Photos: Luxurious bullet train – corruption enabled by government procurement
February 28, 2012Jing GaoOne Commentbullet train, bullet trains, caixin magazine, China railway high speed, corruption, government procurement, Ministry of Railways, New Century Weekly, Rail transport, railway system, Railways Ministry, Zhang Shuguang
The devil is in the details; extravagance is in the details of a bullet train. 1,125-yuan toilet paper holder, 2,294-yuan foot-rest, flush toilet priced at nearly 100,000 yuan…An investigation report by New Century Weekly has unveiled overpriced parts one after another, and a bullet train that costs money like dirt. Behind these are “gray” budget and expenditure that are not transparent due to lack of oversight.
(Note: CRH, short for China Railway High-speed, is the designation for high-speed trains running on China’s rail system. Various train models are differentiated by sub-designations, running from CRH-1 through CRH-5.)
The chair for VIPs in CRH380 series is priced at 160,000 yuan (US$25,000) each. The exclusive supplier is a Shanghai-based company called Yuan Tong. Even in the eyes of insiders at the manufacturing companies, the enigmatic Shanghai-based company shrouded in secrecy must “have underground and reliable connections.”
On a CRH-2 bullet train, the price of a pair of armchairs and their amenities is as high as 40,000 yuan (US$6,250). The monopoly supplier is Shanghai Tanda. According to Caixin Magazine, other manufacturers of the same products quoted a price about one third lower than Tanda and Yuantong. Another company that specializes in assembling parts for bullet trains said that the small table for two priced at 14,000 yuan (US$2,187) only costs at most 9,000 yuan (US$1,400). In 2008, Zhang Shuguang, then deputy chief engineer of Ministry of Railways, announced in a conference that Tanda is the sole manufacturer of all chairs in the first- and second-class coaches of all CRH bullet trains.
A single-seat armchair in the first-class coach is priced at 22,014 yuan (US$3,430). The armrest alone is priced at 3,425 yuan (US$535). Caixin Magazine reporter managed to obtain a list of suppliers for CRH2 bullet trains against all odds, which finally unraveled the mystery of such outrageous monopolies and absurd pricing.
The mesh seat pocket: 90 yuan (US$14).
Footrest: 2,294 yuan (US$358).
Qingdao-based company Chenguang has maintained the monopoly on the supply of liquid crystal displays for CRH2 trains. It sells its 15-inch LCD at 13,472.99 yuan (US$2,105), whereas the highest retail price on the market is only 7,000 yuan (US$1,093). Other manufacturers of LCD are startled, “The profit margin must have been 100%.” According to local suppliers in Qingdao, Chenguang is also a mysterious company. On the Internet, no information can be found about the company, except that its owner Zhang Chenguang is engaged in charity work. “Chenguang is a trading company. It does not engage in manufacturing,” said a supplier to high-speed trains who met the owner of Chenguang.
LED ceiling lights are procured at 6,669.99 yuan ($1,042), whereas the retail price in the market is only 4,200 yuan (US$656).
The 12-watt reading light is procured at 1,416 yuan (US$221) apiece. However, the highest-end product on the market is sold at 500 to 600 yuan (US$78 – 93) apiece.
The lavatory has the highest profit margin among all bullet train amenities. According to Caixin Magazine, on the procurement list of CRH2 train, a marble bathroom countertop is procured at 26,000 yuan (US$4,062), whereas the retail price on the market for the same marble countertop is 3,100 yuan (US$484) per meter. Bathroom countertops used by the bullet trains seldom exceed 2 meters in length.
Motion-activated faucet is procured at 12,800 yuan (US$2,000). A sales representative for a Swiss brand said its most expensive faucet is only 7,000 yuan, and faucet manufactured by a Ningbo company is only priced at around 3,000 yuan (US$468).
Recessed toilet paper holder: 1,125 yuan (US$178).
The flush toilet is a German brand and procured at 95,047 yuan (US$14,851). A toilet supplier explained that flush toilet on board a train is different from regular ones in that it incorporates vacuum and disposal system. But even if this is true, the 95,000 yuan price is still unbelievable. One detail merits attention: Wang Xing, wife of Zhang Shuguang who worked at the deputy chief engineer of the Railways Ministry, is the most avid broker of the bathroom items. She even presided over the establishment of joint-ventures between several international manufactures of bathroom items with domestic companies.
Expenditure on a lavatory in CRH2 trains exceeds 300,000 yuan (US$46,875), whereas that of a lavatory on CRH 3 trains is even more outrageous: 1.2 million yuan.
In addition to common parts aforementioned that are palpable to ordinary people, other more technological parts are similarly overpriced. All these have contributed to the making of a bullet train that costs taxpayers 140 million yuan (US$21.9 million).