The Rail Transportation Equipment Manufacturing in China: Driven by Strong Downstream Demand
From 2005 to 2009, annual production of passenger trains in China increased from 2,001 units to 7,107 units, representing annualized growth rate of 37.3%. During the same period, industry revenue of the Rail Transportation Equipment Manufacturing in China increased from $3.58 billion to $10.48 billion, representing annualized growth rate of 30.8%. However, as the demand for the rail transportation equipment mainly comes from Ministry of Railways (MOR), MOR has the dominant power in product pricing, which negatively impacts the industry’s earning ability.
By the end of 2009, total length of railways under construction in China had reached 33,000 kilometers. In 2010, China Railway plans to lay 3,690 kilometers of new lines and 3,150 kilometers of double-track lines, and 4,613 kilometers of new lines and 3,438 kilometers of double-track lines were put into operation. From 2010 to 2012, China plans to build several new railway lines and the investment scale is expected to increase strongly. During the same period, a total length of 26,000 kilometers of new railway lines in China are expected to be put into operation, including 9,200 kilometers of specialized passenger lines. The fast development of railways and urban rail system in China is expected to create great demand for rail transportation equipment.
At the same time, the bargain power of the rail transportation equipment manufacturers on product pricing will gradually increase. The deepening of Chinese market economy will stimulate the reformation of Ministry of Railways and market-oriented pricing of the rail transportation equipment. In addition, China CNR Corporation Limited (CNR) and China South Locomotive & Rolling Stock Corporation Limited (CSR) are carrying out strategy of product diversification and expanding off-line business scale, which adds leverage for the rail transportation equipment manufacturers to negotiate with MOR on product pricing.
Key Statistics of the Rail Transportation Equipment Manufacturing in China, 2009
| Indicator | Value | Year-on-year Growth (%) |
|---|---|---|
| Industry Revenue (USD Million) | 10,482.4 | 12.7 |
| Industry Profit (USD Million) | 444.0 | -17.7 |
| Exports (USD Million) | 485.3 | -11.1 |
| Imports (USD Million) | 307.5 | 49.8 |
| Passenger Train Output Volume (Unit) | 7,107 | 142.6 |
Source: ACMR Industry Research
By courtesy of ©ACMR-IBISWorld Reports, 2010
ACMR ALL CHINA MARKETING RESEARCH CO., LTD.
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