Weak mastery of core technology costs CRRC record .6b deal
China's largest trainmaker CRRC and its subsidiaries appear to have been left out of a .6 billion rail order in New York City, as media reports said Japan's Kawasaki Heavy Industries may be near a deal with the New York Metropolitan Transportation Authority for at least 1,000 subway cars.
An expert in Beijing said the missed opportunity for the record order may have revealed a weak link for Chinese train producers when it comes to core technologies associated with subway cars.
Although CRRC itself has not disclosed any developments involving the deal, an announcement from its partner may have revealed that CRRC was out, according to a National Business Daily report on Tuesday.
In September 2017, Bombardier Transportation, CRRC's Germany-based rail unit, acknowledged that it was out of the running for the New York subway deal. The company worked with CRRC Corp to make a joint bid for the contract.
Missing the deal, which was described by Japan's Nikkei newspaper last week as a major prize for whichever company won it, should be viewed calmly although with regret, experts noted.
There have been some previous bumps in China's efforts to export its metro products.
CRRC Sifang Co, based in Qingdao, East China's Shandong Province and a subsidiary of CRRC, had to recall defective metro cars exported to Singapore, according to media reports in July 2016.
Zhao Jian, a professor at Beijing Jiaotong University, said that Chinese subway car producers have weak links in contrast to high-speed bullet trains, where China already has a certain level of mastery.
"For historic reasons, Chinese metro car producers are based in many cities, and while they manufacture metro cars for their cities they cooperate with global giants in terms of procurement of core components and systems including traction and signaling," Zhao told the Global Times on Tuesday. "This means they still have weaknesses when they go out to vie with global rivals for orders," Zhao said.
Another expert said the result of the New York City deal reflects political considerations and the global rivalry in rail technology exports between China and Japan.
Sun Zhang, a rail expert and professor at Shanghai Tongji University, said the deal can be seen together with a 2016 incident in which XpressWest, a US railway firm, unilaterally terminated its deal with China Railway International for the Nevada-California Interstate high-speed railway.
"In that deal, the US gave Japan a nominal success, but no real benefits. This time around, there are real benefits," Sun told the Global Times.
US infrastructure is aged and failing. In December 2017, three passengers were killed after an Amtrak train derailed in the state of Washington. The New York City subway system, too, is in urgent need of modernization.
The New York City subway deal "can be seen as a project under US President Donald Trump's trillion infrastructure upgrading plan. Naturally, this big piece of the cake should not be given to China, which is now being considered as a US rival, and should be given to the 'little brother'," Sun said, noting that the Kawasaki deal will strengthen the US-Japan political ties.
"The 'going abroad' of Chinese exports must be based on the fact that Chinese companies are offering highly cost-effective products. It can't be based on irrational competition or by winning deals with conditions attached," Zhao said, noting that these methods won't be sustainable.
Despite the pressure of a seemingly contracting domestic market for metro cars, with some localities putting projects on hold over debt concerns, there is still vast potential in China, Zhao noted.
Despite the development in New York City, Chinese train manufacturers are also making steady progress in the US market.
The first CRRC-built prototype Orange Line subway car was delivered to the Massachusetts Bay Transportation Authority, the greater Boston transit agency, in December 2017.
CRRC Changchun Railway Vehicles Co built the cars. After regular production of the Orange Line and Red Line subway cars begins, the cars will be assembled in Springfield, Massachusetts.
CRRC Changchun Railway Vehicles also won deals to make metro trains for Los Angeles and Philadelphia.ord .6b deal