TGV maker Alstom rattled by closed Asian markets, train cloning
- Published Thursday, January 1, 2009, by the Financial Times
Alstom rattled by Asia's train exports
By Robert Wright
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
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
"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
"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."