• High Speed Bullet Trains

• An All Electric World? 

• Cleantech, World Leading Technology and Chinese Lead Mining In Africa

I started off my recent China visit with our China Team by getting on the high speed bullet train from Shanghai to visit our wind power portfolio company in Wuxi. As I entered the train station I felt like I had just entered a science fiction movie. The train station was huge, super modern, spotless, shining steel glass and granite, and absolutely beautiful. The scale was stupendous. The station was easily as long as three football fields with ceilings probably 80 feet high.

A few minutes later our train was leaving. We whisked through futuristic automated ticket readers with glass gates that opened for each passenger upon ticket insert, and then we moved down escalators to the level below. Awaiting us were the bullet trains. With long pointed noses resembling a fighter plane, these sleek silver beauties have now set the world standard for high-speed trains.

We boarded the spotless train, and decided to travel in the dining car. Sipping on coffees as the train silently accelerated, we started doing some work together. I looked out the window and thought we seemed to be moving pretty quickly. Natalie LI, our senior analyst in China suggested I take a peek at the LED readout displayed at the rear of the car. We were flying along at over 300 km/h ( about 200 mp/h!). We ended up touching 330 km/h, but you would never have known it as there was never even a bump or wiggle. The ride was incredibly smooth.

Simon Shi, our regional president, told me that the train was actually capable of topping out at 415 km/h in test runs. Wow. And soon the Shanghai to Beijing (about the distance from New York to Chicago) high speed bullet train will be operational, cutting the 700 mile transit time to 3 hrs 50 minutes; all electric, city center to city center. A two hour plane flight made in under four hours, and probably even quicker on the train because you eliminate travel out of the city to the airport, long security lines, passport control, and any of that hassle.

I now really understand where China is headed. All electric trains, all electric cars, with windmills, hydro and nuclear pumping out the juice to run the whole country. Once you start to see the long-term vision it becomes quite clear that China may be one of the first all- electric, renewable energy countries, and maybe in as soon as 30 to 40 years. Talk about sustainability and a really powerful competitive edge!

In the 12th 5 year plan which was just released in China, one expert interprets the high speed railway network to reach 45,000 km by the end of 2020, covering all cities with population size of over 500k.

We barely had time to finish our coffees when we arrived at Wuxi, 40 minutes vs. the 2.5 hour drive I have done so many times. We went to visit our portfolio company China Wind Systems, Inc. [CWS]. We were impressed that the company is in the process of setting up their advanced fabrication and machining facility for the solar manufacturing equipment business they are adding to complement the existing wind and industrial industry revenue streams located in neighboring buildings. During our visit they were putting the finishing touches on the installation of a huge robotic CNC gantry capable of rapid precision machining, as well as preparing the area for other machines arriving soon to ramp up the production quantities.

The company told me that this division is being led by their VP of Ops, Ryan Hua, and their new CFO, Fernando Liu, and filled out with the best and most skilled workers to be able to service the most demanding international customer's rigorous demands. Once again we are seeing China Wind move into another high value add Cleantech manufacturing business, and believe that they will have great success in making this happen.

With rising labor costs, we are seeing that the Chinese companies that have vision are responding with higher levels of technology and manufacturing innovation value-add, and transitioning to international level manufacturing quality and procedures, much like what happened with Japan and Korea going upstream over time. China however has a significant edge in that it has a much larger labor pool and the advantage of scale that those countries could never come close to matching. Mr. Wu the Chairman of [CWS]seemed pleased with the quality of the new developments.

Leaving China Wind we whisked back on the high speed bullet train to Shanghai, arriving early for our next meeting. We met our energy saving amorphous alloy portfolio company, China Power Equipment, Inc. [CPQQ], for tea in the Xijiao Garden State Hotel, the garden palace where Mao Tse- tung used to reside in Shanghai which is now a beautiful hotel with exotic birds roaming its gardens, pagodas and little rivers. The China Power team were happy with Premier Wen's plans for the nation to focus on energy savings, which they feel really aligns with the advantage of their transformers. These transformers utilize advanced amorphous technology to eliminate 75 percent of the energy burned. And now because of Chinese technological innovation by entrepreneurs like Mr. Song, CPQQ’s Chairman, this technology has become cost-effective and is in widespread deployment in China. This is an area where China is ahead of the rest of the world. Transformer companies and utilities in the U.S. and Europe are not even using amorphous alloy. Yet in China, it is rapidly becoming the de facto standard for the new transformers being added by the utilities.

Dinner with a Chinese company in which we have a small holding which has begun lead (needed for batteries) mining operations in Nigeria concluded our evening. Chinese companies working with partners in Africa to increase supplies of badly needed metals to feed the huge Chinese manufacturing machine are a growing trend that we are closely monitoring. There are risks and ethical issues which need to be addressed when doing business in Africa however, so we are proceeding cautiously there. After a standard twelve hour work day in China I said my “haode haode” (howdy howdas = it’s all good, it’s all good) and retired for the evening , ready to get up and do it again tomorrow.