Foreign rail firms shunted as 'Made in China' mantra gathers pace

Tue Aug 2, 2016 7:06pm EDT
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By Brenda Goh

SHANGHAI (Reuters) - Foreign firms say they are struggling to gain access to China's vast railway market as the country, seeking to transform its domestic industry into an export powerhouse, tightens the bidding criteria on rail tenders.

The complaints echo similar concerns raised in other industries including technology and renewable energy, and highlight what some foreign companies see as an uneven playing field when operating in China.

Four rail suppliers with offshore funding said they were finding it harder to win contracts thanks to the proliferation of government-supported rivals, with at least one saying it was already experiencing discrimination.

"In the last 1-2 years there have been tendencies to disregard foreign-invested companies as Chinese companies, and to prefer Chinese-invested companies versus foreign-invested companies," Ansgar Brockmeyer, board chairman of German brake maker Knorr-Bremse's Asia Pacific arm, told Reuters.

Foreign participation in China's rail market has for the last decade been limited to minority stakes in joint ventures or as sub-suppliers of domestic players, often with the condition that they transfer technology to local partners.

Many, like Germany's Siemens AG SIEG.DE and Canada's Bombardier (BBDb.TO: Quote) did and consequently helped build the world's biggest railway network by both length and revenue.

Beijing now wants to help many of these local partners such as CRRC Corp (601766.SS: Quote)(1766.HK: Quote) become globally competitive behemoths which will export home-grown technology. Its "Made in China 2025" plan released last year described railways as a priority sector.

Some industry insiders say this is causing concern that wholly-local firms are being increasingly favored at the expense of foreign invested companies.   Continued...

A man looks at the bullet trains serving the new high-speed railway linking Shanghai and Hangzhou in Shanghai October 26, 2010. REUTERS/Aly Song