According to the 11th Five-Year Plan, China’s railway industry will enter a dramatically developing period. Railway network construction, located upstream of the railway industry, will get the business opportunities first, including rail-track laying, engineering & machine, bridge bearings.

Similarly, the railway equipment manufacturing industry will boom in a manner commensurate with being located midstream of the railway industry chain. It’s estimated that the explosive growth of downstream transportation business will be seen in the year 2008 or near there, when the railway network is expected to be perfected.

China’s railway equipment manufacturing industry mainly contains railway locomotive & rolling stock and motor train-sets manufacturing industry, railway special equipment and component manufacturing industry.
There has been a widespread growth seen in the industry. The great increment of fixed assets investment boosted the demand for railway equipment, which also largely advanced the prosperity degree of the railway equipment industry. The economic index of the railway equipment manufacturing industry in 2006 indicated that profit had clearly improved compared to the previous year.

In Jan-Sep 2006, the industry achieved a sales income of RMB 51244 million, a year-on-year increase of 19.57%. The great sales increment resulted in the shape growth in industry profit, and the gross profit margin reached 14.11%, a year-on-year growth of 0.74%. This shows that the industry’s profitability has improved and that profit was quicker than sales income. The total industry profit in Jan-Sep 2006 was RMB 12971 million, a year-on-year increase of 78.97%. The industry profit margin increased gradually, and reached 2.53% in Jan-Sep 2006, largely improved compared to that (1.69%) of 2005, a year-on-year growth of 49.7%. The capital profit margin in Jan-Sep 2006 reached 1.83%, also enjoying a great increment compared last year’s 1.14%. The return on investment ratio of railway equipment manufacturing industry went up, and loss-making enterprises occupied an increasingly small proportion.

Judging by the increment of railway investment, coupled with the low price operation of raw materials, the industry is generally on an upswing. There seems a huge rise in profits- also high-speed development is expected in the future.

A new report addresses the investment & financing of railway construction in China and issues concerned with the privatisation of China’s railway industry.