Delivering the full railway package

Chinese know-how is destined for tracks across the world, particularly in Africa

No wonder Premier Li Keqiang says he feels confident every time he finds himself promoting China's growing railway prowess overseas.

The latest statistics speak for themselves: The country's rail network now covers more than 100,000 km of track - a 10th of which are high-speed - the second longest in the world; Chinese rail companies have landed contracts with 50 countries, worth more than $26 billion, and the country has already exported its railway equipment to more than 30 nations.

This year the speed of China's railway "going out" policy has continued to accelerate.

In January, Chinese companies completed their first overseas high-speed contract in Turkey. In May, China Railways Construction secured a $13.1 billion deal with the Nigerian government to build its latest coastal railway And later this year, the 1,300 km Lobito-Luau railway in Angola will start operation.

The domestic Chinese railway market, particularly for regular-speed rail services, is almost saturated so Chinese companies have little choice but to look overseas for new opportunities. Building railways in Africa not only offers the companies overseas operational experience but also helps to significantly improve African infrastructure.

In recent years, African economies have become more integrated, but a lack of proper transportation, especially across borders, has hindered growth.

African economies are still largely divided into standalone islands, with transportation costs extremely high and inefficient.

The continent covers 23 percent of the world's landmass, yet its rail lines account for just 7 percent of the global total. Out of its 54 countries, 13 have no rail at all.

Figures from the African Development Bank show that transportation costs in Africa are 63 percent higher than in developed countries, and represent 30 to 50 percent of average product prices. And in some landlocked countries such as Zimbabwe and South Sudan, that transportation portion of the final cost rises to a staggering 75 percent.

Building railways represents a highly effective way of reducing those soaring costs.

Chinese-African railway cooperation will not only help reshape the global economic landscape, but enhance both the international profile of Chinese companies and the reputation of its industrial standards.

Africa is often called the world's "raw material warehouse" with its rich reserves of oil and minerals. Demand for mineral resources from China and other countries is soaring, and the continent's rich reserves can expect to play a growing role in future supply.

However, its ageing infrastructure is already under considerable strain, and serious investment is now vital to bring it up to the capacity needed to keep up with the growing demands of its booming mining sector and other industries.

New, and better railways will provide quicker and more efficient access to ports, and improve transportation of vital commodities such as coal and copper, particularly between landlocked nations such as the Democratic Republic of Congo and Zambia.

In recent years, the "going out" policies of some of China's major industrial companies have transformed them from being simply product exporters into whole-package service providers, who can handle everything from technology and financing to improved operational and industrial standards and skilled manpower.

"Going to Africa" is a long-term strategy that requires cooperation across many sectors.

Building railways in Africa should not just be the exclusive province of China's construction companies, but joint efforts involving financial institutes, logistics companies, and law firms. Academic institutes, too, need to offer technological support in providing cutting-edge technology.

But all those involved need to ensure they customize their strategies for different conditions. For example, funding capabilities vary between African countries, so companies need to be able to offer different operational models.

If a country expects a massive influx of cargo and passengers as a result of a rail project, then Chinese companies should be able to offer their services on an operational basis, too, once construction is completed.

If ticket prices alone are unlikely to cover development costs, then Chinese companies should be considering how to help their African partners explore new financing or revenue options.

Successful international rail development is so much more than just laying crossties and tracks, and providing shiny new steel-wheeled engines and plush carriages.

It's about providing complete packages, and Chinese rail companies are now arguably more qualified than those from any nation to deliver those to Africa.

Ou Guoli is director of China Center for Transportation Economic Research, Beijing Jiaotong University, and Wang Ruizhe is a doctoral student at the same university.