China's train manufacturer CNR will enter the competition to build 95 trains for California’s high-speed railway in the first bid to export its technology abroad.
CNR, or China's North Railways Corporation, is a state-owned company, which built a portion of trains for China’s 12,000km high-speed rail network. The company has decided to submit an expression of interest to the California High Speed Railway Authority through its subsidiary Tangshan Railway, which works closely with US-based Sun Group.
Offering its CRH380BL bullet train, the Chinese company will go head to head with global industry leaders including Germany's Siemens, Canada's Bombardier and Japan's Kawasaki, who are also expected to pitch for the $68bn (£42bn) contract. The CRH380BL train, capable of going up to 380km/h, is basically a copy Siemens's Velaro design, which was purchased by China in the early phase of its high-speed rail project. CNR manufactured the CRH380BL using components bought from Siemens as part of a technology transfer agreement. Only about 18 per cent of the train's parts are made in China. The train serves on the Beijing-Shanghai line.
"We believe that high-speed rail is something that China does very well, and it's a product that we can export across the world," SunGroup spokesman Jonathan Sun said in a phone interview with Reuters, adding that SunGroup, CNR and Tangshan Railway had been working together for four years.
The California High Speed Railway Authority is accepting expressions of interest until 22 October and will subsequently issue a formal request for proposals. About a dozen of firms from all over the world are expected to compete.
California has previously expressed interest to see China taking part in its 800-mile high-speed rail project to connect Los Angeles to San Francisco. According to US media, California’s governor Jerry Brown met Chinese rail officials in April last year, including those from Tangshan Railway, to discuss the venture.
The exact value of the prospected contract has not been revealed yet but the California High Speed Railway Authority published an estimate in the 2014 business plan saying it would invest some $45m to buy about 70 trains.
"We haven't officially gone out to bid yet. This is us saying to the industry that we need trainsets. They have to meet these standards. We're asking, 'Are you interested in learning more, and do you think you could do this for us?'" said Lisa Marie Alley, deputy director of public affairs at the High-Speed Rail Authority.
Despite problems marring the construction of China’s enormous high-speed rail network, which is currently the largest in the world and took only seven years finish, the country has recently stepped up its efforts to start exporting the technology.
In China, a now-defunct Ministry of Railways was overseeing the high-speed rail network construction with CNR and CSR Corp supplying the rolling stock and China Railway Construction and China Railway Group building the track.
The Ministry of Railways got later embroiled in a series of corruption investigations with multiple of its high-ranked officials convicted of accepting hefty bribes. A major train crash in 2011, which saw two high-speed trains colliding on a viaduct in the Zhejiang province, eastern China, killing 40 people, further damaged the reputation of the industry. Design shortcomings in the network were blamed for the tragic accident.
However, China has since managed to repair the reputation of its railway network builders by contributing to construction of high-speed tracks in Turkey, Saudi Arabia and Venezuela. A Chinese consortium was also the only competitor to present a bid for a tender to build a 210-km high-speed rail line in Mexico, according to the Mexican government.
The California bid, though, represents China’s first attempt to sell abroad its high-speed trains.
"The Chinese market right now is booming, and there's a very high level of investment, but five, ten years down the road will it still be at this level? We don't know. So it makes sense for these companies to want to diversify their revenue streams," said Barclays analyst Yang Song.
The consortium also intends to bid for the next available contracts to build track sections of the line. A group led by Tutor Perini is building the first segment, while consortiums that include Dragados and Samsung are bidding for the next construction package.
The Californian high-speed rail project was criticised by celebrity entrepreneur Elon Musk who proposed an alternative concept to connect LA and San Francisco. Dubbed the Hyperloop, the transportation system described as a cross between a Concorde, rail gun and air-hockey table, would allegedly be able to ferry people between the two largest cities on the US west coast in just 30 minutes. The high-speed rail would achieve the same in an hour and 15 minutes at best. Musk claims his concept would be considerably cheaper than the $68bn construction of the high-speed rail link.