The prospects of 2007 Asia-Pacific Market" shows that the overall economic situation in 2007 of the Asia-Pacific region will continue to benefit from the development of China, India and Japan (the three major economies). Especially, China will continue to provide the main driving force for regional economic development. It has been estimated that the influence of American economic slowdown on China will be very limited. The report predicts that the expected GDP growth will be over 10%.
　　Therefore, the rapid development of Chinese Market makes the layout of Ferraz Shawmut Asia-Pacific market being more focused on China. Localization is Ferraz Shawmut's important strategic turning point in China. With building its own factories, Ferraz Shawmut will make much better response to market demand and bring more value to its customers and partners in China. Ferraz Shawmut's development strategy in China has been continuously deepened with the construction of new factories.
　　From this point of view, the attraction of Chinese market makes Ferraz Shawmut carrying out "the engagement with China".

Strengthen the competency of Ferraz Shawmut through localization

　　Journalist: When did you prepare to establish Ferraz Shawmut (Kun Shan) Co., Ltd., and how do you position Ferraz Shawmut products in China market?
　　Mr. Hong: We first discussed about setting up a plant to manufacture traction products and high power switches in March, 2006. The plan to construct the plant was confirmed in June, 2006. Vice President of Asia-Pacific region, Ferraz Shawmut, Mr. LAURENT MARCENAC was in charge of the whole program of the construction. Ferraz Shawmut (Kun Shan) Co., Ltd. obtained business license on October 31st, 2006.
　　The plant area of Ferraz Shawmut (Kun Shan) Co., Ltd. is around 1000 square meters. The plant's business scope includes research and development, design, and production of key equipments such as ERCU, CCD, and fuse box for trains of urban railway transportation, as well as high power switch.
　　Journalist: Globally, Ferraz Shawmut considers China as the core of its development. And localization is Ferraz Shawmut's development strategy in China. What benefits could localization bring to Ferraz Shawmut?
　　Mr. Hong: First of all, since both our clients and partners are in China, with a plant in China, we could better adapt to the market requirements in China, and react to the market more quickly.
　　Localization is a milestone of Ferraz Shawmut's development in China. Many Ferraz Shawmut's partners like SIEMENS, BONBARDIER and ALSOM are active in the railway transportation market in China. In SIEMENS China, the sales revenue of transportation industry takes up to 10% of its total sales revenue and its growth rate is estimated to be 9%. In order to provide better service, to bring more value to the Chinese customers, and to take advantage of low cost labor in China, localization is a strategy that Ferraz Shawmut applies to explore the market in China. Localization is a wise choice not only for Ferraz Shawmut, but also for other large multi-national companies.
　　China market is of significant importance to the global strategy of Ferraz Shawmut. Therefore, Ferraz Shawmut's localization is a signal of its long term development in China.
　　Journalist: With the establishment of Ferraz Shawmut's new plant, will you change the market position or will you continue to apply the original market position? Could you describe the market strategy of Feraz Shawmut in China?
　　Mr. Hong: This is a good question. Ferraz Shawmut will not change its market position with the establishment of the new plant in China. This action itself is an important part of Ferraz Shawmut's market strategy.
　　Firstly, we will not change the high-end market position in the electric protection world. Ferraz Shawmut would not provide low price and low quality products. Quality is the most important thing that makes Ferraz Shawmut a leader in the market. Besides high quality, we would try to shorten the delivery time through localization. As a "consultant for electric protection", the technical support team of Ferraz Shawmut would provide tailor-made solutions to customers as usual. We would try to build the core competency for Ferraz Shawmut's sustainable development.
　　The localization process is a step-by-step process. Firstly, Ferraz Shawmut (Kun Shan) Co., Ltd. will take strict quality control procedure. With the participation of French technical department, the localization would be conducted step by step. We would assemble products in Ferraz Shawmut (Kun Shan) Co. After the products are examined by Ferraz Shawmut France, large scaled production would be carried out. Secondly, Ferraz Shawmut (Kun Shan) Co. would build up a deign team, to realize the ultimate localization.
　　Journalist: We understand that the establishment of the plant is a commitment, which shows your strategic position in China. But we are more eager to know that what practical benefits this action could bring to Chinese clients?
　　Mr. Hong: After-sale service has always been a defect of international manufactures. After localizing in China, we will be able to solve this problem including spare parts producing, maintenance, warranty, and daily support more quickly and more efficiently.
　　Ultimate purpose of Ferraz Shawmut's localization is to make the design closer to the demand of Chinese customers. This is a long-term task, from the localization of production to that of service and then to the localization of research and development.
　　Once the target is reached, the quality of service to local clients will be much better, accordingly, the service to the Asia-Pacific clients can be improved.
　　
　　Quality goes first, as the core of Ferraz Shawmut's localization strategy

　　Journalist: Rail transportation is a field that is difficult to enter, and full of international players. However, Ferraz Shawmut took 50% of the rail market, and 80% of the subway market, what capability that makes you penetrate the market so fast?
　　Mr. Hong: First of all is the quality and competitiveness of our products. Ferraz Shawmut began its R&D of high-end equipment of vehicle-CCD, ERCU in1976, so we are the leader in this field. Since DC fuse technology was introduced into the solution of current collector, which is the most distinguishing electric protection product of Ferraz Shawmut, and later the solution of fuse box was realized, our current collector became more favorable. This strength makes the company more powerful in Chinese market. Because of the long-term dedication in the field of electric protection and the practical experience (e.g. the weak-link technology's being applied is making a higher safety standard); the advanced international technology was introduced together with economy enhancement as well as great development in the era of China's reform and opening-up. After Ferraz Shawmut's CCD was used for Wuhan light rail, our development in Chinese market is rapid. We assigned some projects in Tianjin, Beijing, Guangzhou, Shanghai and Nanjing one after another, and the market was enlarged very fast. Besides our CCD products are widely used in Shanghai Metro line 1 and line 2 projects. Looking into the past, the reason why the company can develop at such a high speed in China, is that the advanced technology, reliable safety standard, high quality and excellent service.
　　In addition, I think the most important reason is that Ferraz Shawmut insists on the principle of "developing together with the market". While introducing our solution to clients in China, we gradually got trust, and our products start to occupy the market at last.
　　Journalist: Would you please tell us where we can find the applications of Ferraz Shawmut's products in the domestic rail transportation recently, and how about the feedback of market and clients?
　　Mr. Hong: At present, Ferraz Shawmut's traction equipments in domestic railway projects are basically: CCD, ERCU, Berg switches, cooling devices, etc. Ferraz Shawmut's product is well known for its safety, reliance, easy operation, low-cost maintaining. It is necessary to introduce the CCD used in Guangzhou among so many cooperating projects.
　　The solution of third rail's current collector in Guangzhou is making a coexistence with pneumatic recession and manual recession, therefore, the driver concentrate his mind on operation. There is reliable DC fuse in fuse box, and advanced technology of stretching spectra is adopted in the process of current collector design. The arm of current collector has a weak-link function, so that when there is an accident, only the arm will be given up, while the main body won't be destroyed. It is honored that third rail current collector in Guangzhou adopted 1500VDC voltage standard, and Line 4 in Guangzhou is the only successful case which is adapted to such a voltage standard and is being used.
　　It has the auto-manual operating system with pneumatic recession device, meanwhile, it provide advanced collecting shoe system. Collecting shoe has the features of easy handle but high efficiency, firm and easy maintaining, low repairing cost. (Detail in material 1).
　　In order to reduce the noise during operation, and protect our environment, the current collector of third rail in Guangzhou uses carbon and alloy steel sliding block, while the rail was a steel aluminum composite conductor rail. The sliding block belongs to consumption goods. Since the using life span of sliding block is different, and is always influenced by equipment, environment, installation, and maintaining, the expecting life span of carbon sliding block is 50,000 kilometers. As a matter of fact, the practical result is different. The using life span of carbon sliding block in domestic project was about 50, 000 kilometers before this project. At the beginning of rail running, it is used to be a period of adjustment between carbon sliding block and third rail, during this period, the practical life span of block would be shorter than expecting one. However, the practical result of Line 4 in Guangzhou was that: until June, 2007, there were more than half of the vehicles, whose running distance was more than 200,000 kilometers, in addition, the consumption amount of carbon sliding block was less than 1/3 of the permitted using amount. It was obvious that choosing Ferraz Shawmut's technology was a successful case in Guangzhou rail project.
　　
　　Faithful partnership, your "advisor of electric protection" of Chinese clients

　　Journalist: How do you think of the changing demand of the future rail transportation, what action Ferraz Shawmut will take, and is there any response in strategy?
　　Mr. Hong: At the beginning of development of Chinese rail transportation, import took the main part, because of the high price, local treasuries can hardly afford. Especially for those cities that construct rail transportation by international loan, according to this condition, they had to use the loan to purchase equipment. Therefore, it is demanded that all the rail projects in cities, no matter which kinds of constructing capital they use, the average rate of localization of vehicles and electric equipment should be no less than 70%, and the focus of localization in traction market is vehicle and signal system.
　　Chinese rail vehicle localization has been successful since the policy of rail equipment localization was carried out. China won't import any complete set of equipment except in really important cases; however, we welcome the international group to participate in design, production, joint operation and technology transfer in terms of consultancy.
　　Ferraz Shawmut has new potential clients according to the trend in domestic vehicle production. The company needs to know the demand of local client, and make more rapid and customized support and service to satisfy them, in accompany with maintaining the good relations with international partners. Ferraz Shawmut needs to strengthen the local marketing tactics to cooperate with localization of production, and also needs to improve its technical team to increase the core competence.
　　Journalist: Looking into the future development of rail transportation, what do you want to say to Chinese readers?
　　Mr. Hong: Since the 21st century will be the new era of Chinese rail transportation, Ferraz Shawmut would like to stay here with a long-term development goal, and to develop together with Chinese partners. As your "advisor of electric protection", we provide high-quality products, first-class services, and best solutions for our clients to create more value in the partnership. They keys to realize all these are our technical expertise, a disciplined sales team, and our localization strategy. Ferraz Shawmut (Kun Shan) Co., Ltd. will become your faithful partner and your "advisor of electric protection".

Ferraz Shawmut is a global industrial specialist offering innovative solutions to deliver our partners and customers optimal efficiency in power management and absolute safety for their equipment. Our solutions bring together a unique full basket of fuses for industry with the associated low and medium voltage fusegear, cooling systems for power electronics, and power interconnection solutions. They serve five markets: transportation, power conversion, power generation & distribution, industrial controls, and power quality.
We manufacture at plants on five continents to meet the specific needs of customers in every region, and we have set up world-class logistics to serve the global market with the high level of customer service it demands. Ferraz Shawmut brand products are available around the world from professionals in electrical equipment distribution at thousands of points of sale. And we have our own top-notch technical support teams, ready to help customers and partners define a solution before a sale and right through every step in a design-to-order process.