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Kyodo

Japanese manufacturers of railway vehicles are increasingly competing with Chinese rivals in the United States as they brace for the opening of a bid later this year for cars to serve a planned high-speed rail link in California.
Last year, as Beijing orchestrated its policy to push railway exports, China CNR, the world's biggest builder of rolling stock, overtook Japan's Kawasaki Heavy Industries and other bidders to supply vehicles in a project to renew Boston's subway system.
Pricing by Chinese players appears to be a major factor troubling Japanese executives. "We may lose a market as a result of dumping-like price offers" from Chinese businesses, said an official at a Japanese manufacturer.
CNR asked for US$566.6 million to replace a total of 284 vehicles on the Orange and Red lines run by Massachusetts Bay Transportation Authority. This was about 37 per cent lower than Kawasaki's bid.

The Chinese company is triumphant about its American contract, saying on its website: "CNR metro cars will be landing in the United States and achieving [coverage of] six continents."
According to official documents on the bid, CNR's offer was much lower than the US$720.6 million placed by the runner-up Rotem of South Korea.
Kawasaki tendered a US$904.9 million bid, while Bombardier came in at just over US$1 billion, nearly double CNR's and the highest among the four that advanced to the pricing stage among six companies taking part in the bid that closed in May last year.
CNR is scheduled to deliver a test vehicle for the Orange Line in early 2018 and for the Red Line a year later, followed by mass-production units to be shipped by 2021.
"It was a pity because we were so focused on winning this order but we just couldn't compete with CNR on pricing," a Kawasaki official said.
A widely held view in the Japanese industry is that the Boston victory will prove to be costly for CNR, given that vehicles must be assembled nearby to meet the job creation requirement in the contract and that the two lines run vehicles that vary in size.
A Japanese railway official even conjectured that CNR's bid was "no doubt a loss-making deal".
Kawasaki has stretched into the US from its home market in Japan and grown rapidly on the strength of product quality and reliability in meeting deliveries.
The Japanese company is credited with having helped improve the image of the New York subway run by the city's Metropolitan Transportation Authority after its first order of vehicles in 1982.

Kawasaki is the biggest supplier of vehicles in New York, having delivered more than 2,000 units. Kawasaki officials take pride in helping build a reputation for the New York subway's reliable performance and changing its image from one notorious for malfunctions and graffiti.
Kawasaki has also won a deal to supply up to 748 vehicles worth around US$1.48 billion to Washington DC's subway system, where European manufacturers had been dominant suppliers. Its vehicles started running in 2014. If all cars are delivered, Kawasaki will account for the majority of subway vehicles in the US capital.
About the company's track record with these and other vehicle orders, Hiroji Iwasaki, an executive officer of Kawasaki, said: "We have made strides in quality and technology thanks to the Japanese railway companies we serve who are very demanding and discerning about quality."

Meanwhile, CNR, the world's largest rolling stock maker by sales, announced in December that it would merge with CSR, the world's second largest manufacturer, also from China, under an initiative encouraged by the Chinese government. The new entity is expected to be called CRRC.
Chinese rolling stock makers' marketing drives overseas were dented by a high-speed rail accident in 2011 in Zhejiang province that the Chinese government says killed 40 people.
In the past few years, however, they have been stepping up efforts to win orders abroad. The merger of the two Chinese behemoths will likely enhance their competitiveness and prove to be a major rival for Japanese rolling stock companies.
By size, Japanese manufacturers are by no means in the league of CNR or CSR, the top two in the world in sales in the 2012 business year, excluding component sales and servicing revenues, according to data released in May by German rail consultancy SCI Verkehr GmbH.
None of the Japanese manufacturers including Kawasaki, Hitachi, Nippon Sharyo, Kinki Sharyo and Japan Transport Engineering placed in the top ten.
A Japanese railway executive said the Chinese companies were helped by Kawasaki and East Japan Railway (JR East) in making headway in the global marketplace.
Kawasaki and JR East provided China with technology underpinning the E2 series of shinkansen bullet trains run by JR East.
Yoshiyuki Kasai, honorary chairman of Central Japan Railway (JR Central), is frustrated by the increased presence of Chinese players while Japanese manufacturers struggle.
He said the technology transfer by Kawasaki and JR East to China "was tantamount to selling your country".
The Chinese government claims the country's bullet train service that opened between Beijing and Shanghai was based on "unique home-grown technology," even though many experts believe it largely relied on expertise from Japan and Europe.
Following the Boston subway deal, a group led by China Railway Construction won an order for Mexico's first high-speed rail project between Mexico City and Queretaro in November.
This deal was subsequently voided after an outcry from opposition lawmakers who accused the government of favouring the China-led consortium without allowing other companies to bid in a limited auction window.
For Japanese manufacturers, the stakes are high in the California high-speed rail plan. An alliance of Japanese companies including JR East, Kawasaki Heavy, Nippon Sharyo, Mitsubishi Heavy Industries and Hitachi are planning to promote the shinkansen technology for the US project.
Masaki Ogata, vice chairman of JR East, pointed out that California was an earthquake-prone region that was tightening its environmental regulations. "Shinkansen has all the advantages such as full-fledged measures for quake preparedness, safety, noise and environment conservation," he said.
But rivals are likely to highlight the Japanese technology's potential high costs. "If it comes to pricing, Chinese manufacturers will be a threat," said an executive from one of the companies in the consortium.


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Asia's track stars in the great rail race

Illustration: Sarene Chan

China's home-grown high-speed rail. Photo: Bloomberg

CNR asked for US$566.6m for the Boston contract, comparing with Kawasaki's US$904.9m.

A Washington subway train supplied by Japan's Kawasaki. Photo: Kyodo

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China

World

China and Japan under starter's orders in California in latest competition for US rail contracts


Japanese manufacturers of railway vehicles are increasingly competing with Chinese rivals in the United States as they brace for the opening of a bid later this year for cars to serve a planned high-speed rail link in California.


Asia's track stars in the great rail race

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China and Japan under starter's orders in California in latest competition for US rail contracts

China and Japan under starter's orders in California in latest competition for US rail contracts