KORAIL - Changing People’s Lifestyle

Chung Chang-young, the former secretary general of the National Board of Audit and Inspection, took office in February this year as President of Korea Railroad Corporation (KORAIL). Since then, he has rolled out a new vision and programs designed to enhance people’s quality of life as well as improve the organization’s financial status, with improved performances and results already being seen. To hear about such excellent performances and how they have been achieved in such a short period of time, BusinessKorea held an interview with President Chung regarding KTX, the corporate vision, sales goals, safety, on-time operations, overseas businesses, and his management philosophy.

It has been 8 years since KTX opened to the public. Please explain how it has changed people’s lives.

The number of KTX passengers hit 300 million this year. The daily average in the first year was 70,000, but this has now doubled to 140,000.

KTX has changed people’s daily lives by narrowing physical and psychological distances between regions. With travel time reduced and accessibility improved, people can now travel anywhere in the nation in just half a day.

For example, KTX has influenced business trip patterns, replacing two-day trips with one-day trips, as well as prolonged commutable distances.

KTX has also enhanced inter-regional economic cooperation and helped improve national events. The Seoul-Yeosu journey took five hours by the “Mugunghwa” train in the past. However, this has now been reduced to just three hours thanks to KTX. That is why so many people from Seoul and its metropolitan areas were able to enjoy the international EXPO held in Yeosu this year.

You took office as CEO of KORAIL this year and introduced a vision of “People’s Company KORAIL Communicating with Customers, Environment and Future.” Could you please tell our readers about this.

On April 6 this year, KORAIL proclaimed its new vision “People’s Company KORAIL Communicating with Customers, Environment and Future.”

From my inauguration to this proclamation, approximately two months, I tried to figure out the situation and thought deeply about how to establish the company’s future direction and goals. I asked professionals for advice and heard opinions from customers and employees before putting KORAIL’s wishes and passion into this new vision.

The vision means that KORAIL will be reborn as a people’s company, one that communicates with all interested parties with no barriers in order to satisfy the master of KORAIL, or the Korean people, and to reinforce the foundation for social contributions and sustainable growth. As implied in the vision, KORAIL will do its utmost to enhance people’s quality of life.

In this regard, to meet customers’ sense of emotion, KORAIL employed the concept of visual design to the management of stations and trains. KORAIL will make these spaces not simply spaces you pass but spaces you wish to stay in. Passengers will see beautiful railway stations representing the various regions. We are also presenting another kind of pleasure to customers en route through the use of mini libraries within trains furnished with quality books and magazines.

Environmental-friendliness is one of the greatest merits of KORAIL. In particular, KTX’s CO2 production and energy consumption are one sixth and one ninth of that produced by cars, respectively. Its land use efficiency and annual social costs are 13 times better and 1/42 that of roads, respectively.

Credited for its environmental friendliness, the KTX Seoul-Busan route was chosen as the “Green Product of the Year” in 2012, a first for a public enterprise. This is very meaningful in that professionals and consumers evaluated KTX as the most environmental friendly product.

To realize this vision, you set the goal of 620 billion won in sales through diversified business structure by 2020. Please tell us more s about this and how you aim to get there?

On top of the transportation of passengers and freight, KORAIL is to create a diversified business structure that includes the development of railway station areas, advertising, real estate rental business, and, mostly importantly, Yongsan International Business District, which will be the largest project in Korean history. Through this diversified business structure, of which the center is of course railway stations, we are seeking to make an earlier achievement in regards to fiscal soundness.

In 2011, KORAIL recorded 129.1 billion won in sales in the new growth business sector which is still small and in an early stage, compared to that of East Japan Railway (over 30% of total sales) or SNCF in France (21.5%).

To increase the proportion of the value-added new growth business sector and improve its profit-making structure, KORAIL hired 18 external professionals in May in order to create an asset development team of professionals. Furthermore, with the deliberation functions for business and investment reinforced, KORAIL is placing a priority on feasibility studies for new growth businesses and risk management.

In railway-advanced countries such as Japan, railways companies tend to expand their business scopes to cover hotels, shopping malls, tourism and even credit cards. KORAIL will also continue to strengthen its capacity in diversified new growth business areas.

In addition, using our 113 year-old know-how and world-class operating capacity, KORAIL is actively searching for opportunities in the overseas railway market.

Through such efforts, KORAIL will increase new growth business sector sales to 620 billion won by 2020. I believe we can achieve this goal if these on-going projects proceed as planned.

KORAIL was ranked 1st in the field of world-class safety and on-time operation by the International Union of Railways (Union Internationale des Chemins de fer; UIC) in 2012. Could you please tell us about the operational know-how of KORAIL.

I think this is the result of KORAIL’s 30,000 employees’ day-and-night efforts to ensure “Safety First.”

In April this year, we established a master plan regarding safety management. We identified and improved mid and long-term safety tasks, created a Human Error Research Commission to avoid human error, and reinforced a wide-range of alarm and signal systems. Furthermore, we extensively replaced and updated older electrical parts and other items.

For an improved level of safety inspection and quality management, KORAIL signed a service contract with an accredited international organization “Lloyd’s Register” so as to establish a roadmap for the examination and development of a safety management system in September. Through this, KORAIL will be able to apply strict international standards in safety management using a scientifically advanced system.

To prevent train breakdowns and enhance maintenance capability, we have founded a technology academy and are fostering experts in key technologies. In addition, we are also preparing against unexpected situations by improving our crisis management capabilities through field training.

To promote the habit of safe operations among employees, KORAIL prepared a set of guidelines instructing employees to first stop trains, regardless of trivial the situation is, and then to identify the problem before restarting operations.

KORAIL recently provided consultations to the Bulgarian railway authority regarding their information systems. Could you please tell us more about KORAIL’s overseas performance and any future plans in this regards.

The railways business has emerged as a worldwide mantra for green growth, with it being adopted as a national strategic business in many countries.

Under such circumstances, since my inauguration, I have tried to enhance the capacity for overseas businesses by reorganizing our overseas business teams, expanding networks with interested parties in and out of the country, and identifying new business opportunities abroad.

More concretely, KORAIL has built cooperative systems with private companies and public institutions both at home and abroad. It is now operating study groups with 30 local companies and has signed MOUs for business cooperation with various overseas railway companies including SNCF (France), SMCB (Belgium) and TCDD (Turkey).

Under MOUs with KOTRA and KOICA, KORAIL has contributed to manpower exchanges with foreign countries; training for Libyan railway workers (2.34 billion won), superintendence of a Libyan construction project (660 million won), and training of Bangladeshi railway workers in regards to the maintenance of diesel locomotives (100 million won).

KORAIL is actively engaged in various overseas projects; exporting used locomotives and dispatching expert consultants to Pakistan in July (14.4 billion won), participating in two train reform projects in the Philippines (9 billion won), exporting used trains to Iran (4.14 billion won) and helping build information systems for Bulgarian railways (40 million won).

KORAIL recently launched a public campaign proclaiming, “Stay away from the wheel at weekends.” Please tell us more about this.

KORAIL has introduced a nationwide campaign stating, “Stay away from the wheel at weekends” to promote the use of railways and describe the relaxation of using railways.

This is also in accordance with the government’s campaign for the Execution of Green Railways. We are trying to encourage people to enjoy complete relaxation by using environment-friendly, energy-efficient railways, and to stay away from driving at weekends in an attempt to enhance their quality of life.

In addition to this campaign, and to meet various customer needs and provide convenience, KORAIL operates theme travel options for weekend travelers, such as like Trains for Agricultural Experiences, Trains for Educational Experiences and Trains for Bikes.

In particular, by connecting abandoned mining areas in Gangwon-do, such as Taeback City and remote areas in North Gyeongsang-do like Youngju City, KORAIL is trying to give more leisure opportunities to citizens stricken with fast, congested city lives, as well as help local economies.

KORAIL is now planning to participate in the creation of a marine tour belt of yachting routes, which will utilize the transportation infrastructure and facility of the international EXPO around Yeosu, as well as establish a yachting school and connect the archipelago off the southern coast of the peninsular.

KORAIL will continue to develop tourist theme products and contribute to the construction of local tour infrastructure in order to enhance the company’s image and expand the use of railways. Of course, this will also lead to an increase in the company’s earnings.

It appears that KORAIL will face many big challenges as a giant public company. To overcome these, you will need a firm philosophy in regards to the management of the company. Do you think your former position as the General Secretary of the Board of Audit and Inspection will help you in this endevour?

It is true that KORAIL has many things to do. It has to normalize the Yongsan International Business District project, conclude a collective agreement with laborers, and move away from operating losses. Creating safe railways that people can use is also an important task that we have to constantly deal with.

To deal with these tasks, our attitude is crucial. What I realized from my 30-years in public service is that performance can differ depending on who implements tasks and how.

Based on this belief, as soon as I took office I began to encourage employees by giving proper rewards to honorable employees who have shown good performances or who have adhered to the basics of their jobs under any circumstances.

I have also carried out “detailed management” which aims to not overlook even the very smallest thing, as well as “system management” which systematically manages objectives and performance.

Over the past eight months, I know that the management and employees of KORAIL have become familiar with “detailed management” and “system management.” The company is now working well, even without me. This is something that I am very pleased with.

In the first half of this year, KORAIL recorded an operating income of 34.8 billion won for the first time since becoming a public company. It also saw a reduction in safety-related accidents. Building on such successful results, the management and employees of KORAIL are confident that they can overcome any challenge through collaborative effort.

KORAIL will become the “People’s Company,” working to improve their convenience and interest as well as fulfilling its social responsibilities.