China steals train technology too..
When the Japanese and European companies that pioneered high-speed rail agreed to build trains for China, they thought they'd be getting access to a booming new market, billions of dollars worth of contracts and the cachet of creating the most ambitious rapid rail system in history.
What they didn't count on was having to compete with Chinese firms who adapted their technology and turned it against them just a few years later.
Today, Chinese rail companies that were oncejunior partnerswith the likes of Kawasaki Heavy Industries Ltd., Siemens AG, Alstom SA and Bombardier Inc. are vying against them...
Industries such as autos and aerospace have long sought to tap China's vast market, entering into joint ventures that have brought them enormous reward. But by handing over their technology, some companies have opened the door for homegrown competitors to compete in the global marketplace.
China acknowledges that the trains its own companies are now selling were developed using foreign technology.
CSR obtained Japanese high-speed technology starting in 2004 as part of a deal with Kawasaki.
But Kawasaki, in a statement, says it and other high-speed train producers disagree with China's claim that it has created its own technology. Most of its trains in operation today, some executives say, are almost exactly the same as its foreign partners' trains. They cite a few tweaks to the exterior paint scheme and interior trims and a beefed-up propulsion systems for faster speeds. "China says she owns exclusive rights to that intellectual property, but Kawasaki and other foreign companies feel otherwise," Kawasaki said in a statement, adding that it hopes to resolve the issue through commercial talks. Kawasaki says it is emphasizing in those negotiations that its technology-transfer contracts with the Railways Ministry state that the technology is for use exclusively within China, and that Chinese companies can't use it in products they intend to export.
Privately, some executives are more blunt. "Claiming most of the recently developed bullet trains as China's own may be good for national pride... but it's nothing but deceitful propaganda," says a senior executive at Kawasaki. "How are you supposed to fight rivals when they have your technology, and their cost base is so much lower," the executive adds.
What's unique about China is its vast domestic market, which makes foreign companies willing to hand over their technology know-how for a piece of the action. As China increasingly favors domestic suppliers, it's able to up the ante further, demanding that companies who want to do business transfer ever more advanced technologies. "Any company bringing new technology, innovation or ideas to China has to deal with shanzhai, what one could readily refer to as 'bandit' culture," says Andrew Forbes Winkler, an analyst with Commodore Research & Consultancy in New York. "From cellphones to automobiles, Chinese companies have taken pride in using others' intellectual property and either innovating or counterfeiting goods."
The government looked abroad. In 2004, it signed deals to buy trains from Alstom and Kawasaki, which shipped the first batch over fully assembled. Later, the companies helped set up production facilities within China. They trained Chinese engineers while helping the country develop its own supply chain for train components. Siemens and Bombardier later signed similar deals. Executives from Siemens and Kawasaki both say they were eager for contracts, and feared that if they didn't do deals with China, their competitors would.
Kawasaki's 2004 deal with the Railways Ministry, worth 80 billion yen, or about $760 million at the time, included transfer of the whole spectrum of technology and know-how for the iconic bullet train called Hayate, or "fresh breeze," to Qingdao Sifang Locomotive & Rolling Stock Co., a CSR unit.
Kawasaki exported nine Hayate train sets to China. It then helped produce 51 additional Hayates in China, partly using components imported from Japan. Kawasaki took dozens of CSR engineers to Japan for training. Some later helped set up the Qingdao factory, which now churns out about 200 train sets a year. Over the ensuing years, China asked Kawasaki and others to provide additional technology to make its trains go even faster. Each time Kawasaki signed a deal, it gained "several million dollars" as a fee, according to the senior Kawasaki executive.
