China high-speed trains on fast track to overseas market

BEIJING -- Soon, travel time between Malaysian capital Kuala Lumpur and tourist destination Ipoh 200 km away will be slashed to a little more than one hour. On the other side of the Pacific, Boston's South Station subway will replace its archaic engines with new, air-conditioned metro trains.

Many of the new train technologies popping up over the world have Chinese train makers to thank.

With advanced technology and low prices, China's high-speed trains, which are currently running on five continents, are increasingly becoming a business magnet, driving huge foreign orders. The turbo-charged industry is taking shape in the country.

On Sunday, China finished the world's fastest meter-gage multiple unit trains for Malaysia. The fast trains will begin commuting between Kuala Lumpur and Ipoh at 160 km per hour by the end of 2015, according to CSR Corp Ltd, one of China's two major locomotive makers that produced the trains.

That deal forms part of the 98 train orders out of five programs Malaysia inked with China, making the latter one of the biggest supporters for Malaysia's city rail transit systems.

Part of China's train industry boom lies in innovation, as the country's high-speed train makers turn more self-reliant, rather than depending on imported core technology.

Such progress can be seen in the latest technological development. Last week, trains fitted with homegrown electric traction drive system and network control went into last phase of trial operation. These are China's first high-speed trains with such features.

Amid rising strengths, the booming industry is prompting domestic companies to feed rising foreign demand.

China CNR Corporation Ltd, China's largest railway equipment maker, said in October that it had secured a deal worth 3.485 billion yuan ($567 million) to supply 284 metro vehicles for the red line and orange line subway in Boston.

It allows CNR to leave its first footprint in North America, a market that it has been longing for a share for years. It also breaks ground for Chinese train makers whose overseas push, backed by Premier Li Keqiang, has been mostly limited to developing markets.

Lu Xiwei, president of CNR MA, a joint-venture that CNR created to take care of this project, told Xinhua that the successful bidding partly owes to the smart price offer strategy. While critics doubt CNR could ensure quality at such a low cost, Lu underlined quality control is CNR's "hard pass" in America.

Despite the taste of success, the picture of the overseas journey is not all rosy.

In early November, Mexico scrapped a multi-billion-US-dollar deal with a Chinese-led consortium over its first high-speed railway project linking Mexico City with the industrial hub of Queretaro. Mexico cited public concerns about the bidding process as the reason.

But the high-profile setback does not seem to hold back passions in the China train-making sector. Companies including CSR Corp Ltd and China Railway Construction Corporation plan to bid for the Mexican project again, according to the Beijing News, citing an internal source with CSR.

And to make it to the next level, China's top train makers are believed to be en route to empowering themselves, with reports that China CNR Corp. Ltd and CSR Corp Ltd are considering a possible regrouping. The reports were further reinforced when the two corporations announced continued share suspension on Friday, citing ongoing big events.

According to official statistics, the two corporations currently hold the lion's share in the world's high-speed train market, with their total sales revenue equal to that of the rest of the world's top five makers combined.

If regrouped, the two biggest rail transit stars could form an extremely powerful juggernaut with total assets exceeding 300 billion yuan (nearly $50 billion), creating an annual revenue of 300 billion yuan in 2015 and a huge impact on the world's train-making sector.

Wang Mengshu, an academician with China Academy of Engineering, said the possible regrouping could help ramp up competitiveness of China's domestic train-making companies around the globe and allow them to better concentrate on technological innovation.

Wang's statement echoes that of Wang Zhigang, an official with the State-owned Assets Supervision and Administration Commission of the State Council, who encourages the coupling of these corporations.

Wang Zhigang said as the industry evolves, domestic companies should join hands in boosting international development, rather than focusing on mutual competition.

"It is time for them to make joint efforts to tap the overseas market," he said.