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TGV maker Alstom rattled by closed Asian markets, train cloning

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    Published Thursday, January 1, 2009, by the Financial Times Alstom rattled by Asia s train exports By Robert Wright Transport Correspondent Other countries,
    Message 1 of 1 , Jan 2, 2009
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      Published Thursday, January 1, 2009, by the Financial Times

      Alstom rattled by Asia's train exports

      By Robert Wright
      Transport Correspondent

      Other countries, suggests Philippe Mellier, chief executive of
      Paris-based Alstom Transport, should consider blocking Chinese
      train exports. It is only the latest sign of worsening tension
      about increasing competitiveness of Asian train manufacturers.

      Builders in China, Japan and South Korea tended in the past either to
      develop technology for purely domestic use or to work with technology
      imported from one of the three big international manufacturers –- the
      German-based trainmaking operation of Canada's Bombardier, France's
      Alstom or Germany's Siemens.

      Now trainmakers in Asia's three biggest economies benefit from rapidly
      increasing domestic rail investment, using it as the springboard for
      an export drive that leaves many in the European heart of the industry
      uncomfortable.

      None of these Asian countries has in modern times allowed the import
      of a wholly foreign-built, foreign-designed train.

      The issues are all the more acute because many European governments
      are investing heavily in their railways, for environmental reasons
      and to boost battered economies.

      Europe's big three builders are unwilling to see orders for trains
      go to markets where they cannot export products back.

      China's position gives particular grounds for concern because of
      suspicion many of its builders' designs draw heavily on technology
      transferred from Europe, North America or Japan.

      Some appear to be using that technology to compete with those
      suppliers' home markets.

      It seems likely there will be few further opportunities for outsiders
      to participate in the investment of at least $180bn in railways under
      way during China's 2006-10 five-year plan.

      Mr Mellier says that, after designs are bought from Hitachi or
      Kawasaki of Japan -- both of whom have supplied technology used in
      Japanese Shinkansen trains to China =– or Bombardier, the technology
      is "made Chinese".

      "They will use them, adapt them, aggregate them to [form] a Chinese
      technology based on foreign technology being leased by them," he
      says. "I sincerely believe that all the many tenders for rolling
      stock and signalling will be for Chinese companies and the access
      for non-Chinese companies will be kept to a bare minimum."

      Issues about Japanese and Korean markets are similar to those in
      China, Mr Mellier reckons.

      Japan's manufacturers have their own technology and face no foreign
      competition in their protected home market.

      Korea's market is closed. Hyundai Rotem, the country's biggest
      trainmaker, has begun to produce its own high speed train after a
      technology transfer deal by which it used Alstom's TGV design for
      Korea's 300kph KTX express.

      "We sold the Koreans a technology for very high speed trains, which
      is now 20 years old, and they have `developed' their own technology
      based on our old technology."

      Mr Mellier's concerns are far from theoretical. Japan's Hitachi is
      building its first European order, a series of 225kph trains for
      high-speed domestic services between London and Kent in the UK,
      Europe's most open rail market.

      Two China State Railways subsidiaries won an order to supply three
      200kph trains to Grand Central, a British company, in 2007, while CSR
      Nanjing Puzhen was on a shortlist to supply 200 diesel train carriages
      to the UK announced on December 22.

      Hyundai Rotem was on the same British shortlist and has supplied
      trains to the Athens metro.

      But Mr Mellier insists companies like his have means to manage the
      conflict between selling trains to emerging Asian markets and risking
      losing valuable technology – they should not sell their latest
      technology.

      "It is very important for Alstom to sell [older] technology when we're
      shooting a little bit ahead and we are developing and selling a newer
      technology that is going to give us a competitive edge," he says.

      Koreans have a 300kph domestically produced, single-deck train, but
      Alstom markets its double deck, 320kph Duplex and 360kph single deck
      AGV.

      "Transfer of technology is good," he says. "But it has to be entered
      into carefully, so that the selling company isn't damaged in return."
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