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Chinese wheels set to run on UK rails

2015-06-02 10:34:05Source:China DailyAuthor:

Trainmakers look to the future with projects in the UK and Europe, report Meng Jing in Birmingham and Cecily Liu in London.

About 151 years ago, it was the British who built the first railway line in China. Now the Chinese want to return the favor by supplying the United Kingdom with state-of-the-art trains that can run on the country's first high-speed rail.

The opportunity they see is Britain's HS2, the high-speed train project that links London with the English Midlands and Northern England. Advanced technology, extensive experience and cost efficiency are believed to be the competitive advantages that Chinese firms are banking on to open the doors in the UK and other mature economies in Europe.

"Western companies, such as Germany's Siemens AG and France's Alstom, entered the high-speed rail sector earlier, but no countries in the world have a high-speed rail network as extensive as China's," Yu Weiping, vice-president of CNR Corp, told China Daily at a recent rail exhibition in the UK.

CNR is set to become the world's largest maker of rolling stock by sales after its merger with CSR Corp. The latter has set up a UK subsidiary that will now become the UK subsidiary of the merged company.

Yu said that about 60 percent of the world's high-speed railways are in China and China's high-speed rail network is the world's most complicated one. "The climate and geographic situation in China is diverse from the north to the south and from the east to the west. It is safe to say that if our high-speed trains can adapt to the complicated situation in China, they can run in any country in the world," he said.

Yu said his team has been following the HS2 project for a long time and is having ongoing communication with the relevant authorities in the UK.

HS2, planned by the UK government, will be built in two phases. The first phase, linking London and Birmingham, will start construction in 2017. It has an indicated opening date of 2026 and a government estimated cost of 22 billion pounds ($34.1 billion). Phase two is an extension to Manchester and Leeds, opening by 2033. Other companies with an interest in HS2 are Alstom, Siemens and Japan's Hitachi Ltd.

Yu said his company has been tracking 28 projects from around the world. "However, it takes years for foreign governments to kick off a high-speed rail project. But I am confident about our technologies and products. In a couple of years, we will have gained more experience in high-speed trains, which means more chances for us to win the project in the UK," he said.

The expansion of Chinese high-speed train firms in the UK is welcomed by experts in the railway industry who recognize the quality of Chinese high-speed train technology and believe their bidding for HS2 adds diversity and a dose of healthy competition.

"Chinese companies' experience, building an extensive amount of railways in China, has meant they are able to bring tried and tested solutions at a lower price point, and ones that rely on lower energy consumption levels than local firms," said James Jameson, vice-president of product strategy at Rivo Software Ltd, a UK firm that supplies safety software to the rail industry.

Jameson said that UK companies wishing to compete for the same services in the procurement process, like the production of equipment, will not be able to compete with Chinese firms on price.

"Chinese suppliers who have a tested high-speed rail model of over 11,265 kilometers will be extremely competitive on price." Jameson said the win-win partnership is created when Chinese suppliers can help transfer experience and skills into the UK market, help accelerate growth in terms of the industry and also provide better technology.

There can be a win-win situation for UK suppliers, Chinese suppliers and the public. Roy Freeland, president of Perpetuum Ltd, a supplier of wireless train and track monitoring systems, said the expansion of Chinese firms into the UK railway industry may create potential partnerships that can help UK firms in the high-speed train supply chain to expand in the UK, China and globally.

"As CSR expands into the UK, it will need to build a supply chain locally. It may not be the whole of their supply chain, but will certainly be a part of it, so it provides a lot of opportunities for our supply chain firms, especially small and medium-sized businesses," said Freeland, who is also a member of the Rail Supply Group Council.

Freeland said that his Perpetuum colleagues have already visited CSR's headquarters in China to learn how they can fit into the CSR supply chain, and they have hosted a CSR manager's visit to Perpetuum to learn about its strengths.

He said if CSR works well with UK firms on a UK project, they could cooperate more on other projects in international markets, so the potential benefit for UK railway supply chain firms is much more than just what is available in the UK.

"Cooperation with CSR can also open up access to the Chinese market for these UK firms," Freeland said.

Chinese high-speed train firms have also used local research and development resources to assist their expansion into the UK market, as demonstrated by an R&D partnership CSR established in mid-May with three UK universities: the University of Birmingham, Imperial College London and the University of Southampton.

Clive Roberts, director of the Birmingham Center for Railway Research and Education and a professor at the University of Birmingham, said his team is also working with CSR to understand European high-speed train requirements and regulations and how Chinese high-speed train technology can fulfill these requirements.

Roberts said one key difference is that Chinese systems are more uniform because almost all the new development is on building new high-speed trains. In comparison, systems in Europe are more complex, because a lot of the high-speed trains are already built, and the focus is now on maintaining or upgrading them. To understand these differences would equip CSR with the skills to both build new railway projects in Europe, and maintain and upgrade existing ones, he said.

Apart from the UK, other mature economies in Europe are also watching the internationalization progress that Chinese high-speed rail firms are making. Deutsche Bahn AG, one of the world's largest railway operators, said last week that it is setting up a procurement office in China later this year.

The Germany-based company's move, with an eye on making CSR and CNR its potential suppliers, has been seen as a strong endorsement of China's high-speed rail development.

Paul Leslie, secretary-general with the France-based Association Trans Europe TGV, said it is important for Chinese high-speed train makers to demonstrate their capability in the overseas market.

Once China can demonstrate its global potential, it is very likely to become a major player in the high-speed rail market in Europe due to the good price-quality performance offered by Chinese suppliers, said Leslie, whose association is promoting a high-speed rail linking Germany and the Mediterranean region.

He said it is very difficult to promote the use of high-speed rail transportation in France because the tickets for such journeys are more expensive than flights.

However, Leslie is a firm believer that there is huge demand for high-speed railways in Europe.

"It is obvious that we need to move a lot more people in a much faster way ... Once the European market is open to overseas suppliers, there is a promising future ahead for Chinese high-speed train makers," he said.