Train maker on track for expansion into Europe

China's largest train manufacturer is set for large-scale expansion into Europe, thanks to some European governments loosening restrictions on the import of high-tech products.

China South Locomotive & Rolling Stock Corporation Ltd (CSR) will also export high-speed train technology to the United States through a joint-venture company co-operated by CSR and General Electric Co (GE).

The European move is spearheaded by a 350-million-yuan (37.9 million euros) deal CSR signed with Turkey to supply light rail trains with a capacity of 1,000 passengers.

"This is the first time that Chinese rail transport products will land in the European market," says a public relations manager of CSR.

"We will begin to deliver trains by the end of this year."

In 2010, CSR established a semiconductor research center in the United Kingdom, its first foray into Britain. Semiconductors are crucial in the communication systems of high-speed trains.

CSR, reputed to be the world's largest manufacturer of electric locomotives, has so far been exporting trains and spare parts to 66 countries, including 20 European countries.

The company, which has its headquarters in Beijing, produces diesel and electric locomotives, passenger and freight carriages as well as rolling stock for subways and light rail systems.

The manager says the company is confident of its international competitiveness and quality.

"In terms of safety standards, I'm quite confident that Chinese trains are as good, or even better than our Western counterparts," she says.

The derailment coefficient of CSR's high-speed trains, for example, is 0.1, far lower than the international standard of 0.8. No CSR-built high-speed train has ever been derailed, she says. (Derailment coefficient is one of the most important safety standards for high-speed trains.)

For the US, China will export high-speed train technology through a joint venture between CSR and GE.

Last month, the Obama administration announced a six-year $53 billion (37.6 billion euros) high-speed rail program for the US.

Although many US states are still debating the feasibility of the capital-intensive high-speed train projects, the manager says it is still a great opportunity for Chinese manufacturers.

"We will closely watch the progress and seize any possible opportunity," she says.

High-speed trains have been in service in China since 2006 and today operate between Beijing and the city of Tianjin, about 110 km away, and between Shanghai and Hangzhou, about 200 km away.

Ou Guoli, a professor at Beijing Jiaotong University with expertise in transportation economy, says Chinese train manufacturers are latecomers in the world.

"The first high-speed train was put into operation in Japan in the 1960s, and major European countries started R&D in the 1970s," Ou says.

"In China large scale high-speed train construction started only after 2000."

However, China now has more than 8,300 km of high-speed rail, compared with Japan's 2,500 km, Spain's 2,056 km and France's 1,896 km.

Ou says Chinese companies may also lease their trains to European operators, instead of just selling them.

Leasing can avoid import restrictions, he says, while saving the operator huge capital expenditure.

"Lower price is China's major advantage," Ou says.

"Besides, Chinese train companies usually offer much cheaper and comprehensive after-sales services and maintenances, which is another big attraction for contractors."

The manager says CSR's overseas expansion is still in the preliminary stage. She says revenue from overseas markets makes up only 10 percent of the company's total, with its major overseas markets in mainly less developed countries in Asia, South America and Africa.

Ou says overseas expansion is not easy.

"In most European countries, a high-speed railway project needs to go through extended debates to get approval; some companies even need to wait for 10 years before a project virtually started," he says.

"Besides, there are strict restrictions on the import of high-technology products."