International Campaign for Tibet

On top of the world

Niangqu Village, Tibet - Forty-five years ago, Ni Ma was born in a tent of yak's fur on the vast, empty grasslands of the Tibetan plateau. Like his father and grandfather before him, he grew up to lead a traditional life of herding yaks and sheep in a remote land that had changed little for centuries.

On those rare days when Ni Ma killed a yak to feed his family, it was a moment of sadness. As his forefathers had done, he took the animal's life with deliberate ceremony, holding butter-oil candles near its nose and putting holy water in its mouth as he tightened a rope around its neck. This "crying ceremony" is a sign of grief in a Buddhist society, where all life is sacred.

But today, as he gazes across the mountains and frozen pastures of his homeland, Ni Ma knows these old ways are about to change forever.

Red Communist flags are fluttering in front of his two-room cement house, and Chinese officials are putting pressure on him to give up the ancient ceremonies, to kill more yaks and sheep, to sell the surplus meat for commercial prices and send it off over a gleaming new ribbon of steel that connects his land to the teeming metropolises of China's east coast.

With the arrival of Tibet's first railway this summer, Ni Ma accepts that the market economy has arrived in his homeland, and that his subsistence way of life will soon die. Yet he cherishes the ritual that marks the death of each yak. "My father and mother did that ceremony," he says. "And some day my children will, too."

For the past five years, more than 100,000 workers have swarmed over this forbidding land, building a $4.2-billion (U.S.) engineering miracle that traverses the 1,140 kilometres of mountains and permafrost between Tibet's capital, Lhasa, and the Qinghai frontier city of Golmud, where existing track runs to Beijing. Now the trains are running every day-and they are generating money for Canadian investors.

Indeed, Canadian companies, led by Bombardier Inc., have been crucial to the rail project. For other Canadian companies, the reverse is true: The train is crucial to their projects. The contingent ranges from mining companies and mineral-water bottlers to telecommunications providers and luxury train services. The opportunities here are huge; so are the risks. The key question is whether the Canadians can exploit those opportunities without threatening the survival of a vulnerable people. The companies need to provide development that benefits Tibetans, while negotiating a gauntlet of political protesters and the technical challenges of doing business in one of the world's most hostile climates.

Ever restless and energetic, China's Communist leaders are pushing for rapid change in Tibet. For them, the nomadic traditions are nothing but a hindrance. The message has reached the lower-ranking cadres. "We will not cry again for the killing of our animals," says municipal official Banjue Luoba as he meets a group of foreign correspondents in a tent on the grasslands.

In the nearest county capital, a senior Chinese official is impatient with the ancient rituals of the herdsmen. "This kind of concept has restricted our development," Nagqu county commissioner Duan Xiangzheng says brusquely. But he is confident the railway will soon do its magic. "In the past, the herdsmen had weak economic thinking," he says. "If they were fed and sheltered, they were satisfied. But the railroad is changing their thinking. Thanks to technology and development, now they are entering the market economy."

Bombardier and its financial partner Power Corp. are providing the high-tech, oxygen-enriched train cars that are key to this transformation. Another Canadian corporate icon, Nortel Networks, is supplying the GSM-R communications system for the trains-the first ever commercially installed in China (GSM-R stands for global system for mobile communication-railway). And lesser-known companies, such as Continental Minerals Corp., will provide much of the freight.

Canadians have grown accustomed to seeing negative headlines about the woes of Nortel and Bombardier in their North American operations. But both companies are profiting nicely from the Tibet railway. Indeed, China is a big part of both companies' future. And while they might be struggling with their business plans in some parts of the world, both Bombardier and Nortel are among the market leaders in China. Nortel expects to make hundreds of millions from its GSM-R technology as China modernizes its railway system.

How did Canada end up being one of the biggest foreign investors in Tibet? There's a certain logic to it in a historical parallel. Providing an east-west link over a vast, rugged land, the 4,000-kilometre railway from Beijing to Lhasa echoes Canada's 19th-century transcontinental railway. The new Tibetan line allows settlers from the east to gain dominance over a restless western frontier, and opens up a wild territory to domesticating development.

During the tumultuous decades of the early 20th century, Tibet had a strong claim to autonomy and perhaps even independence. Some scholars have suggested that Tibet met all the international standards for statehood in the middle of the century. But in 1950, after the Communist revolution, Beijing sent troops into much of Tibet, securing an agreement that Tibet would be part of China. But the Tibetans rebelled against their new rulers, and Beijing retaliated in 1959 with a full-scale military occupation.

In the 1960s and 1970s, tens of thousands of Tibetans are believed to have been killed by the Chinese or sent to labour camps. Most monasteries were closed, and Buddhist texts were destroyed. The number of monks and nuns fell from about 115,600 in 1958 to only 970 in 1978, after the Cultural Revolution. China's ethnic majority, the Han Chinese, have moved in at such a rate that today the Tibetans are a minority in Lhasa.

Beijing is now using the new railway to ensure that Tibet is tightly integrated into the rest of China. Migrant workers and tourists are pouring into the region. The railways ministry forecasts that almost a million people a year will arrive in Tibet via rail, of whom 400,000 will be tourists. Train tickets are subsidized-some seats are as cheap as $55 for the two-day journey from Beijing, much cheaper than airfare.

The line's inaugural run in early July was impressive technologically-and also impressive as an exhibition of the Chinese obsession with image management.

The train ran smoothly, arriving in Lhasa five minutes ahead of schedule. But the effect of the journey on the cars' contents was a reminder that the sheer altitude of the route was long thought to make railway construction impossible. At Golmud, a doctor and a nurse boarded the train, and attendants showed passengers how to use the emergency oxygen supply that is available to supplement the oxygen injected into each carriage through the air-conditioning vents.

When the train had climbed above 4,000 metres, the doctor's and nurse's services were required by passengers who felt weak, and a few people could be heard vomiting in their bunks. After several hours at high altitudes, ballpoint pens started bursting, as did the tiny airbags that cushion disk drives, causing laptops to crash.

The signage and announcements aboard the train were persistently upbeat about Tibet. The message was conveyed in Chinese and English, but not in Tibetan. Tibetan songs-actually Chinese songs about Tibet-were played loudly over the public-address system. In the dining car, flat-screen televisions showed, in an endless loop, a tourism-promotion video that portrays Tibetans as happy, singing-and-dancing folk.

But only a token handful of Tibetans were among the 600 officials, journalists and hangers-on aboard the train. And there were virtually no Tibetans among the 300 staff, many of whom were police and security agents.

The happy message was belied as the train approached Tibet. Soldiers of the People's Liberation Army stood at attention every few hundred metres along the line, and in rows at the main stations. Huge convoys of military vehicles were visible from the train, as were army camps and bases.

The railway has been roundly condemned for its cultural and environmental impact by many exiled Tibetan activists and Hollywood celebrities such as Richard Gere, who heads the International Campaign for Tibet. "Many Tibetans lost their land to make way for the railway, and Tibetan nomads are being forced to settle in cities," Gere wrote recently. "Its construction was based upon the Communist Party's old strategic and political objectives, and its main beneficiaries will be the Chinese military units stationed there, Chinese companies and Chinese settlers. ...It is also the most serious threat by the Chinese yet to the survival of Tibet's unique religious, cultural and linguistic identity."

In Lhasa, the Tibetan monks are fed up with the hordes of rowdy Chinese tourists who swarm into their temples and grab the monks for photos, even in the middle of theological discussions. On the roof of the sacred Jokhang Temple, monks openly admit that they fear the influx of Chinese migrants and tourists the railway is bringing to their homeland. "It will be too crowded," one monk says. Pro-Tibet activists have dogged Bombardier and Nortel at their annual meetings, and have likewise pressured smaller Canadian investors such as Continental Minerals, which is exploring for copper and gold near the route of a planned extension of the railway in central Tibet. But the Canadian companies reject the protests. "The railway is not our responsibility," says Jianwei Zhang, president and chief country representative of Bombardier China. "We're just manufacturing the cars. Bombardier's responsibility is to make certain of our long-term collaboration with China."

Bombardier's factory in the sophisticated coastal city of Qingdao is a world away from the wilds of Tibet. Qingdao, with its seaside boardwalk and resort-town atmosphere, is famed for its Tsingtao beer, its pre-revolutionary German architecture and its sailing regattas (the city will host part of the 2008 Olympics). Its freewheeling business climate dates to its days as a German-controlled treaty port, beginning in 1898. After the death of Mao Zedong, the port became one of the first wave of "open door" cities, where foreign trade and investment was encouraged.

In the 1990s, Bombardier won several contracts that allowed it to export subway cars to China that had no Chinese content in their manufacturing. But in 1999, Beijing introduced a new policy, requiring bidders on public contracts to give a chunk of business to Chinese producers. Bombardier had shrewdly anticipated this. In 1998 it had set up a joint venture with Qingdao -based CSR Sifang Locomotive and Rolling Stock Co. Ltd., in alliance with Power Corp. The resulting company, Bombardier Sifang Power, set up shop in a German-era factory.

The move was a tactical coup that gave Bombardier a major edge on its foreign rivals; the joint venture is now the top train-car supplier in China. "We have a big advantage because our joint venture is the only one in the train-car industry in China," Zhang says.

After some lean years in the beginning, Bombardier's sales in China have quadrupled since 2004. The company and its joint ventures racked up an impressive $1.4 billion (U.S.) in sales in China last year, and it could score a similar total this year, depending on the outcome of negotiations on several deals. On the Tibet project, Bombardier's share of the $281-million contract is $78 million. All told, China now accounts for about 7" of Bombardier's worldwide sales-up from virtually nothing in the late 1990s. And China recently signed a 20-year agreement with Bombardier to make it the preferred supplier for sets of train cars.

"Progress has been very quick," Zhang says. "Our strategy has been very successful. The Chinese market is more and more important to Bombardier. Before we considered it an emerging market, a potential market. Now it's an existing market. We're one of the most important key national suppliers in China."

While its Tibet project might be its most visible work in China, Bombardier has also won important contracts for subway cars, airport people-mover systems, high-grade intercity cars and high-speed trains. It is also China's leading supplier of regional and business jets.

The joint-venture structure is not the only reason for Bombardier's growth in China. Another factor, according to Zhang, is the company's penchant for long-term planning. It assigns staff to track every government rail project, even those that are many years from fruition, in case an opportunity for a contract will materialize. It is monitoring more than 300 possible transit projects, for example. And it has maintained the same local leadership-headed by Zhang himself-for the past several years, creating networks of government contacts that the company can exploit.

"Other companies sometimes change their leaders very quickly," Zhang says, somewhat disapprovingly. "We take a long-term view."

In Qingdao, Zhang relies on people such as Amir Levin, an Israeli-Canadian who serves as the factory's general manager, and Emmanuel Verhoeven, a Belgian engineer who is director of project management. They were the ones who had to solve the extraordinary technical challenges of building train cars that could withstand Tibet's harsh climate and sky-high altitudes. The 363 wagons have to endure mountain passes more than 5,000 metres above sea level, oxygen levels that are 40" thinner than normal sea-level air, winter temperatures that can fall to 45 below zero, lightning storms striking up to 82 days a year, ultraviolet radiation so intense that it is 60" stronger than sea-level radiation, heavy snow and sandstorms, and-just in case all of this is not enough-occasional earthquakes.

Some of the solutions-oxygen enrichment in every car and tinted windows to keep out the ultraviolet rays-have already been celebrated in the Western and Chinese media. Other solutions are less well known. The double-glazed windows, for example, had to be built with a special balloon-type seal around the edges, allowing the air between the two glass plates to expand and contract with the air pressure as the train moves to higher and lower elevations. "We had no reference points," Verhoeven says. "Nobody else was doing these cars. So we had to innovate."

The mountain passes and long stretches of permafrost between Golmud and Lhasa posed the toughest challenges. In this environment, reliability is crucial, since the nearest source of repairs could be almost 600 kilometres away. All safety and life-support systems had to be backed up on-board in case of equipment failure at high altitude. Otherwise, even a broken heating system could be disastrous. "If something happens in the middle of the line, you're in deep shit," Verhoeven says. "All you can do is give blankets to the passengers and put them into a single car for warmth."

But the Tibet train cars were not merely a technical achievement. The entire contract was carried out on an extremely tight and demanding schedule, which pushed Bombardier to the limit.

When the company first drafted its contract proposal in 2004, the Chinese authorities were talking about a 2007 deadline for delivering the cars. But by the time of the contract's final signing, in February, 2005, the deadline had been squeezed even tighter. Instead of a 12-month schedule for delivering the first train, the railways ministry wanted it completed in 10 months, so that the trains could be tested in the winter. For technical reasons, Bombardier also had to test the experimental oxygen-enrichment system as early as possible in the fall. Ultimately, the first car was finished by September, 2005-seven months after the contract was signed.

At the peak of construction, Bombardier had to double its engineering staff and have two shifts working every day. Some of its top managers rented apartments across the street from the factory, so they could go back to work at any hour of the day or night. "I didn't even ask them to do it-they asked me," Amir Levin says. "It's in the culture of the Chinese to be very flexible. When we do the job, they can work day and night."

The company is facing an even bigger challenge this fall. It has just begun to deliver the first of 40 EMU (electric multiple unit) high-speed trains-320 cars in total-for China's busy southern railway lines. "It's the most advanced train car in the world," Verhoeven says, allowing himself a bit of hyperbolic pride. "It's a revolution. It has thousands of electronic elements. Every function is done electronically."

On a typical day at the factory in late August this year, the company's staff were putting the final touches on the first EMU trains to be delivered to the railways ministry for testing. Swedish experts with laptop computers were swarming over the cars, checking systems. Levin and Verhoeven were a little nervous, because the EMU cars had never been tested at high speed before.

At the same time, the two men were supervising modifications to 45 of the Tibet cars, which would soon be put to work. The railway had officially begun operation on July 1, and the early runs had revealed a few flaws. The oxygen system needed to be fine-tuned. A welding problem had to be fixed. The hot-water taps were too sensitive and needed adjustment. The water tanks needed a bigger capacity. And filters would be added to the sink drains to catch the noodles and tea leaves that the passengers were dumping.

Still, the Bombardier executives were pleased over all with the Tibet trains' initial performance. "It's a showcase for us," Levin says. "It's the first such train in the world. The customer is happy and the passengers are happy, so it's a great achievement. The railways ministry is getting more confidence in our ability to deliver, and that helps us to get future contracts."

ortel, like Bombardier, has used the Tibet railway as a showcase of its technological prowess. And like Bombardier, Nortel is uncomfortable with the politics of Tibet. Nortel has tried to avoid any questions or interviews on the subject, declining every Globe and Mail interview request for five weeks until finally offering up a single session with one mid-level executive.

Nortel's GSM-R system-which allows a wide range of technical signalling, voice communication and text messaging on even the most remote stretches of the Tibet railway-was installed on 40-metre-high towers along the line in arduous conditions. "The wind was so strong that our installation people were blown around like kites," says Jay Huang, vice-president of mobility and converged core networks in Asia.

"The biggest challenges were the very harsh environment, the violent climate, the wide temperature fluctuations and the low air pressure. And it was compounded by a very tight construction schedule," Huang says. "As a Canadian citizen, I'm very proud of what we accomplished."

To ensure reliability, Nortel had to provide two radio networks on the towers, with one serving as an emergency backup. The hand-off between the two had to be seamless. Nortel sometimes had to install the networks where the basic infrastructure-towers and power-was not completed. Huang arranged to receive an immediate text message on his cellphone if there was a technical failure. He has yet to receive an alert.

"It was a world-class challenge," Huang says. "Nobody has ever done this before. It's definitely strengthened our image and reputation, especially in the railways ministry. We're building up our market share and our credibility."

Nortel is already reaping the rewards of its Tibet success. The railways ministry is building 19 new switching centres as it modernizes the national railway system. Of these 19 centres, nine will be built by Nortel-more than any of its competitors. And since each switching centre will become the basis of a new high-speed railway, Nortel is virtually guaranteed to be the GSM-R provider for nine new lines.

But railways are just one of the opportunities for the telecom company here. Huang estimates that China is adding 5.5 million new mobile-phone subscribers every month-the equivalent of Canada's entire population every six months.

Huang says he is untroubled by the political protests against the Tibet project. In fact, he offers a creative response. "The equipment that Nortel supplies in Tibet and China is enhancing communications and the free exchange of ideas," he says. "Communications helps to reduce bias and improve tolerance. It helps build society and civilization. So I'm definitely sleeping well at night."

Another Canadian company, RailPartners, seeks to placate the protesters by promising to promote "responsible tourism" on its luxury train service on the Tibet line. The luxury trains, charging each passenger around $1,000 (U.S.) per night, are expected to go into service in late 2007 or early 2008. Passengers will be offered round-the-clock butler service, 10-square-metre suites and a gamut of digital entertainment, among other amenities. RailPartners is planning to pump $100 million to $200 million into the project, including the cars themselves-53 of them, to be purchased from Bombardier. The company also foresees building luxury resorts at several stops along the railway. In response to the Tibetan activists, the company insists that its tourist service will be beneficial for Tibetans. "I think it's a good thing if more money is pouring into Tibet," says Howard Balloch, a former Canadian ambassador to China, who is a key investor in RailPartners.

Other Canadian investors are trying to defuse protests by pointing to their hiring of Tibetan employees. Wallace Yu, a Canadian businessman who was born in China, has hired 30 Tibetans for his mineral-water company, Tibet Glacier Mineral Water Co. Ltd., which bills itself as the proprietor of the world's highest-altitude bottling plant. He plans to boost his work force to 100 Tibetans as he expands production at the plant, located at an incredible 4,330 metres above sea level.

Continental Minerals, meanwhile, employed more than 100 people at the summer peak of its exploration work this year at a site about 240 kilometres southwest of Lhasa. Of these, only 5" were foreigners. The rest were divided equally between Tibetans and Han Chinese.

The company plans to send its copper concentrate by railway to smelters about 2,000 kilometres to the east. Such mineral shipments are expected to form 70" of the freight from Tibet on the new railway. (Bombardier is not providing the freight cars.) "If there was no railway, we would not have had a project in the making," says Gerald Panneton, president and chief executive officer of Continental. "The cost of transportation by road is 10 times greater than the cost by railway."

Panneton argues that the company is providing extensive benefits to the Tibetan villages around the mining site. It has used its backhoes to build irrigation canals for the local farmers. It has offered to dig wells. It has donated supplies to local schools. And it promises to provide training to the villagers to maximize their job opportunities if the mine goes into operation, as planned, in 2010.

"We're doing everything we're capable of doing," Panneton says. "As a Canadian, I'm a guest in Tibet and I always consult the hosts before doing anything. There's no advantage to mining if you don't benefit the people. We consult them on every step we take-every road we build and so on. There's no resentment. They love what we are doing."

Not all of the Tibetans, however, were quite as enamoured with Continental as Panneton suggested. A few days after this interview, Tibetan activists revealed that a group of several dozen angry Tibetans had confronted the mining company on June 19 and forced it to stop drilling at one of its locations. The incident had gone completely unmentioned in the Chinese media-a not atypical omission in a country where the media is heavily state-controlled.

Dickson Hall, director of Asian corporate development at Continental, confirms that the incident took place. He says it was resolved after a few hours when the company paid compensation to the Tibetans for the use of their land. But the Tibetan activists say the protest was not merely a bid for payment-it was an attempt to stop the mine.

"When doing business in Tibet, the main issue is not compensation but self-determination," says Lhadon Tethong, executive director of Students for a Free Tibet, a group based in New York.

"The Chinese government rules Tibetans with an iron fist, and nobody is able to oppose government-backed projects without fear of serious harm to themselves and their communities. The vast majority of Tibetans are not leading, nor profiting from, so-called development projects like mining operations and the railway. Continental should not be in Tibet at all."

The confrontation at the mining site was a timely reminder for Canadian investors. Because of their projects' environmental and cultural impact, miners in particular need to find ways of doing business in Tibet without alienating the nomads and herdsmen who have lived there for centuries. Apart from Continental, Canadian miners active in Tibet include Maxy Gold Corp., GobiMin Inc. and Sterling Group Ventures Inc. In the broader Tibet-outside the "autonomous region" as defined by China-Inter-Citic Minerals Inc. and Eldorado Gold Corp. are also at work.

Continental argues that the confrontation is proof that the Tibetans can freely express their views. "I would suggest that they have a very clear voice," Hall says. "They look after themselves very well."

But if the nomads were truly free to decide the fate of Tibet, would they choose a capitalist economy with mining projects and railways and a commercial yak-beef industry? As long as Beijing controls the region, the Canadian investors might never know the true answer.

Bombardier's Man In China

When Jianwei Zhang was appointed to head up Bombardier's transport division in China in 1998, he had no staff and no certain prospects. Today, the Montreal-based company has about 2,400 employees in the country, and it is dominant nationally in train cars and regional jets.

Zhang, who is now president and chief country representative for Bombardier China, grew up on the small wheat farm of his peasant grandparents. After finishing high school in 1974 in the waning years of the Cultural Revolution, he was ordered back to the countryside for "re-education" in Maoist beliefs. He worked for several months with the peasants, planting wheat, until he was ordered to help the local government as a family-planning administrator. Zhang was only 18 years old. They instructed him to start smoking, so he'd seem older. Three decades later, he is still a heavy smoker.

In 1978, after Mao's death, university classes started up again. Zhang's father persuaded him to apply. He obtained an engineering degree at Tianjin University, and in 1987 received permission to travel to Canada to take an MBA course at the University of Montreal. Once he'd prepared with a six-month crash course in French, he made the move to Canada-a cherished dream of many Chinese at the time. After obtaining his MBA and finishing most of his work for a doctoral degree, he joined Bombardier in 1995 as a project manager in its Montreal office.

Three years later, Zhang was offered the chance to head up the Beijing office. At first he was reluctant. "I had worked so hard to get to Canada, I was living in Montreal, and then they wanted to send me back to China!" he recalls. Bombardier ultimately lured him to Beijing by offering a contract for just three years, but kept asking him to extend his term. Last year he was awarded responsibility for all of Bombardier's operations in China, including its aerospace division.

Zhang imagines a future China where a foreign businessman might arrive in Beijing on a Bombardier corporate jet, walk onto a Bombardier people-mover system at the airport, take a Bombardier shuttle train from the airport to the city, and then travel around town on Bombardier subway cars. "You will be able to take Bombardier the whole way," Zhang says with a smile.