Meet The Train Makers, Part 6: China

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This is the 6th installment in our series on high-speed rail manufacturers around the world. Previous stories looked at:

• Bombardier
• Japanese train makers
• Siemens
• Talgo
• and Alstom.

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Introduction

More than any other country, China has taken advantage of the recession to pursue a reconstruction of its transportation networks. And with hundreds of billions of dollars slated for construction of new high-speed railways, China’s future increasingly seems to be one that will be defined by its trains.

Thousands of miles of new tracks will necessitate thousands of vehicles, and indeed, China has already become the world’s largest high-speed train market. So far, the country’s trains have been evolution of foreign designs manufactured by Chinese companies, but fully local products are already emerging. When the nation is able to offer independent technology, it could be a big player on the world stage, but it’s not quite there yet.

History

China’s race to modernize its rail lines began earlier this decade, with the first high-speed intercity operations opening in 2003 between Qinhuangdao and Shenyang, some 250 miles apart. The first trains that operated on the Qinshen passenger railway offered services at up to 125 mph.

That line, however, was just the first among many, and China is rapidly improving its rail offerings. In 2008, in coordination with the Olympics Games, the Beijing-Tianjin Intercity Railway opened, bringing the cities within thirty minutes of one another, down from 70. With new trains capable of 220 mph, that corridor hosts the world’s fastest conventional trains.

Much of the rest of the country’s exhaustive rail network, which will open in stages over the next decade, will have trains that run at similar speeds. The Beijing-Shanghai Express Railway, notably, will shuttle passengers 820 miles between the country’s two biggest cities in just four hours. It will open in 2012.

For decades, the publicly owned Chinese National Railway Locomotive and Rolling Stock company was charged with producing the country’s trains. In 2001, however, the government decided to split the company in two, forming the China South (CSR) and China North (CNR) enterprises, each of which, with about 100,000 employees, would own their own factories and produce distinct trains, though they would cooperate on designs. Though both companies would be government-controlled, they were charged with signing cooperation agreements with foreign manufacturers and constructing new trains for the country’s railways. Together, the two companies dominate China’s rail manufacturing landscape.

The first high-speed train offered on the Chinese market was the China Star (top of page), which was designed entirely by domestic engineers. Introduced in 2002, the train is capable of 170 mph operating speeds (faster than any American train) and has reached 200 mph during testing.

But this local effort was doomed by a country that wanted more from its trains, and only one example was built. Chinese engineers wanted help from foreign companies for their next trains — because they wanted the best technology on domestic soil.

Help they got — from all four major international players, Bombardier, Kawasaki, Siemens, and Alstom. Working in close collaboration with these foreign companies, China was able to develop trains specific to the domestic market that replicate those offered elsewhere.

Bombardier formed an alliance with Sifang, a subsidiary of CSR, to produce the CRH 1 (above), which can operate at speeds of up to 155 mph. Sifang also cooperated with Kawasaki to import Shinkansen technologies for the CRH 2, which is similar to the E2 Shinkansen that is no longer in production on the Japanese market.

Meanwhile, CNR invested in technology from Siemens and Alstom. The CRH 3 (above), which is the country’s fastest train, is a derivative of the Siemens Velaro vehicle also used in Germany, Spain, and Russia. It is now produced in a plant owned by CNR subsidiary Tangshan Railway Vehicle. The CRH 5 (below), meanwhile, is closely related to Alstom’s Pendolino and it is produced in CNR’s Changchun plant.

The first examples of each of the four trains was produced in the exporting manufacturer’s respective home country. Thereafter, using agreements called “technology transfers,” the two Chinese rail manufacturers gained the right to reproduce the product exactly as designed in local manufacturing plants. In many ways, this process is no different than that required for many American transit vehicle acquisitions, in which a majority of parts must be made in the United States to meet federal guidelines. Yet China’s willingness to demand that foreign manufacturers abandon their patented technology to Chinese industrial concerns is taking the situation a full step further.

Today

In 2004, Siemens offered its trains to Chinese buyers, but its bid was refused until the German company opened up to a higher degree of technological transfer; with a huge market available, Siemens was content to take a recent order of CRH 3 trains (below) with only 18% of the content actually made by Siemens.

Bombardier, which claims it has developed the world’s fastest train in the 236 mph Zefiro, has agreed to a similar lessening of its share. Though it received a contract for 80 examples of the train, the Canadian company will get less than 50% of total proceeds, with the rest going to CSR’s Sifang unit. Both Bombardier and Siemens evidently see these deals as the price of doing business in the world’s soon-to-be-biggest economy.

But Alstom has proven less happy about the deal, intentionally denying China access to its newest AGV train technologies and instead offering it only less advanced Pendolino trainsets. The CEO of the French company, Philippe Mellier, said of China, “They will use them, adapt them, aggregate them to [form] a Chinese technology based on foreign technology being leased by them.” He cites his own experience working with South Koreans on a similar technology transfer deal ten years back, arguing that the South Koreans have “developed” their own technology based directly on Alstom’s ingenuity. In other words, it’s something close to legalized stealing.

In the short term, though, Western countries are likely to benefit from the large number of contracts being signed in Beijing. But in the longer term, Chinese companies like CNR or CSR, strengthened by a huge domestic market, could prove formidable competitors to the likes of Alstom and Siemens.

The two corporations are already selling local and commuter trains to operators in countries as far removed as Australia, Namibia, and Mongolia; why are indigenously produced high-speed offerings any more difficult to imagine? After years of working directly with Western companies and understanding their advanced rolling stock from front to back, it seems likely that China will be competing with them sometime soon.

PREVIOUSLY:

Part 1: Alstom
Part 2: Bombardier
Part 3: Talgo
Part 4: The Japanese
Part 5: China