Over­seas growth

Rail gi­ant ex­pects one-third of rev­enue from abroad by 2025

China Daily (Hong Kong) - - FRONT PAGE - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

China Rail­way Rolling Stock Corp Ltd, the coun­try’s rail­way ve­hi­cle and equip­ment ex­porter, will aug­ment both over­seas pro­duc­tion and R&D to in­crease over­seas sales rev­enue sub­stan­tially.

In 2015, CRRC’s over­seas sales reached 26.57 bil­lion yuan ($3.86 bil­lion), up 67 per­cent year-on-year, and ac­counted for 7 per­cent of to­tal sales. It is seek­ing to boost the fig­ure to 35 per­cent by 2025 (that is, the end of the 14th Five-Year Plan).

The goal is to grab more mar­ket share from estab­lished global ri­vals. Its sales in 2015 reached 243.7 bil­lion yuan, up over 8 per­cent yearon-year, earn­ing a profit of 16.3 bil­lion yuan, up over 17 per­cent.

Zheng Changhong, for­mer CRRC’s deputy chair­man, said the group ex­pects a to­tal of $8 bil­lion worth of or­ders from over­seas cus­tomers by the end of this year.

“The op­por­tu­ni­ties come from surg­ing de­mand in both de­vel­oped and de­vel­op­ing coun­tries for high-speed rail­roads, im­proved rail­way in­fra­struc­ture, upgra­da­tion of sub­way sys­tems, pas­sen­ger ser­vices and re­gional con­nec­tiv­ity, as well as their de­sire to cre­ate jobs and new com­mer­cial ar­eas,” said Zheng, who re­tired last week.

CRRC’s main com­peti­tors are France’s Al­stom SA, Ger­many’s Siemens AG and Canada’s Bom­bardier Inc. The other three have over 30 per­cent of in­ter­na­tional busi­ness in rail­way ve­hi­cles, re­lated prod­ucts, oper­a­tions-re­lated so­lu­tions and main­te­nance.

CRRC’s big­gest cus­tomer is still China Rail­way Corp, the coun­try’s rail­way op­er­a­tor.

Ea­ger to en­hance earn­ings from this fast-grow­ing in­dus­try and pre­vent un­healthy com­pe­ti­tion among Chi­nese firms in over­seas mar­kets, the Chi­nese gov­ern­ment de­cided to merge two for­mer ri­vals, CSR Corp and CNR Corp, to form CRRC in 2015.

The State-owned en­ter­prise now has 190,000 em­ploy­ees and 430 sub­sidiaries, in­clud­ing five listed com­pa­nies, through­out the world.

Zheng said the merged en­tity has man­aged to cut over­lap­ping in­vest­ment worth 1 bil­lion yuan, in­clud­ing build­ing man­u­fac­tur­ing fa­cil­i­ties in a num­ber of Chi­nese cities, and “will gear up to ex­port bul­let trains, sub­way cars, rail tech­nolo­gies and equip­ment”.

Till date, CRRC has shipped and de­ployed its rail­way ve­hi­cles, parts, sig­nalling sys­tems, main­te­nance and other ser- vice busi­nesses to mar­kets in 102 coun­tries and re­gions, ac­count­ing for 83 per­cent of coun­tries that op­er­ate rail­way ser­vices in the world.

“The world’s rail-trans­port mar­ket is not as hot as in the past years, just like the global econ­omy. In­fra­struc­ture con­struc­tion needs money. The gen­eral de­mand is fall­ing,” said Zhao Mingde, di­rec­tor of CRRC’s strategy and plan­ning depart­ment.

“Many for­eign gov­ern­ments also ask us to build plants in their coun­tries as part of the deal to con­tinue the busi­ness.”

With a to­tal as­set amount of 22.6 bil­lion yuan, the Chi­nese com­pany has set up 56 branches such as CRRC North Amer­ica or CRRC South Amer­ica in 21 coun­tries with 4,625 em­ploy­ees.

In Au­gust, CRRC’s first joint ven­ture plant in In­dia/South Asia started oper­a­tions. In­dia has one of the world’s most ex­ten­sive rail sys­tems.

The joint ven­ture, CRRC Pioneer (In­dia) Elec­tric Co Ltd, is based in Bavo In­dus­trial Dis­trict, Haryana state, near the national cap­i­tal New Delhi. The man­u­fac­tur­ing base saw an in­vest­ment of $63.4 mil­lion. The Chi­nese side holds a 51 per­cent stake in the ven­ture.

Even though CRRC has set goals to dou­ble its global sales to as much as $15 bil­lion by 2020, Zhao said lo­cal­iza­tion, qual­ity af­ter-sales ser­vices and rea­son­ably-priced ad­vanced prod­ucts will be key to over­com­ing busi­ness un­cer­tainty caused by de­clin­ing global de­mand and trade pro­tec­tion­ism in cer­tain re­gions.

“Un­der such cir­cum­stances, we wouldn’t mind build­ing ‘com­peti­tor-part­ner’ re­la­tions with ri­vals to win bids in cer­tain mar­kets if it’s nec­es­sary,” said Chen Day­ong, gen­eral man­ager of CRRC’s in­ter­na­tional busi­ness depart­ment.

For in­stance, CRRC and Bom­bardier agreed in Septem­ber to ex­pand their re­la­tion­ship and join forces on in­ter­na­tional bids. They will co­op­er­ate to de­velop the mar­ket of New York’s ag­ing sub­way sys­tem.

The Chi­nese com­pany will also de­liver its first train built at its man­u­fac­tur­ing plant in Spring­field, Mas­sachusetts, to the Bos­ton tran­sit sys­tem in 2018. The con­struc­tion work was com­pleted in Au­gust.

In March, CRRC also won a bid in Chicago to pro­duce 846 metro rail cars, a record in the de­vel­oped mar­kets.

The group now op­er­ates plants that pro­duce elec­tric lo­co­mo­tives, elec­tric mul­ti­ple

We wouldn’t mind build­ing ‘com­peti­tor-part­ner’ re­la­tions with ri­vals to win bids in cer­tain mar­kets.” Chen Day­ong, gen­eral man­ager of CRRC’s in­ter­na­tional busi­ness depart­ment.

units and sub­way trains in South Africa, Malaysia, Turkey and Iran. The goal is to tap key coun­tries and re­gional mar­kets around each plant.

CRRC’s sub­sidiaries, in­clud­ing CRRC Zhuzhou Elec­tric Lo­co­mo­tive Co, Zhuzhou CRRC Times Elec­tric Co and CRRC Si­fang Co, have in­vested 3 bil­lion yuan so far to ac­quire Euro­pean tech­nolo­gies and man­u­fac­tur­ing parts sup­pli­ers, in­clud­ing the United King­dom-based Dynex and Ger­many’s Boge Elast­metail GmbH.

CRRC Zhuzhou Elec­tric Lo­co­mo­tive Co, one of CRRC’s man­u­fac­tur­ers mainly pro­duc­ing elec­tric lo­co­mo­tives, is

PRO­VIDED TO CHINA DAILY

Two tech­ni­cians in­spect a high-speed train’s wheels at a main­te­nance shed in Nan­jing, Jiangsu prov­ince.

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