Until the 1970s, steam engines were still being built in Zhuzhou, the transportation center in South China’s Hunan province, by workers in grey Mao jackets, who did almost everything by hand.
Since then, a technological revolution has transformed the factory floor of what is now the China South Locomotive and Rolling Stock or CVSR. The flagship products of today are the Maglev urban rail system serving the Chinese capital of Beijing, where trains use magnetic levitation rather than wheels and gears to propel them, and the dazzlingly white, high-speed rail system, where trains can achieve speeds of 380 kilometers per hour, or 236 miles per hour. The workforce has changed, too. The Mao jackets are gone, replaced by robots made by the Austria based-igm Robotic Systems which perform all of the precision spot welding.
“We want to become the global leader in supplying rail equipment.”
The state-owned rail transport conglomerate, CSR, and its sister company, China CNR Corporation Limited, have become modern suppliers of rail technology and have global ambitions. The Chinese have been competing in international markets for some time with established market leaders from the west including France’s Alstom, Canada’s Bombardier and Germany’s Siemens, though anyone in central Europe looking for engines made in China will search in vain.
Lutz Bertling, president and chief operating officer at Bombardier, believes that will fundamentally change over the next decade. Billions of dollars invested in the domestic rail market have given China’s rail companies a wealth of experience in everything that rolls on tracks. Next on the agenda is the international market.
“That is one of our most important strategic goals,” said Xu Houguang, a manager at CSR. “We want to become the global leader in supplying rail equipment.” He modestly belies annual sales of €11.98 ($15.44 billion), making the company second only to CNR.
Acquisitions are vital to the company’s growth. In Germany, for example, CSR recently purchased Hof-based E+M Drilling Technologies to strengthen its tunnel construction division. In the United Kingdom, the Chinese purchased information technology specialist Dynex, while in Australia they bought Delkor Rail PTY, a supplier of track-related products.
Foreign sales accounted for €2.2 billion in the first six months of 2014 for CSR. The amount of international business has been doubling annually over the past few years and high-profile rail projects are underway around the world in Australia, Belarus and Ethiopia. CSR recently modernized the local transportation in Rio de Janeiro.
CSR is now speeding towards Europe.
The growing quality of the trains and rolling stock makes China highly competitive, but the attractive financing offered by the Chinese is another powerful sales tool.
Construction of a high-speed railway between Istanbul and Ankara is continuing in Turkey while Macedonia recently bought high-speed trains. The firm is in a partnership with Siemens, which delivered the first three Intercity-Express trains five years ago. Another 57 trains are being built in China using German know-how.
The growing quality of the trains and rolling stock produced in China make them highly competitive, but the attractive financing offered by the Chinese is another powerful sales tool. Cash-strapped emerging nations appreciate this service, which tailors financial packages to the needs of clients. Meanwhile, Premier Li Keqiang touts China’s transportation expertise on his world travels and has been dubbed by Chinese media as “our No. 1 traveling bullet-train salesman.”
The basis for the self-confidence abroad is the experience gained at home. China is expanding its transportation infrastructure at breakneck speed and the market is enormous. This year alone, the country will spend upwards of €80 billion to expand its rail network. And each year about 300 new high-speed trains leave the CSR and CNR factories. Germany’s total fleet of ICE trains doesn’t even come close. China’s major cities are linked by over 10,000 kilometers of high-speed track, while each year €40 billion is invested just in the expansion of urban subway systems.
Finn Mayer-Kuckuk is Handelsblatt’s East Asian correspondent. To reach the author: email@example.com