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Amazing growth
The future looks good for Changzhou Pacific. The switchgear manufacturer is one of the many companies that are powering China’s economic
success – and that are, in turn, powered by it.
Text: Justus Krüger, Photos: Shiho Fukada / Panos
Changzhou Pacific Electric Power Equipment uses state-of-the-art equipment and employs 600 staff in two factories.
Who has ever heard of Changzhou? The city
of 4.5 million inhabitants is clearly not among
China’s most famous places. Maybe this is in part
because it is squeezed in between its more
renowned neighbors Shanghai and Nanjing. If
Changzhou is not widely known outside of China,
it is certainly not due to economic reasons. It is one
of the country’s most successful cities. Its growth
rate between 2005 and 2009 was a staggering 18
percent per year; a host of “Fortune 500” companies have set up shop in the city, and its per capita
GDP is among the highest in the country.
All this makes Gao Guokai proud of his city. “When
I was young,” says the 63-year-old, “Changzhou
had a population of just 36 wan” – 360,000. “It
covered 36 square kilometers, and people earned
about 36 yuan per month.” Mister Gao laughs his
hearty laugh. “Somehow, everything came in
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batches of 36.” Even then, he recalls, Changzhou
was a center of industry – especially the textile industry. But what has made the city rich in recent
years are its machine tool manufacturers and its
electronics companies – like Mr. Gao’s.
“I’m really a son of Changzhou,” he says, taking a
sip of his favorite Longjing green tea from his giant
cup. “I was born here. I grew up here. My family is
here. And my company is also here. Everything
I have is in Changzhou.”
Mr. Gao is a down-to-earth, energetic man. You
can tell by the way he moves about in his spacious
office that he spends more time there than at
home. Or maybe the office is his home. There is a
huge calligraphy on the wall showing a quote from
the “Romance of the Three Kingdoms,” a classical
novel from the Ming dynasty about chivalry, courage, and loyalty. A small water kettle on the shelf is
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constantly bubbling – Mr. Gao drinks a lot of tea.
Ashtrays, cups, and paperwork are distributed over
several tables, and there is a constant coming and
going of people who have work to discuss. Mr. Gao
likes to get down to business. He does not stand on
ceremony. Neither is he too fond of Shanghai, the
big city just to the south of Changzhou, and its refinements. “I don’t like Shanghai too much,” he
says. “People there are kind of prissy.”
constant growth
He likes Changzhou a lot better. His hometown is
also featured in the name of his company. The
Changzhou Pacific Electric Power Equipment
Group, founded and run by Mr. Gao, is by some
measures the largest manufacturer of switchgear
in China. When Mr. Gao started in 1992, it was a
tiny firm. It didn’t even operate from its own prem-
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ises. Instead, it rented the factory grounds and machinery when needed. Today, it owns two factories, runs state-of-the-art equipment, and has
more than 600 employees. It has certainly grown
very rapidly since it was founded not even twenty
years ago.
“How did I do that? Well, I work very hard,” says
Mr. Gao. He runs the company like an old-fashioned industrial patriarch – and that means taking
on a lot of responsibility. The company is his own
creation, after all, and he has more than just a professional interest in its success. “I am actually poor,”
he quips. “But the company is doing very well. We
consistently reinvest our profits, and we keep
growing.”
Mr. Gao also credits his Chinese patriotism and his
admiration for the successes of Mao Zedong. “If I
was to describe the spirit of Mao in a nutshell, it
“We constantly
reinvest our
­profits, and we
keep growing.”
Gao Guokai, CEO Changzhou
Pacific Electric Power Equipment
Group
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Changzhou Pacific China
“All else being
equal, I would
always opt for a
Bystronic
machine.”
Gao Guokai
means being tough in the face of obstacles, and it
is always an inspiration for me at work,” he says.
“Besides, China has been rather underdeveloped
in the past, and we certainly do not want it to stay
that way. That motivates us to put in even more
­effort.”
His company has done so successfully. Ever since
the beginning of Deng Xiaoping’s economic reforms, the true potential of the Chinese economy
has become more and more obvious. As is well
known, the country has generated amazing economic growth for more than thirty years. After
starting the reforms in the late 1970s as a poor developing country, China’s economic output overtook that of the United Kingdom in 2005, replaced
Germany’s as number three in 2007, and overtook
­Japan three years later. It is expected to leapfrog
the USA and become the world’s largest economy
(measured in purchasing power parity) by 2016,
and the most productive country in the world in
absolute terms around 2020.
It’s been quite an amazing development for the
country. People like Mr. Gao and his company are
driving it – and are in turn powered by it. The
growth potential of the markets for Changzhou
Pacific seems virtually endless. “The company has
indeed grown very quickly in the past twenty years,”
says Mr. Gao. “I am confident that it will grow even
more quickly in the coming twenty years.”
Changzhou Pacific started out building switchgear
for power plants, the chemical industry, and for oil
refineries. These and similar customers still make
up approximately 75 percent of the company’s
turnover. This is a market that is not likely to slow
down, as China keeps building power plants and
other industrial outfits at a high speed.
Another area of growth is urbanization. At present,
Evidence of the good cooperation between Changzhou Pacific
and Bystronic: a 1997 vintage Bysprint.
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approximately 50 percent of the Chinese population live in cities. In 1978, the ratio was a mere
18 percent. In Germany, by comparison, the ratio
in 2005 was 86 percent. “China is in the midst of
a huge urbanization process,” says Mr. Gao. “This
is going to go on for a long time. And as all the
new housing that is going up contains electric installations, obviously they need switchgear.” This
is a long-term, high-growth area for Changzhou
Pacific.
And yet, the most dynamic business for Mr. Gao’s
company is elsewhere. Equipment for Chinese railroads is a market segment with astonishing growth
that is outpacing all other sectors. “China has a vast
territory and a huge population,” says Mr. Gao, not
without pride. “People need to be mobile. And
how is that going to happen? Railroads.”
on track to the future
The Chinese government is allocating enormous
sums to the construction of a state-of-the-art network of high-speed railways. Already now, a mere
four years after the commencement of the highspeed railroad project, China has the most extensive network of gaotie, as the fast trains are known
in Chinese, with no less than 9,600 kilometers of
high-speed rail as of June 2011. By 2015, the length
of that network is projected to grow to 25,000 kilometers. By comparison, the Spanish high-speed
rail network, the most extensive in Europe and the
global number two, spans 2,665 kilometers. A lot
less extensive in absolute terms – but a far larger
share per capita than in China.
“If you break down the length of the Chinese railroad system – not just the gaotie, but all of it – to
the number of Chinese citizens, it’s just a few centimeters of railroad per capita. Not even” – Mr. Gao
pulls out a pack of Zhonghua, an upmarket brand
of cigarettes famous in China – “not even the
length of a single cigarette.” He lights the Zhonghua and flashes a big smile. Construction in China,
he is convinced, will not cease for a long time, and
the railroad companies are set to become his most
important customers.
Mr. Gao’s company already has a big stake in the
high-speed project – and in one of its most spectacular new rail connections. This is the link between Shanghai and Beijing, which went into operation in June this year. With the new trains
reaching top speeds of 300 km/h, the 1,300-kilometer trip takes a mere five hours. Approximately
40 percent of cubicle-type gas-insulated switchgear or C-GIS for this link are manufactured by
Changzhou Pacific. This type of switchgear accommodates all the live components in a gas-tight
stainless steel enclosure containing SF6 gas. SF6
stands for sulfur hexafluoride, a gas molecule in
which six fluorine atoms are arranged around one
sulfur atom. SF6 is a nonflammable, nontoxic, and
non-ozone-depleting, highly insulating medium
that provides optimum conditions for the handling
of high voltages.
It goes without saying that customers such as the
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The fully automated Byspeed helps Gao Guokai to offset increasing wages.
Another advantage is that sensitive metals are handled carefully.
Production plans can be met because Bystronic systems operate reliably.
Changzhou Pacific China
companies involved in the Chinese high-speed
railroad project are extremely demanding. And this
means that Mr. Gao needs to be able to rely on his
equipment and his partners.
quality matters
“When it comes to choosing the machine tool
needed to manufacture the switchgear,” he says,
“the two most important points are of course the
quality of the machines and, equally important,
the quality of the service.” Both criteria, Mr. Gao
thinks, are best met by Bystronic. Changzhou
Pacific started using a Bystronic laser cutting machine with a loading and unloading system in 1997
as the first company in the city. “From the start, we
were so satisfied with the equipment and the service that I recommended these machines to other
companies in Changzhou,” says Mr. Gao. “Many of
them have then also switched to Bystronic.”
By now, his in-house engineers naturally are thoroughly familiar with the equipment. “This means
that in the event of minor problems, we can fix
them ourselves. If a situation does arise where we
have an issue we can’t take care of here, the
­Bystronic service is fast and reliable,” says Mr. Gao.
Good service, he explains, has three components.
The first is an initial feedback, followed by, if necessary, a Bystronic engineer coming to the workshop.
If needed, finally, spare parts must be available
quickly. “This works so well that, everything else
being equal, I would always opt for a Bystronic machine. Service is important; we can’t afford to mess
up our production plans.”
While service is crucial if something does go
wrong, it does not follow that this happens
­frequently. “I don’t know whether the Bystronic
service is still as good as it used to be,” Mr. Gao
quips. “I haven’t used it in a long time.” It wasn’t
necessary.
In 2010, Changzhou Pacific acquired two highly
productive new machines, the Byspeed and Bystar,
specifically for the manufacturing of C-GIS switchgear for its railroad customers. Along with the
laser cutting systems, Changzhou Pacific also opted for the ­Bycell automation system.
One big advantage that China has had during its
breakneck-speed development since the 1980s
was low-cost labor. But this is beginning to change
– one reason for Mr. Gao to opt for automation.
“Wages are rising in China,” he says. “Labor is not
as cheap as it used to be. Living standards have
been improving a great deal, and this is certainly
going to continue.” But there are other reasons for
his choice. The surfaces of the stainless steel sheet
metals are rather sensitive and easily damaged.
This simply does not happen when using the automated system. Another advantage of the Bycell is
its reliability, steadiness, and consequently its predictability, which is a positive factor in designing
dependable production plans. Finally, Gao thinks
that humans are simply too smart for the kind of
work at which the machine has replaced them.
“Obviously, people are intelligent. So I would rath-
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Gao Guokai takes the long view – including when it comes to selecting machines.
“Many other companies in
­Changzhou have also
switched to Bystronic.”
Gao Guokai
er have them work on tasks that really do require
intelligence. For everything else, my attitude is, if
we can do it automatically, that’s what we do.”
Mr. Gao is confident that not only his company,
but other Chinese companies like his will stay successful. The times when Western products constituted the benchmark for quality and Chinese companies worked to adapt to their standards is
drawing to a close, he believes. “Even today, our
products are better than those of our Western
competitors,” he states. Mr. Gao is an ambitious
man in an ambitious country. “China will keep improving,” he says. “We are going to be number one.”
Justus Krüger is a freelance journalist based in
Hong Kong. He has written for the “Financial Times
Deutschland”, “GEO”, the “South China Morning
Post”, the “Berliner Zeitung”, and “McK Wissen”.
Precisely engineered parts and high
output: At Changzhou Pacific, the
laser cutting systems mean satisfaction
is guaranteed.
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