Speeches: Andrés Cosmen Menéndez-Castanedo, Chairman of ALSA, China

It is a great honour to be with all of you in this important Forum about bus and coach operations in China, organized by IRU, CRTA and UITP. The huge population of China and its economic growth are amongst others, the reasons why many years ago, we came to work in this marvellous country.

As many of you know, ALSA is the leading bus company in Spain and one of the main players in the European intercity transport lines. Our company was established more than one hundred years ago and presently we have bus operations in four continents: Europe, South America, Asia and Africa.

Next month will mark the twenty-first anniversary of ALSA operations in China. Our first company in China was established in 1984 in the Special Economic Zone of Shenzhen. It was in the early stages of the economic opening of China started by President Deng Xiao Ping in 1980. Our entry was so early, that this our first company had to be set up to run a taxi fleet, since in those years foreign investment in bus and coach companies was not allowed by the government.

Nowadays, besides Shenzhen, ALSA has created together with local partners joint ventures companies in the Chinese cities of Beijing, Shanghai, Tianjin, Nanjing and Shijiazhuang. The main activity of these companies is running passenger intercity bus lines to over one hundred destinations. We have also made investments in building and operating bus stations and workshops in different Chinese cities.

The situation of the passenger transport sector in China has changed a lot over the last twenty years. In the beginning there were no foreign brands in the fleet of the local operators, except for a few IKARUS and SANOS, which were the result of State trade deals between China and the Eastern European Countries. There was not any fixed timetable for most of the services, with the buses departing when all the seats were full. In 1987 there was only one Expressway in China, the one running from Shenyang to Dalian with a length of 360 kilometres.

Today, foreign bus brands are common in the local fleets and almost all the foreign bus makers have set up production operations in China, such as MERCEDES BENZ, IVECO, MAN, VOLVO, HINO, IRIZAR, etc. Also there are a few Chinese companies doing good quality buses, such as KINGLONG. All the intercity lines use mostly modern buses and have a fixed timetable for departures. By the end of last year, the total length of expressways in China was over 28.000 kilometres, second in the world only to U.S.A.

All of this has resulted in a big rise in the quality of the service provided to customers and a big increase in the number of passengers. The standard of service provided to passengers in the main lines in China is not too far from the standard of service provided in Europe. The result is that everyday there are more Chinese people who are enjoying a good level of service when they travel by bus in China.

ALSA has been a witness and an active player in the great transformation of the passenger transport sector in China in the last twenty years. Our contribution to the sector has been in the following areas:

• Quality transport services and normalization standards
• Modern management focused in customers using the latest technologies.
• Safety of passengers and employees as the first priority.
• Staff training at all levels.
• Fleet management.
• Working together with local partners and authorities.

What are the key elements to be considered by foreign companies wishing to do transport business in China? In my opinion and according to our experience, there are four of them:

1.- Find the right local partner and work together with the government.

Foreign bus companies seeking partnerships in China need to invest a lot of time in building relationships that will last into the years ahead. This time-consuming, but essential task is essential for doing business in the largest passenger transport market in the world. One of our Chinese joint venture companies has needed four years of preparation and approval process before it could start operations. We are very satisfied with the good relationships that we have forged with our local partners and Chinese transport authorities at the local, provincial and Ministry level. I want to thank them all for the support they have given us in these years.

2.- Build a competent local management team.

Of over 1.400 people working for ALSA in China only three are foreigners. Most of our companies are run by Chinese people. They have developed excellent management

skills that not only have helped ALSA but the whole of the transport sector. Periodically we do training programs for our employees at all levels from top management to drivers, sales agents and mechanics. For example, every year Instructors from Spain come to China to help our conductors improve their driving skills and drive safely.

3.- Continuously improve the level of services to customers.

This rule is valid for any country but especially for China where the speed of change and economic development mean that customers are more demanding and sophisticated. In this respect we have started our premium services, called Imperial Class, which is like the business class of the airplanes. For a higher fare, passengers can enjoy an even higher level of service with a more comfortable and luxurious bus and service.

4.- Adapt the service to the local conditions.

We are invited to do business in this great country and for this reason we must take into consideration the Chinese characteristics and adapt to the local conditions. This is necessary not only for the service provided to passengers but also for the management of the companies. We should not forget that China is still making the change from a planned economy to a market economy.

All of us want that China development success continues in the future for the benefit of its population and the whole world, and we are willing to help with our work. In this respect I would like to make a few observations to the Chinese transport authorities that, in my opinion, will help even further in this field.

1. Transparency should be improved in the allocation of lines licenses to the operator companies. The legal transport framework should be modernized and special efforts should be made in its implementation with the aim of making a more levelled playing field for all operators. Besides the national legislation, there are many different regulations at the provincial level that make companies confused and limit their abilities to improve transport services. The recent promulgation of the China transport law is a good sign in this regard. China is aware of the need to improve its legal system and I believe a lot of progress should be made in the coming years. The recent CRTA membership of the IRU is another show of China willingness towards this goal.
2. More attention should be paid to safety issues and the inspection of companies and transport services in order to ensure a more organized and safe transport sector. There are still a few illegal operators who are giving a bad name to the whole sector. Finally, the use of safety devices like the speed limiter or the tacograph should be promoted and its use made compulsory. All these measures will help to reduce the huge number of accidents that happen every year on Chinese roads.

Working together side by side, the companies and the transport authorities, is the best way to help the improvement of the mobility of the Chinese people. These twenty years have been only our beginning and we wish to be here for more than one hundred years with the aim that the level of services received by Chinese passengers is at the same level as in Europe.

ALSA IN CHINA - IRU Shanghai Forum 16.03.2005

ALSA has been operating transport services in China for over twenty years.

Presently, together with local Chinese partners, ALSA has joint venture companies in the cities of Beijing, Shanghai, Tianjin, Shenzhen, Nanjing and Shijiazhuang. These companies operate bus lines as well as bus stations and workshops across China.

The bus passenger transport sector has improved a lot over the last twenty years, but more effort should be put by the transport authorities to achieve a higher standard. The upgrade of the legal framework and more transparency on the assignment of lines licenses, together with more attention to safety issues will help to reach this goal.

Foreign companies wishing to set up operations in China, should find the right local partner, build a competent management team, continuously improve the level of service and adapt to the local conditions.