Deal expected to showcase quality of Chinese rail transit
Domestic bullet train producer CRRC Corp Ltd (CRRC) said one of its subsidiaries has won the biggest order ever for subway cars in China by snagging a contract worth 4.84 billion yuan ($779.7 million) to manufacture 93 trains for the Hong Kong transportation company MTR Corp.
CSR Qingdao Sifang Locomotive & Rolling Stock Co, a CRRC subsidiary located in East China's Shandong Province, will assemble the cars, according to a CRRC filing Thursday to Hong Kong's stock exchange.
The trains, which will enter service during 2018-23, will replace decades-old rolling stock running on four routes in the Hong Kong Special Administrative Region such as the Kwun Tong Line and Tsuen Wan Line.
Experts said the order will give a boost to China's exports of subway cars, a business that is contributing an increasing portion of profits for the newly merged train giant.
"Metro trains have a lifespan of about 30 years. So the global market is big for providing replacements for the first generation of metro systems worldwide," Sun Zhang, a rail expert and professor at Shanghai Tongji University, told the Global Times Thursday.
CRRC was formed through the merger of State-owned train makers CSR Corp Ltd and China CNR Corp Ltd (CNR) in June.
CNR announced an export contract on January 26 to sell 284 trains worth 4.12 billion yuan for the subway in Boston, Massachusetts.
The deal was China's first foray into the U.S. rail transit market.
"The Hong Kong deal demonstrates that the merger of CNR and CSR has strengthened the nation's hand in train exports," Sun said.
CRRC has also exported metro trains to India and Turkey.
Buyers of urban rail cars want comfort, reliability and cost effectiveness, Sun said, noting that the requirements for urban rail transit equipment differ from those of high-speed trains, another competitive Chinese export.
"I heard the new trains will be more spacious. That's good, because Hong Kong's population and its tourist arrivals have both kept increasing," a 20-something Hong Kong resident who declined to be identified told the Global Times Thursday.
China has metro systems in more than 20 cities, so the nation's rolling stock producers can turn out models to cope with a variety of climate conditions, Sun noted.
Urban transit is a fast-growing segment for CRRC.
In CSR's 2014 annual report, the company said operating income stood at 119.7 billion yuan, up 20.5 percent year-on-year. The metro car section, however, grew about 49.5 percent, generating 12.39 billion yuan.
As the only subway operator in the world that makes money, MTR Corp has deep management expertise. It also operates subways in Beijing, Shenzhen, London and Stockholm.
"A metro system combining the expertise of the seasoned metro operator and the quality of mainland-manufactured equipment in the global city of Hong Kong will send a message loud and clear to other cities around the world," Sun said.
