Siemens sets sights on China's rapid city growth

International industrial group Siemens AG said on Tuesday that fast urbanization in China is expected to provide huge market opportunities for its new infrastructure and city business in coming years.

Mei-Wei Cheng, CEO of Siemens North East Asia and president of Siemens Ltd China, said the new unit, established in November last year, has already been involved in metro-system construction in China.

"We expect it to grow in accordance with the speed of China's urbanization, as Vice-Premier Li Keqiang has said urbanization is to be one of the driving forces for China's economic growth during the 12th Five-Year Plan (2011-15) period," he said.

In 2012 alone, Siemens infrastructure and city business provided integrated advanced metro solutions in five cities - Nanjing, Qingdao, Chongqing, Suzhou and Dongguan.

Siemens plans more such projects nationwide, especially in western and central regions, where urbanization is booming.

The operator of the metro line being built in Xi'an, capital of Shaanxi province, is showing its interest in signaling solutions provided by Siemens.

A report in 2011 from domestic brokerage Rising Securities Co Ltd says rapid urbanization needs mass transportation, with metro systems being the most efficient form.

It said the nation will construct 85 new lines with a total length of nearly 3,000 km in more than 30 cities, with a combined investment estimated at 1.2 trillion yuan ($192 billion) during the Five-Year Plan period.

Siemens infrastructure and city sector is also eyeing the nation's high-speed rail sector, Cheng said. "We hope new project tenders (for high-speed railways) will open, in which we have technological advantages and are very competitive."

But analyst Xu Haiyang from Rising Securities said the company faces strong competitors such as Thyssen Krupp AG, Alstom Ltd and East Japan Railway Co.

Cheng said in addition to railway construction, China's urbanization will also benefit building technology, smart grid, mobile logistics and low and medium voltage units under Siemens' construction and city business.

During the fiscal year from Oct 1, 2011 to Sept 30, 2012, Siemens China achieved its second-best result despite challenges brought by the global economic slowdown and cooling growth of the Chinese economy.

In the current fiscal year, new orders for Siemens in China have reached 6.04 billion euros ($7.82 billion) and revenue has reached 6.35 billion euros, compared with 6.24 billion euros and 6.39 billion euros last year. China contributes 8 percent of the company's total global revenue and remains its second-largest overseas market to the US.

"China's economy has picked up and stabilized. We will see a sound market environment in the coming years," said Cheng, adding that he expected the growth of Siemens China to match his individual goal of doubling revenue during his five-year tenure starting from July 2010.

Executives from other multinational companies have also voiced optimism about the Chinese economy.

Caterpillar Group President and Chief Financial Officer Edward J. Rapp has said he believes China "has bottomed out" and will continue to grow.

Johannes Dietsch, president of Bayer Greater China Group, said he expects double-digit growth rates for the German company in China in coming years.