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Case studyForeign Direct Investment Transrapid-Ge
rmany-China
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Case study--Background infomation What is
transrapid?

• The Transrapid is the first fundamental
  innovation in railroad engineering since
  construction of the first railroads.
• Compared to the traditional railway system, it
  has the advantage of high speed(The hourly speed
  can reach 400-550km) low pollution,low power
  consumption, low noise, high safety.
• Today only very few countries including Germany
  and Japan have the technology of designing and
  producing transrapid.

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Case study--Background infomation Shanghai
Airport Project Events

• On 23rd January 2001 signing of the contract for
  the Shanghai airport project
• 30 km between Pudong international airport and
  downtown
• Costs of 9 billion RMB(1.1billion USD)
• Based on the technology produced by the German
  Consortium Thyssenkrupp, Siemens and Adtranz of
  DaimlerChysler.
• The first time for transrapid to be used for
  commercial purpose.
• Its considered as a reference for late
  expansions.

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Case study--Background infomation Shanghai
Airport Project Route
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Case study--Background infomation Shanghai
Airport Project Events

• April 2001 construction work on the transrapid
  project Shanghai began
• The trains, power and control equipment are
  produced in Germany.
• The guideway girgers are manufactured in China
  with supervision of the Germans.
• Chinese companies are building the magnetic track
  and others.

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Case study--Background infomation Shanghai
Airport Project Events

• January 2003 Oneway trail operation
• Germany Prime Minister Gerhard Schröder will
  cut ribbon.
• September 2003 Return trail operation
• December 2003 Project completion
• (Formal operation)

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Case study--Background infomation Shanghai
Airport Project Data
Route Length 30 km double track Link to
maintenance facilities 3 km single
track Stations 2 Number of vehicles in 2003 3
vehicles each with 5 sections (6 sections from
June 2004) Traffic Volume in 2005 10
million passengers in 2010 20 million
passengers in 2020 33 million
passengers Travel speed (max.) 430 km/h Trip
time 8 minutes Headway 10 minutes (option 5
minutes) Daily operation 18 hours
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Case study--Transrapid Why does Germany invest in
China?

• The technology mastered by Germany is mature.
• Theyre able to produce transrapid.
• Transrapid has a bright prospects despite high
  costs
• Good trade relationship between China and
  Germany.(Japan also wants this project in China.)
  

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Case study--Transrapid Why does Germany invest in
China?

• Stable economic situation in China
• Stable exchange rate of RMB
• Good infrastructure
• Stable-increasing economy (Increase
  rate at 7-8 per year)
• Stable political situation in China

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Case study--Transrapid Why does Germany invest in
China?

• Transrapid is not very meaningful in Germany
  because
• The territory of Germany is not large
• Very developed traffic net(ICE)
• But it has a bright future in China

Shanghai airport
Far East transrapid center in China ?
Beijing -Tianjin
Beijing -Shanghai
China,Eastasia
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Case study--Transrapid Why does Germany invest in
China?

• The product cycle model (Vernons).

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Case study--Transrapid Why does Germany invest in
China?

• "As the first to introduce the maglev
  transportation technology into commercial
  service, China will make a contribution to the
  world's future market development in the sector
  of maglev transportation."
• --Hans Eichel
• (Germany's Finance Minister)

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Case study--Transrapid Benefits from this project

• China
• Develop enough Hi-tech
• Increase local employment
• Consumer benefits
• Improvement in production quality
• Increase export possibility
• Spill-overeffect

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Case study--Transrapid Benefits from this project

• Germany
• Advantage of cost through
• Lower labor cost in China
• Lower raw material cost in China
• Lower tax
• Increase export possiblity
• Chain reaction
• Employment restructure
• Dodge the trade barriers