CSR unit raring to go in Southeast Asia

Locomotive maker invests $131 million for manufacturing center in Malaysia

After shipping various rail vehicles to the global market for 17 years, CSR Zhuzhou Electric Locomotive Co is pulling out all stops to offer localized services, manufacturing and maintenance facilities in Southeast Asia's growing rail transit market.

As a subsidiary of China South Locomotive and Rolling Stock Co, which is considered the world's largest manufacturer of electric locomotives, the Hunan-based rail transit producer began its Southeast Asia journey from Malaysia in 2010 and so far has 38 electric multiple units running in Kuala Lumpur.

The company is investing $131 million to build a manufacturing and maintenance center in Malaysia to serve the needs of the whole ASEAN region, after gaining another 10 EMU orders and 30 light-rail vehicles from the Transport Ministry of Malaysia last year.

Zhou Qinghe, president of CSR ZELC, said as China's railway network grows, it is the time for the nation to export its technology, expertise and service model to overseas markets.

The ASEAN rail center is expected to be operational this year, with the annual capacity to produce 100 carriages and overhaul a further 150. It will create 800 jobs and would cover aspects like production, assembly, testing, overhaul and refurbishment.

"Because most Southeast Asian countries have just begun to build new railway lines or bought new trains, they are keen to acquire technological support from China to assist in the daily operations, maintenance, staff training and other services," said Zhou.

CSR ZELC established CSR Kuala Lumpur Sdn Bhd in 2011 to serve the busiest urban rail line crossing south to north in Kuala Lumpur and support maintenance services for the country's diesel locomotives. The company employs 80 people, with 14 of them gaining three months' training in Zhuzhou.

The new EMU trains and light-rail vehicles will be delivered to Malaysia in May 2015. The EMU trains will serve Kuala Lumpur's urban rail system and light-rail vehicles will be used for Malaysia's Ampang Line extension project, one of two light rapid transit rail lines operated in Kuala Lumpur.

With ASEAN nations such as Malaysia and Indonesia having a strong Muslim background, all the trains exported to these markets have been specially designed to have coaches for female passengers, as well as installing LED lights to add green element.

All electronic equipments and parts will use antiseptic and dehumidifying technologies to strengthen the operational ability of trains to cope with the tropical marine climate.

CSR ZELC's sales revenue amounted to 2.3 billion yuan ($373 million) in the Southeast Asian market in 2013, up 12 percent year-on-year. The company's main markets are Malaysia, Singapore, Indonesia and Thailand, with rising demand for electric locomotives, mass transit vehicles, engineering vehicles and suburban commuter trains in the ASEAN region.

Yuan Degang, deputy director of overseas business division at CSR ZELC, said although a lot of money can be made from selling trains, providing maintenance services can be another profitable market.

To ensure product safety and durability, all trains need to be examined and maintained every day and sent for large-scale overhaul services after the running period of one year, five and 10 years, respectively.

Other foreign rivals such as Germany's Siemens AG, Alstom Group of France and Canada's Bombardier Inc have already set up their global service network to strengthen their earning ability and build an industrial chain in major foreign markets, especially in Asia, the Middle East and Europe.

The world rail and transit industry was worth $188 billion in 2013, with maintenance services accounting for half that figure, according to a report published by the United Nations Industrial Development Organization in March.

Yuan said China's experience demonstrates that a developed national rail network not only brings benefits to domestic and regional trade, but also makes it easier for people to travel around, and that creates more business opportunities.

"The tactic of establishing the ASEAN rail center in Malaysia is based on our market share in the country and its geographical location," Yuan said. "The relatively developed infrastructure could help us further develop neighboring markets such as Singapore, Indonesia, Thailand and the Philippines."

Thanks to the localization strategy, CSR ZELC received an order for 18 metro engineering maintenance vehicles through the bidding purchase project from the Land Transport Authority of Singapore in 2013.

Delivery will start in November. The vehicles will serve the west extension of Singapore urban rail transport network east-west line of Tuas and the engineering maintenance of Thomson line to guarantee normal operation of the lines.

Xu Bo, CSR ZELC's regional manager for Malaysia, recalled the biggest challenge for himself and the team last year occurred during the 2013 Malaysian general election period.

All trains developed by China CSR provided a 72-hour continuous services as required and extended 120 kilometers from the original running route to penetrate into electoral districts in the north.

"To respond to the local demand, we came up with coping solutions under different circumstances, formulated contingency plans in advance, closely monitored the train state, coordinated and strengthened overhaul operations during the rush hours, and provided uninterrupted transport services from May 4 to 6," Xu said.

"The China-ASEAN economies will count on enhanced regional connectivity especially the rail transportation to stimulate trade and attract investment as the member countries seek decisive measures to improve regional economic integration," said Zhao Jian, a professor of rail transportation at Beijing Jiaotong University.

Indeed, improving rail infrastructure could have meaningful economic implications because it comes at a critical time, when the world is counting on emerging markets to revive the global economy.

Zhao said Singapore and Malaysia's ongoing plan of building a high-speed rail link can further fuel the hope that Southeast Asia could one day have a similar European-style train system connected to China's Yunnan province or Guangxi Zhuang autonomous region in the future.

With an eager eye on future orders, Zhou, from CSR ZELC, predicted that ASEAN countries would need 1,100 new cars and refurbishment service for another 700 in the next five years, and its new ASEAN rail center in Malaysia will give the company an advantage to tap further into this lucrative market.

zhongnan@chinadaily.com.cn