National rail operator China Railway Corp (CRC) and leading Chinese rolling stock maker CRRC Group signed a strategic cooperation agreement on Monday, showed a filing to the Shanghai Stock Exchange available on Tuesday.
Under the agreement, CRC plans to purchase 500 Fuxing (Revival) bullet trains, with speeds of up to 350 kilometers per hour, according to the filing. The actual quantity will be subject to the purchase contracts, said the filing.
CRC said that the cooperation would generate synergies that can enhance the global competitiveness of China's high-speed rail systems, according to a Tuesday report by peoplerail.com, an industry news site supervised by CRC.
The agreement will "have a positive effect" on the long-term development of CRRC but it won't have an impact on its results for 2017, said CRRC.
A long-term adjustment mechanism for the purchase price will be established, taking into account the price level, the technical conditions and other factors, according to the CRRC filing.
The highlight of the cooperation agreement is that it paves the way for the nation's high-speed rail systems to go global via standardization, Sun Zhang, a rail expert and professor at Shanghai Tongji University, told the Global Times on Tuesday. "As the nation's exclusive railway operator and exclusive train maker, respectively, CRC and CRRC will be a cohesive force in exploring the overseas market, which also represents the advantage of our nation's mechanism," Sun noted.
Based on standardized electric multiple unit proprietary technology and economies of scale in manufacturing, the Fuxing bullet trains will save production and training costs, according to Sun.
China and Indonesia signed a high-speed rail deal in April to build a rail link between Jakarta, Indonesia's capital and its fourth-largest city Bandung, the first full-package overseas high-speed rail project using Chinese standardized technology.
CRRC has a 70 percent global market share in terms of high-speed rolling stock, according to media reports, while Japanese companies hold 10 percent and France's Alstom SA 7 percent.
"Our biggest challenge comes from pursuing a combination of high speed and a high degree of safety, which relies on advanced technology," Sun said.
Zhao Jian, a professor at Beijing Jiaotong University, agreed that the cooperation will cut costs thanks to Fuxing's Chinese standards and mass production.
On Sunday, CRC said the maximum speed of 350 kilometers per hour will be restored on Fuxing bullet trains between Beijing and Shanghai starting September 21. That move will reduce the travel time by 30 minutes to 4.5 hours.
CRC reportedly negotiated with CRRC over the price of the Fuxing bullet trains for almost half a year. CRC ultimately accepted a 5 percent discount, according to an August 14 report by financial news site caixin.com.
The base price for Fuxing bullet trains was set at 180 million yuan ( million) each, based on which the negotiations were conducted, said the report. CRC abandoned its previous request for a 20 percent discount, the report noted.
The purchase price for each train is 170 million yuan to 172 million yuan, according to the caixin.com report.
The companies are also cooperating in other activities such as supply management cooperation in respect of railway parts and research and development into new equipment technologies and new products. For instance, CRC will provide support to CRRC for new equipment testing and verification, according to the filing.