Competition heats up between Japan, China for High-speed Railway projects in Asia

Japanese and Chinese companies are battling for potentially lucrative railway projects around Asia, as rapid economic growth and expanding populations have led to plans for about 10,000 kilometers in railway networks.

A bidding competition is expected next year for a railway route linking Kuala Lumpur and Singapore. India and Thailand also plan to build high-speed rail services through large parts of their nations.

At a railway conference and exhibition held in Kuala Lumpur last week, Masaki Ogata, vice chairman of East Japan Railway Co.,touted the technology that has made the Shinkansen bullet train a proud feature of Japanese manufacturing.

“Japan’s Shinkansen is not only safe, but the starting point of its strengths also lies in its on-time operations,” he said.

Asia's proposed new Highspeed Rail routesOgata has made clear that JR East intends to win the bid for construction of the high-speed railway that will cover about 350 kilometers in 90 minutes and connect Malaysia and Singapore. The line is expected to begin operations in 2020.

Total construction costs are estimated at 40 billion ringgit (about 1.3 trillion yen or $12 billion).

“We will likely hold the bidding between October and December 2015,” Mohd Nur Ismal Mohamed Kamal, chief executive officer of the Land Public Transport Commission of Malaysia, said.

China, France and Spain have also shown interest in the project.

Executives of companies in a Japanese consortium, including JR East, Sumitomo Corp. and Mitsubishi Heavy Industries Ltd., accompanied transport minister Akihiro Ota to Malaysia in mid-August to lobby officials of the Southeast Asian country.

Elsewhere in Southeast Asia, the military junta in Thailand has approved two high-speed domestic rail projects. And in Vietnam, discussions are continuing on a plan to begin work on a part of a line that will eventually link Hanoi with Ho Chi Minh City.

A study is moving ahead in India for a railway to connect Mumbai with Ahmedabad in the western part of the nation.

The United States and Brazil also plan to build high-speed railway networks. But the focus of attention is in Asia because of its economic growth and booming population.

However, Japan so far has little to show in terms of exporting its Shinkansen technology, outside of rolling stock sold to Taiwan High Speed Rail Corp., which began operations in 2007. To gain a firmer position in the bidding process, Japanese companies are now publicizing various other services they can provide, such as operations support, maintenance and inspection.

As in other economic areas, China is ratcheting up efforts to export high-speed railway technology. Chinese companies were involved in the construction of a high-speed railway line in Turkey that was completed in July.

China also intends to take the initiative in building a 3,000-km network to connect Kunming, Yunnan province, with Singapore by passing through Laos and Thailand.

To gain a foothold in the project, Beijing reportedly is considering offering a loan of 700 billion yen to financially struggling Laos for construction costs.

Chinese officials also expressed strong interest in the high-speed railway projects in Thailand during strategic talks held with the military junta in July.

Chinese companies boast that they can build railway lines faster than Japanese companies and for about half the cost. A 1,069-km line linking Wuhan with Guangzhou began operations in 2009, about four and a half years after the start of construction.

CSR Corp., a major Chinese rolling stock manufacturer, had a booth at the Malaysia conference that was bigger than the one for JR East.

“We will not lose in the competition in terms not only of price but also safety,” a CSR source said.

Consulting companies that conduct feasibility studies play a key role in the export of railway infrastructure. JR East has established a consulting company that has been commissioned to study the high-speed railway projects under consideration in India and Indonesia.

The Association of Southeast Asian Nations plans to create an economic union among member states in 2015. Such a union would accelerate the construction of high-speed railway lines that go beyond national boundaries.

Geoffrey Wade, a visiting fellow at Australian National University, said such a cross-border railway network would likely lead to a unification in standards and operations among the various nations. That would mean that the total capabilities of nations showing interest in the bidding process would be tested, he said.

Japan Railway consortium mounts ‘all-Japan’ effort to market Shinkansen overseas

Railway companies, manufacturers and industry groups have banded together to link up efforts to dispatch Japan’s bullet-train technology overseas.

The newly organized International High-Speed Rail Association is planning an international conference in October, inviting about 300 representatives from railway companies and governments from the United States, Australia, India, Malaysia and other countries, which all have projects to construct high-speed railways.

The association plans to promote the advantages of the Shinkansen system amid increasing competition from rivals in Europe and elsewhere.

“It’s high time for us to make an all-Japan effort to pitch the Shinkansen system to overseas markets,” Masafumi Shukuri, chairman of the International High-Speed Rail Association, said in a recent interview.

During a news conference after the association’s inauguration in April, Yoshiyuki Kasai, honorary chairman of Central Japan Railway Co. (JR Tokai), said that Japan’s expertise in operating high-speed railways should become “the world’s common asset.”

“We have developed expertise in operating (a high-speed railway) since the Tokaido Shinkansen Line went into service 50 years ago,” Kasai said. “Our experience can be a common asset for the world, and we will make efforts to make it known to the world.”

The International High-Speed Rail Association includes 26 companies and industry groups, including four Japan Railway Group companies that operate Shinkansen lines and major railway makers, including Mitsubishi Heavy Industries Ltd. and Toshiba Corp.

The association plans to mount publicity campaigns and lobbying efforts to pitch Shinkansen technology to countries planning to construct high-speed railways.

There currently are 22 countries planning to build high-speed railways that run faster than 250 kph at maximum speed, including the United States and Canada, as well as emerging economies in Asia and Africa.

Despite decades of efforts to export Shinkansen technology, Japan has successfully won orders only from Taiwan’s rapid rail.

On the sidelines of the East Asia Summit in Phnom Penh in November 2012, then Prime Minister Yoshihiko Noda and his Indian counterpart, Manmohan Singh, agreed to hold talks on adopting Japan’s bullet-train system for a high-speed rail project connecting 500-km routes between Mumbai with Ahmedabad.

But the agreement has been on hold since the two prime ministers stepped down from office.

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While a railway consulting company set up by East Japan Railway Co. (JR East) and its partners has conducted research on exporting Shinkansen technology to India, officials say that European competitors have been aggressively pitching their technologies to counter Japan.

There are seven projects to construct high-speed railway lines in India, whose total distance tops 4,600 kilometers, including the Mumbai-Ahmedabad route. France and Spain have already won orders to conduct research on some of the routes.

In a scheduled summit meeting with Indian Prime Minister Narendra Modi in Japan in September, Prime Minister Shinzo Abe plans to push the Shinkansen system directly to Modi.

As for a 900 billion yen ($8.86 billion) high-speed railway project to connect Kuala Lumpur and Singapore, the bidding for construction contractors is set to start sometime next year at the earliest. JR East has set up an office in Singapore to collect up-to-date information.

Japan also faces China as a rival, which has surpassed Japan with the world’s longest high-speed railway network, as competition heats up for orders from developing countries in Southeast Asia and Africa.

Whereas China’s system has its advantage in lower construction costs and subsidies that its government grants to these countries, Japan’s Shinkansen boasts a safety record that is free of any fatal operational accidents during a half-century of operation.

The excellent safety record is because the Shinkansen system uses exclusive railway tracks without railroad crossings, which also enable trains to run on precise timetables.

But the system poses a double-edged sword because of its higher construction costs and longer building schedule. It can also inconvenience users when they transfer from existing railway lines to a Shinkansen.

But Shukuri said that Shinkansen technology, which also uses the automatic train control system, can be cost effective in the long run because it allows high-speed and high-frequency operations to meet increasing passenger demand in the future.

“Viewed from the mid- and long-term perspective, I certainly do not believe that Shinkansen technology has cost disadvantages,” he said, adding that countries without existing train networks can take full advantage of the Shinkansen system.

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