Japanese railway giants face competition in the global market
"The national railway project invites international companies to bid for project management and design works," an Omani tender board announced today. It is one of a host of global projects spurring competition in the high-speed rail market. Japanese companies have made no attempt to hide their ambitions to expand overseas, especially in light of a leveling-off domestic market.
To some extent they are succeeding. Hitachi currently awaits the finalization of a 70 billion yen deal in Great Britain. Kawasaki Industries is developing a streetcar capable of running at 90kph for the US market, while a Japanese consortium headed by either Sumitomo Corporation or Itochu Corporation is likely to win the contract to upgrade and expand Vietnam’s rail system.
More often than not, though, Japanese companies are losing out. The global electrical machinery market is dominated by companies Bombardier of Canada, Alstom of France, and Germany’s Siemens, who together account for 60 percent of market share, reports the Daily Yomiuri.
From Europe, Deutsche Bahn recently announced plans to construct an “ultra-modern” rail system in the United Arab Emirates, while Alstom has won a contract to supply the French national railways with 23 trains. In 2009, Siemens was contracted to supply railroad equipment to upgrade rail infrastructure in Russia. The deal comes in at 80 billion yen.
China has also entered the fray. It has already won contracts in Turkey and Venezuela. A Chinese consortium, allied with Siemens, has been contracted to build high-speed rail links between the holy cities of Mecca and Medina.
China has drawn heavy flak, though. Alstom has complained that Chinese companies are competing for contracts using foreign technology. Yoshiyuki Kasai, chairman of Central Japan Railway, has been more direct, and accused China of “stealing” technology, reports the Financial Times.
But opportunities are still abound. According to the Daily Yomiuri, over 1 trillion yen of train projects have been planned overseas, with major contracts in countries such Brazil still to bid for. Spain’s rail system will surpass Japan’s in length this year, while it in turn will be leapfrogged by China and India in the coming years.
Japan’s advantage lies in its technology, especially its environmentally friendly solutions. Hitachi’s energy-efficient trains proved to be the dealbreaker in Great Britain. But technology won’t suffice, especially not in developing countries. While Tokyo is looking to amend its foreign aid rules so as to allow the Japan Bank for International Co-operation to finance Japanese infrastructure projects in developed countries, further cooperation between domestic players is needed.