Export of Chinese HSR

Export of Chinese HSR

Seven years ago, high speed rail were words unknown in China; but now the country is pioneering in constructing some of the world’s largest as well as longest rail projects. The Shanghai-Beijing Rail Network is the best example of this. But, now, the Chinese are focusing on improving transport & infrastructure of other countries . This is important as China is making inroads into every Third World country. It will also promote diplomacy and goodwill between China and other counties.

A key advantage of Chinese high-speed train technology is that it is inexpensive, and exporting it could help growth in developing countries. A report said that unit costs in building the high-speed rail network were lower than for similar projects in other countries.

China initially bought trains and related equipment from foreign manufacturers, but its engineers later re-designed the machinery and succeeded in building their own trains capable of reaching top speeds between 350 and 400 kilometers per hour. Furthermore, the scale of domestic high-speed rail network construction has led to a decline in production costs for Chinese manufacturers, which has made them more competitive than their counterparts in places like Germany and France.

In an bid to increase its impact on European markets, China has been investing in countries which has been hit the most by the Financial Crisis of 2008 and/or 2012-13. The contract that CSR signed with Macedonia last month was its first in Europe. It marks the first attempt by China to sell high-speed locomotives abroad and establish itself as a credible rival to sector leaders such as Germany's Siemens, Canada's Bombardier and Japan's Kawasaki.

In terms of technology, China is currently using a strategy that has served the country well in various industries - technology transfer and reverse-engineering. Early competitors in the Chinese railway market like of Alstom, Bombardier etc. were required to form joint ventures or partnerships with Chinese manufacturers. Most were happy to oblige in return for access to a huge emerging HSR market. Still these foreign contractors would have been unable to predict just how quickly China would be able to adapt towards it, improvise upon it, re-innovate it and enter the international market for big contracts.

A recently inaugurated high-speed rail line in Turkey, which connect the country's largest city Istanbul and its capital Ankara, represents China's first major completed HSR project in a foreign market. This line might be the first international Chinese-assisted high-speed rail project to be completed, but it certainly won't be the last. The Chinese Government is having negotiations all over the world to bring Chinese technology and construction to planned HSR projects. And they are effectively using their main trump card- low cost.

The Chinese state can negotiate attractive export terms for its fully-owned HSR tech, a luxury not afforded to its European and Japanese rivals. "In other countries it is difficult to export all the technologies since they are controlled by different companies," said Ji Jialun, a professor at Beijing Jiaotong University's School of Traffic and Transportation, as quoted by China Economic Review. Right now, countries in which China has signed or is negotiating HSR contracts include Saudi Arabia, Hungary and Serbia.

India, led by her new PM Narendra Modi (who was elected on the promises of better governance and especially improving infrastructure) , is proving to be a tight contest between China and arch-rival Japan. India has to look deeply with the options she has at her hand: while Japan is emphasising on flawless technology and safety record while China positions itself as the cost-effective option.

The British were the first to build railways in China, but now UK is seeking help from China for developing further its own network of high-speed rail. It has been 150 years since the British started building - without permission - the first railways in China, the earliest of which were dismantled by a suspicious Qing dynasty government. Today, history has come full circle and it is the UK that is seeking Chinese help for its next wave of high-speed rail.

There are plenty of developing economies which want to take “fruit of China's HSR” labour at a lower cost than its rivals can achieve. HSR is another industry where the Chinese have taken the world by storm.