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China`s railway equipment export surges

2015-02-05 10:30:47Source:XinhuaAuthor:

China saw a surge in export of railway equipment as industry leaders actively explore overseas markets, official data showed Wednesday.

China exported 26.77 billion yuan ($4.36 billion) worth of railway equipment last year, surging 22.6 percent year on year, according to data from the General Administration of Customs (GAC).

In December alone, the export value came in at 2.81 billion yuan, a surge of 42.3 percent from the same period a year earlier.

GAC spokesman Zhang Guangzhi attributed the rapid growth to China's manufacturing competitiveness in the sector as well as domestic firms' efforts to tap the global market.

So far, China has exported its railway technology to more than 30 countries and regions, including ASEAN countries, Argentina, Australia and the United states.

The overseas march was mainly led by state-owned firms, with their exports accounting for around 70 percent of the total value, according to the GAC data.

Although a latecomer to the field, Chinese railway equipment companies have thrived due to cost advantage and shorter delivery time.

According to German transportation consultant firm, SCI Verkehr, China North Railway and China South Railway, two industry leaders, currently hold the lion's share of the world's HSR market, with their sales revenue equal to the other five top companies combined.

Related stories: China turns to rail , nuclear to energize exports, by Zhao Yinan, China Daily

China will lift sluggish exports by promoting rail, nuclear power and surplus products in overseas markets after trade growth fell short of its target last year.

The exploration of overseas markets for railways, nuclear power and other sectors involving the use of large-scale equipment will be upgraded through joint-ventures and public-private partnerships, top members of the State Council decided on Wednesday. Premier Li Keqiang presided over the executive meeting.

Industrial resources in those sectors should be integrated, according to a statement released after the meeting. The decision was in line with the ongoing merger of the country's top two train makers, hinting that a similar overhaul in related industries could be possible.

Industries with overcapacity, including steel, nonferrous smelting, building materials and textiles, are also included in China's latest plan to reach out to overseas markets, the statement said.

The statement said the plan will become another engine to drive the country's exports and help with needed upgrading of domestic industries.

China has relied heavily on the export of large-scale equipment, such as railways and nuclear power facilities, to boost trade after missing its growth target for the third consecutive year.

The country's foreign trade rose by 3.4 percent last year, far behind its target of 7 percent. Exports grew by 4.9 percent last year to 14.4 trillion yuan ($2.32 trillion), and the surplus widened to 2.35 trillion yuan.

In its latest move, China CNR Corp, a leading manufacturer of locomotives in China, announced an export contract for subway trains with the United States on Jan 27. It was the first foray into the US rail transit market, Xinhua News Agency reported.

The manufacturer will sell 284 subway trains worth 4.12 billion yuan to equip Red and Orange subway lines in Boston, the announcement said.

Wang Mengshu, an academic at the Chinese Academy of Engineering who specializes in rail and infrastructure projects, said China boasts the longest rail lines in the world-proof of its technological success-and Chinese rail companies' prices are more competitive than Japanese and German companies.

"Railway exports invigorate the whole industrial chain, including the manufacturing of locomotives, parts and signals," he said.

Chinese companies are more competitive since they are able to offer a whole package of services, including infrastructure construction, locomotive manufacturing, maintenance and professional training, Wang said.

Wednesday's executive meeting also brought a decision to build more business incubators to provide logistics, legal and accounting services for startup companies.

It asked local governments to streamline the administrative procedures for small and micro companies, and to provide offices at low cost or subsidize their rent, Internet and other fixed expenses.

The meeting pledged to use government-backed funds and tax exemptions to support early-stage scientific and technological companies, which often face difficulties in borrowing capital because of their lack of tangible assets.

Angel investors, crowd funding, a regional stock exchange market and intellectual property mortgages will also be encouraged to support startup businesses.

CRCC seeks compensation for Mexico high-speed project by chinadaily.com.cn

China Railway Construction Corp Ltd (CRCC) said on Tuesday that Mexico high-speed project's "indefinite suspension" would not impact its overseas operation, adding that the company is negotiating with the government of Mexico on the project's compensation.

The government of Mexico cut its 2015 budget by nearly 3 percent last Friday after a drop in global oil prices hurt public finances, and decided to shelve a project to build the rail link between Mexico City and the central city of Queretaro.

CRCC shares fell 6.42 percent and 9.91 percent respectively on Jan 30 and Feb 2.

CRCC said the Mexico high-speed project's shelving is an individual case and wouldn't have an effect on its overseas operations, according to an official announcement. The company is negotiating with the Mexico government on the project's compensation.

The Chinese-led consortium, formed by CRCC, CSR and four other Mexican construction firms, won the bid last November to build a 210-km high-speed railway connecting Mexico City with the industrial hub of Queretaro to the north. However, the contract was revoked days later out of domestic issues.

Rail giants CNR, CSR look to calm clients with road show by Niu Yue,China Daily

Senior management at China's CNR Corp and CSR Corp - the country's largest train makers - are on a global tour to reassure investors as the two companies merge into what will be the world's largest train maker.

The road show, which will start in the week starting Jan 29, seeks to communicate with potential investors. The tour will include stops in New York, London, Singapore and Hong Kong. Road shows for the Chinese mainland have not yet been disclosed.

Analysts have been optimistic about the merged company, China Railway Rolling Stock Corp, which will go by the initials CRRC.

Guotai Junan Securities, one of the largest investment banks in China, maintained its buy rating on CSR, saying the benefits outweigh the risk.

Wu Jiangtao, analyst with Northeast Securities, said in a note that the merger will "further improve their competence overseas and reduce the negative impact of price wars" and maintained a buy rating on CNR.

CNR and CSR (on Jan 26 and Jan 27, respectively) released announcements on their latest contracts totaling $7.2 billion.

On Tuesday, CNR signed a $670 million contract to equip Boston, Massachusetts' Red and Orange subway lines, marking China's first step into the US railroad transit market.

The companies announced their merger on Dec 30. CSR will acquire CNR through a swap of shares in Shanghai and Hong Kong. One share of CNR would be exchanged for 1.1 shares of CSR, and CNR shares will cease trading eventually. Shareholders will vote on the plan March 9.

The merger is to "improve the scale of operations, increase profitability and construct a large, comprehensive, world-leading industrial group centered on rail-transportation equipment with multinational operations," CSR and CNR said in a joint statement on Jan 20.

If approved by shareholders and regulatory agencies, the new train maker will be the largest in the world, more than three times larger than Canada-based Bombardier, according to German-based consultancy SCI Verkehr.

After the merger, the company "would be a large and attractive corporation in international competition for the manufacturing of rolling stock," said Stan Feinsod, a rail consultant.

"Competition drives innovation, helps manage cost and provides options to buyers," he said. "So, I think this idea of a larger Chinese company can be seen as a good thing internationally."

The merger also will reduce overhead, including research and development costs, making the new entity "more efficient and more competitive", said Michael Gorman, professor of operations management at the University of Dayton School of Business.