Millions Use Samsung SDS’s Metro System in China, India
By Cho Jin-seo
Traffic congestion is one of the major concerns that has unnerved Beijing's officials, as the Olympic Games will bring an unprecedented number of visitors to the city in August. Introduction of an ``athlete-only'' lane is one of the measures they are considering. But a more fundamental relief will come from the addition of three new subway lines, in which Korea's Samsung SDS is playing a crucial role.
The company has provided an automatic fare collection (AFC) system at 26 stations on Line 10 and the Olympic Spur line, which will open at the end of June. The cutting-edge automated system will replace the 30-year-old paper tickets of Beijing metro in order to reduce the hustle and bustle at the ticket gates ― ``Beijing Subway to Bid Farewell to Paper Tickets,'' the state-run People's Daily proclaimed.
``We are absolutely confident that the AFC system will work flawlessly in Beijing,'' said Yun Ho-sok, vice president of Samsung SDS. The system has been on a trial run for three months. He also boasts that Samsung's AFC system beat those made by French and Japanese firms during a performance test.
The modern AFC system does more than just selling and receiving tickets. Today's public transportation systems use various high-tech methods to collect fares, such as the smart card, which uses radio frequency to scan the card.
Ticket vending machines and gates at each station are wired into a single computer network via high-speed communication cables so they can be monitored and controlled simultaneously from the central computer center. Upgrades and modifications of software systems can be done easily via the network.
Use of a portable ticket checking system is also available, using wireless technologies. The system is also linked to bank accounts, so the fares are automatically accumulated and calculated.
Samsung SDS has accumulated its know-how and technologies in the AFC system from projects in South Korea. The company has provided the same package to KTX, Seoul Metropolitan Subway and public transportation systems in many other cities. The company then turned its eyes to overseas markets, especially China.
``A head count is the most important thing in the mass transit system business,'' Yun said. ``China has many large cities that are as big as Seoul, and most of them were introducing subways. As Chinese cities have a rush-hour culture similar to South Korea, we naturally selected China as our target.''
So far, the company has been involved in nine overseas metro projects in China's Guangzhou, Muhan, and Beijing and Taiwan's Taipei and India's Delhi. The first project in Guangzhou Line 1 and Line 2, completed in 2005, was so successful that it has become a showcase for other projects, the vice president said.
From a financial perspective, the train system business accounts for only a small part of Samsung SDS' sales. The company is the largest IT service firm in South Korea with some 2.5 trillion won in sales and over 8,000 employees in Korea and other countries.
A large part of the revenue is made from operating Samsung Group's corporate computer systems, such as finance, supply chain management, human resource management, customer relations management and logistics and payment systems. It also does the software outsourcing business for Samsung Electronics and many other Samsung affiliates.
The division that takes care of the public infrastructure such as the AFC is aiming to win $100 million in orders this year, which will account for only 4 percent of the firm's revenue. Still, it has a significant meaning to the firm in its globalization efforts, Yun says.
``This is a flagship item for us. Most of our overseas sales are made from the AFC systems,'' he said. ``We have a certain spirit in doing this business.''
To India and Further West
As its AFC system has earned high acclaim in China, Samsung is now expanding the AFC business further west. The next destination is India, another country that has a vigorously growing urban population.
The firm is off to a good start. On April 23, it announced that it won a $20 million order from the metropolitan government of Delhi to facilitate an AFC system for 41 subway stations on three extension lines of the city's metro. The construction is scheduled to reach completion by May 2010, in time for the Commonwealth Games that the Indian capital city will play host to.
The tricky part of the Delhi system is that it is an expansion of an existing system, which was built by French firm Thales. But Samsung ``has the edge when it comes to making their systems compatible with others,'' Yun says.
The firm plans to participate in similar bids expected to take place throughout India, including Mumbai, Bangalore and Kolkata. It is also seeking sales opportunities in other regions in Asia, such as Kazakhstan and Kyrgyzstan.
``Samsung SDS wants to be one of the top 10 IT service companies by 2010. To achieve this goal, we need to adopt new business models and expand our market overseas,'' Yun said, adding that it is considering several acquisitions of local and foreign firms.