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November 18, 2010

China's share of manufacturing of advanced machinery could more than triple by 2020

Wall Street Journal - China's market share of manufacturing of advanced machinery could climb to 30% of global exports within the decade, from 8% today

The progression of China's rail business reflects a national economic strategy of boosting state-owned firms and obtaining advanced technology, even at the expense of foreign partners. Chinese rail companies that were once junior partners are vying against the Japanese and European companies that pioneered high-speed rail in the burgeoning global market for super-fast train system

The CRH380A is the newest train and is equipped with first-class seats that fold completely flat, and it can go up to 236 miles per hour. CSR obtained Japanese high-speed technology starting in 2004 as part of a deal with Kawasaki. CSR engineers and executives say they have adapted and improved that technology to make trains that are faster and better. The fastest trains now operating in Japan and Europe run about 199 mph.


Liang Jianying, a senior CSR engineer, explains how the company reduced wheel-to-track friction and made the train more aerodynamic. "We improved, optimized, and self-innovated...and came up with a brand new design," she says.

Kawasaki, in a statement, says it and other high-speed train producers disagree with China's claim that it has created its own technology. Most of its trains in operation today, some executives say, are almost exactly the same as its foreign partners' trains. They cite a few tweaks to the exterior paint scheme and interior trims and a beefed-up propulsion systems for faster speeds. "China says she owns exclusive rights to that intellectual property, but Kawasaki and other foreign companies feel otherwise," Kawasaki said in a statement, adding that it hopes to resolve the issue through commercial talks. Kawasaki says it is emphasizing in those negotiations that its technology-transfer contracts with the Railways Ministry state that the technology is for use exclusively within China, and that Chinese companies can't use it in products they intend to export. "How are you supposed to fight rivals when they have your technology, and their cost base is so much lower," the executive adds.

China's high-speed rail ambitions are already global. China Railway Group Ltd., a civil-engineering company, is participating in a high-speed rail project in Venezuela. China Railway Construction Corp. is helping build a high-speed line in Turkey linking Ankara and Istanbul. China's Railway ministry has said Chinese companies are bidding for contracts in Brazil, and that Russia, Saudi Arabia and Poland have expressed interest

Some say China's rise as a new train power brings more good to the industry than bad, helping to push others to build their own networks. Says Murray King, a rail analyst at research firm APCO Worldwide Inc.: "You have to give at least partial credit to China."

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