Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Case Study: China Rail
2 China Railways
2.1 Governance and Organization of Railway Enterprises
Since MOR has formal responsibility for governance of the 18 RRAs, the RRAs
have no boards of directors or other external supervisory bodies and each RRA
has a railway Head who reports to MOR. The RRA functional managers report to
both the RRA Head and less directly to the functional heads at MOR central administrative
unit in Beijing. The RRA organizational structure is similar and
tends to mirror the functional classifications that exist at the Ministry level.
Recently, MOR has improved China Rail organization in several ways. During the
1990s, non core activities were separated, including construction, manufacture,
telecom, design, education and social activities. During 1992-05, the rail operations
staff was reduced from 2.2 million to 1.4 million and traffic increased by 60
percent, which more than doubled railway employees’ average labor productivity.
In 1999, the Asset Operation Liability System (AOLS) was implemented, and
RRAs managers became accountable for return on capital, output, profitability,
and safety. Under the AOLS, managers are responsible for managing and increasing
assets assigned to them, and incentives are provided to those who exceed
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