Pictures of the Future    Fall 2006

Hot Pot Town

The trademark of the world’s largest city is the "Chongqing Hot Pot," a beef broth filled with red chili peppers and lots of little peppercorns. Granted, it may seem a curious mainstay dish for a city where it gets so hot in the summer that factories send their workers home for weeks at a time. Still, residents of Chongqing love their fondue-like Hot Pot. "Hot on the inside, hot on the outside—it has a balancing effect," they like to say.

Aside from the Hot Pot and high temperatures, however, this city of 31 million was anything but a "hot" attraction until recently. After all, the centers of the Chinese economic miracle—namely the Pearl River Delta in Hong Kong’s hinterland and the Yangtze Delta around Shanghai—are 1,000 km away. Although Chongqing is also on the Yangtze—China’s largest river—only small ships used to be able to pass through the narrow and dangerous Three Gorges to reach it. And aside from the arms industry, which Mao Zedong set up here precisely because of the city’s inaccessibility, Chongqing wasn’t home to any industrial sector.

Then, in the mid-1990s, Beijing decided to use Chongqing as the bridgehead for a large-scale campaign to develop the country’s backward hinterland. Between 2000 and 2005, the government invested $75 billion in a "Go West" program. Part of this plan involved making Chongqing a kind of "Shanghai of the West," as city officials put it. Beijing provided $22 billion in funding for the effort. That was certainly a lot of money, but it was a relatively small budget for putting 30 million people to work; ensuring enough housing for them; building roads, schools, and hospitals; and providing electricity, drinking water and waste disposal services. What’s more, all of this had to be done over an area the size of Austria, because only half of Chongqing residents live in the city itself; the rest have their homes in the hinterland that was incorporated into the municipality in 1997. This inclusion is also the reason why some dispute Chongqing’s claim of being the world’s largest city. The situation demands that Chongqing invest in infrastructure solutions that are both reasonably priced and effective.

Siemens Supplies the Infrastructure. That also explains why Chongqing relies on Siemens technology for many of its key projects. Just a few years ago, to cite one example, a rusty suspended tram spanning the river was the city’s most advanced mode of transport. In 2004, however, that honor was transferred to the city’s first commuter rail line, which began operating with Siemens control technology, electrical supply equipment and alarm systems. Six additional above-ground and underground rail lines are being planned. Siemens also provided building systems technology for Chongqing’s new airport, trade fair center and numerous new hotels and office buildings. The company also supplied control systems and network technology to the Luohuang coal-fired power plant, one of the municipality’s major power utilities.

This infrastructure is the foundation for making Chongqing a competitive business location. The story of Chongqing’s largest company, the Chang’an Automotive Group, which has 43,000 employees, illustrates how this goal can be achieved. The state-run enterprise, which used to make military vehicles, was reorganized into one of the country’s leading manufacturers of passenger cars and commercial vehicles. In 1993, Chang’an established a joint venture with Suzuki, followed in 2000 by one with Ford. The Japanese and American companies originally wanted to set up on China’s booming east coast, but the authorities in Beijing enticed them into the interior with investment incentives. This was the spark that got things moving for Chongqing, as Suzuki and Ford brought with them not only modern technology and new management methods but also suppliers, whose employees needed hotels, rented offices, and created jobs for the local population.

Siemens VDO is one of the chief suppliers in Chongqing. Because the automotive supplier was already providing components to many joint venture plants run by Chinese and foreign partners (most notably Volkswagen facilities in Shanghai and Changchun), it was able to help Suzuki and Ford to quickly achieve a high level of local participation in Chongqing—a decisive factor for success in China’s hotly contested automotive market. The two joint ventures purchase a wide range of components from Siemens, including sensors, air-bag control systems, door-locking systems, alarms, audio equipment and instrument clusters. The components are produced at Siemens factories in Shanghai, Changchun, Wuhu (Anhui province) and Huizhou (Guangdong). "Today, Chongqing is so well connected via roads, railroads, harbors and airports that it’s no problem to establish efficient supplier chains," says Yuan Quan, Siemens Key Account Manager for Chang’an. "All of this shows how China is growing into a single huge market."

Chang’an has meanwhile become the fourth-largest automaker in China. In 2004 the company sold 580,000 vehicles, twice as many as in 2002. Its products range from Suzuki compact cars, Ford midrange models and other cars to minivans, buses, and small trucks that Chang’an makes on its own. Chang’an also uses Siemens components for these vehicles to ensure they remain competitive. For example, Siemens is developing the body control module for Chang’an’s new generation of mini buses.

Motorcycle Economics. Although the sales market for automobiles in China remains largely concentrated in prosperous eastern China, another product from Chongqing—motorcycles—is now also doing well in the west. The leading manufacturers already deliver their products all over the country and are now determined to conquer the world market. They plan to do this by establishing alliances with global leaders in technology—which is why Siemens subsidiary Synerject is building an R&D center in Chongqing. Here, 25 engineers will develop products for the motorcycle industry. "Siemens is very committed to providing tailor-made products to its Chinese customers," says Zhang Xiang, technical director of Jialing, the largest state-owned motorcycle manufacturer. "The Siemens development facility is an important step toward making Chongqing a center for technology and the export industry, because it will help local companies build vehicles of high quality." Synerject has already received initial orders for the development of its Engine Management System (EMS). "The use of Siemens drive technology is important from an environmental point of view, as it enables us to build fuel-efficient vehicles," says Zhang.

Siemens has also entered into other technical partnerships in Chongqing, such as the one with the Chongqing Iron & Steel Design Institute (CISDI), a government research center for the metalworking industry that is steeped in tradition, and which is also playing a key role in the modernization of the Chinese iron and steel sector. CISDI is a system integrator that’s bringing iron and steel plants throughout the country up to par with the latest technology—using Siemens products including control technology, automation units and drive control systems. The iron and steel services provider from Chongqing and the German high-tech company have already built many iron and steel plants together, from Xinjiang in the far west of China to the eastern Chinese port city of Tianjin. They also established a strategic partnership in 2005.

Treating Cancer with Ultrasound. Siemens cooperative projects in China extend into the medical systems sector as well. Many hospitals in China, including Southwest Hospital in Chongqing, use diagnostic equipment from Siemens. Several months ago, Siemens established a partnership with Chongqing Haifu Technology Co. (Haifu) for the joint development of magnetic resonance (MR)-guided high-intensity focused ultrasound treatment systems and their subsequent market launch. Here, Siemens’ technological leadership in magnetic resonance imaging fits perfectly with Haifu’s experience in ultrasound therapy. The treatment allows doctors to burn tumors with high-intensity ultrasound while MR, which depicts organs and temperature variations, shows them exactly where the heat is being focused. "We’re very pleased about our cooperation with Siemens," says Haifu President Prof. Wang Zhibiao. "This new, exciting development will enable us to offer the treatment to patients worldwide."

Partnerships such as these have been helping to transform Chongqing from a remote metropolis to an integrated center of commerce. At the same time, economic developments in other parts of China have long been having an impact on Chongqing.

The shortage of workers in the Pearl River delta has encouraged more and more factories to move to Chongqing, where wages are much lower than on the east coast. High real estate prices in the Shanghai region are also prompting businesses to relocate to Chongqing, where foreign companies invested $2.5 billion between 2000 and 2005.

Still, the biggest impact is due to the Three Gorges Dam, which is 300 km down river from the city. Although disputed for its social and environmental implications, the project has many advantages. For example, the 18,200-MW plant located there provides electricity for the entire region. Siemens provided the plant with large transformers as well as technical assistance. It has also provided two 420-ton rotor disks and key generator components from joint venture company Voith Siemens Hydro.

What’s more, by raising the water level, the Three Gorges Dam will make Chongqing accessible to large ships. This feat will be possible thanks to 113-m-high ship locks—the world’s tallest—for which Siemens has provided the lock control systems. In 2009, when the Three Gorges project will be completed, Chongqing’s citizens will be able to enjoy a lovely river promenade and admire the large ships. And, of course, the patrons of water-front restaurants will continue to enjoy the Chongqing Hot Pot.
                                                                                                          Bernhard Bartsch