Shotgunner51
RETIRED INTL MOD
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http://www.ft.com/intl/cms/s/0/c28fe2e8-a6fe-11e5-9700-2b669a5aeb83.html#axzz3uyVmxw1b
December 20, 2015 4:43 pm
Robin Harding in Tokyo and Tom Mitchell in Beijing
When Japan lost out to China on a $5bn deal to export high-speed rail to Indonesia this October, a nation despaired at the rejection of its beloved shinkansen, the great symbol of Japan’s technological might.
Yet this month it was the other way round as Japan rejoiced in a $15bn deal to build a high-speed line between Mumbai and Ahmedabad in India, while Chinese officials insisted they had not lost because there was no open tender.
The battle to sell high-speed rail has become a proxy for the broader competition between Japan and China for industrial supremacy and political influence in Asia. Yet officials say the cut-throat battle over high-speed rail reflects a different reality — few buyers actually want it.
The Indian shinkansen project was won with a $12bn loan from Japan at 0.1 per cent over 50 years. It will have a 15-year upfront repayment moratorium and Japan will supplement the loan with a generous package of technical assistance and training. China won the Indonesia project by offering to finance it without any recourse to Indonesia’s government.
Many countries think they want high-speed rail — a prized symbol of economic development — but fewer actually suit it. A high-speed line needs to connect two or more large cities, with reasonably high incomes, neither too close together nor too far apart. Taiwan is the only country to buy the shinkansen so far and its line makes heavy losses.
In Thailand, for example, the problem is choosing a second city large enough to connect with Bangkok; in Vietnam, Hanoi and Ho Chi Minh City are big enough, but the 1160km distance is too far for rail to compete with air.
China and Japan are both trying their best to turn the competition away from finance. “Japan has more experience building high-speed railways,” says Sun Zhang, a railway expert at Tongji University in Shanghai. “But we have built out 10,800km of high-speed railways over the last 12 years. Our high-speed rail is cheaper because of our large scale production and lower labour costs.”
“With China creating a gigantic state-owned company, they may be able to manufacture in large volumes at low costs. But once it becomes a competition for initial pricing, it may turn to a war of attrition,” says Toshiaki Higashihara, president of Hitachi, one of the main shinkansen companies.
“The Japan consortium will be very strong if it can sell not just the railway vehicle but a comprehensive package including operational services over the span of an entire life cycle. I am confident the Japan consortium will not lose against other countries in terms of competitiveness,” he adds.
Behind the scenes, the competition is less decorous, with Japanese officials claiming China has no proper business plan for the Jakarta-Bandung line in Indonesia and is making promises it cannot keep.
Still, many Japanese experts also recognise their all-or-nothing approach — buyers have to take the shinkansen as an integrated system — is a tough sell. “The specs for the shinkansen are very high,” says Yoshihiko Sato, an industry consultant and author of a book on overseas rail projects. “The exporters want to take the shinkansen abroad as it is and that’s a challenge.”
Tatsuo Yasunaga, chief executive of trading house Mitsui, says Japanese infrastructure exports will succeed more often if its technologies are combined with those from other countries.
“When people talk about exporting infrastructure, they often focus on Japanese content. But Japan has its strengths and weaknesses,” Mr Yasunaga says. “We don’t think that we can win with an-all Japan package. You need to constantly think about what the best package is that is competitive.”
Developing countries are crying out for urban railways, and outside the companies with a direct stake in the shinkansen, many in Japan’s rail industry think metros are a better bet. “My personal opinion is putting effort into city railways rather than high-speed offers more business chances,” says Mr Sato.
Earlier this year, Sumitomo and Nippon Sharyo won a $107m rolling stock contract for the Jakarta metro. Delhi’s successful metro was built with Japanese money, and little noticed amid the high-speed hoopla, a visit by Shinzo Abe, Japan’s prime minister, also produced deals to finance systems in Chennai and Ahmedabad.
Mr Yasunaga says Mitsui had long pursued a Brazilian plan for a high-speed rail network linking Rio de Janeiro and São Paulo. But it is now working on a metro line in São Paulo with Mitsubishi Heavy Industries after the costly bullet train plan faced public opposition.
“Japan can sell its strengths by first helping to build a precise and safe urban transportation system. In that way, it may lead to long-distance lines,” Mr Yasunaga says.
Additional reporting by Kana Inagaki in Tokyo
December 20, 2015 4:43 pm
Robin Harding in Tokyo and Tom Mitchell in Beijing
When Japan lost out to China on a $5bn deal to export high-speed rail to Indonesia this October, a nation despaired at the rejection of its beloved shinkansen, the great symbol of Japan’s technological might.
Yet this month it was the other way round as Japan rejoiced in a $15bn deal to build a high-speed line between Mumbai and Ahmedabad in India, while Chinese officials insisted they had not lost because there was no open tender.
The battle to sell high-speed rail has become a proxy for the broader competition between Japan and China for industrial supremacy and political influence in Asia. Yet officials say the cut-throat battle over high-speed rail reflects a different reality — few buyers actually want it.
“The shinkansen is part of Japan’s identity. We have to try and sell it,” says one senior official in Tokyo of the spectacularly generous financing packages both countries are offering.
The Indian shinkansen project was won with a $12bn loan from Japan at 0.1 per cent over 50 years. It will have a 15-year upfront repayment moratorium and Japan will supplement the loan with a generous package of technical assistance and training. China won the Indonesia project by offering to finance it without any recourse to Indonesia’s government.
Many countries think they want high-speed rail — a prized symbol of economic development — but fewer actually suit it. A high-speed line needs to connect two or more large cities, with reasonably high incomes, neither too close together nor too far apart. Taiwan is the only country to buy the shinkansen so far and its line makes heavy losses.
“There aren’t very many overseas markets that can support high-speed railways,” says Zhao Jian, a professor at Beijing Transportation University.
In Thailand, for example, the problem is choosing a second city large enough to connect with Bangkok; in Vietnam, Hanoi and Ho Chi Minh City are big enough, but the 1160km distance is too far for rail to compete with air.
China and Japan are both trying their best to turn the competition away from finance. “Japan has more experience building high-speed railways,” says Sun Zhang, a railway expert at Tongji University in Shanghai. “But we have built out 10,800km of high-speed railways over the last 12 years. Our high-speed rail is cheaper because of our large scale production and lower labour costs.”
“With China creating a gigantic state-owned company, they may be able to manufacture in large volumes at low costs. But once it becomes a competition for initial pricing, it may turn to a war of attrition,” says Toshiaki Higashihara, president of Hitachi, one of the main shinkansen companies.
“The Japan consortium will be very strong if it can sell not just the railway vehicle but a comprehensive package including operational services over the span of an entire life cycle. I am confident the Japan consortium will not lose against other countries in terms of competitiveness,” he adds.
Behind the scenes, the competition is less decorous, with Japanese officials claiming China has no proper business plan for the Jakarta-Bandung line in Indonesia and is making promises it cannot keep.
Still, many Japanese experts also recognise their all-or-nothing approach — buyers have to take the shinkansen as an integrated system — is a tough sell. “The specs for the shinkansen are very high,” says Yoshihiko Sato, an industry consultant and author of a book on overseas rail projects. “The exporters want to take the shinkansen abroad as it is and that’s a challenge.”
Tatsuo Yasunaga, chief executive of trading house Mitsui, says Japanese infrastructure exports will succeed more often if its technologies are combined with those from other countries.
“When people talk about exporting infrastructure, they often focus on Japanese content. But Japan has its strengths and weaknesses,” Mr Yasunaga says. “We don’t think that we can win with an-all Japan package. You need to constantly think about what the best package is that is competitive.”
Developing countries are crying out for urban railways, and outside the companies with a direct stake in the shinkansen, many in Japan’s rail industry think metros are a better bet. “My personal opinion is putting effort into city railways rather than high-speed offers more business chances,” says Mr Sato.
Earlier this year, Sumitomo and Nippon Sharyo won a $107m rolling stock contract for the Jakarta metro. Delhi’s successful metro was built with Japanese money, and little noticed amid the high-speed hoopla, a visit by Shinzo Abe, Japan’s prime minister, also produced deals to finance systems in Chennai and Ahmedabad.
Mr Yasunaga says Mitsui had long pursued a Brazilian plan for a high-speed rail network linking Rio de Janeiro and São Paulo. But it is now working on a metro line in São Paulo with Mitsubishi Heavy Industries after the costly bullet train plan faced public opposition.
“Japan can sell its strengths by first helping to build a precise and safe urban transportation system. In that way, it may lead to long-distance lines,” Mr Yasunaga says.
Additional reporting by Kana Inagaki in Tokyo
There's a fair competition between Japan and China high-speed railway export, here we go ~!
If you are serious about the hurting part i suggest you do more research. China has great relations with many countries on a global scale, we have many projects going on. To think China can't do without India is totally nonsense. I for one am happy to see Japan will be building the HSR network for India so the Japanese can squeeze all the milk from the poor cow.
