China’s two largest state-owned railroad giants have both claimed to hold more than half of the domestic metro market in 2013, casting doubt of the accuracy of their data and raising concerns regarding overcapacity

12.26.2013 18:22

Two Rail Giants Both Claim over Half of Urban Transit Market

CNR and CSR both say they have more than 50 percent of the sector, raising doubts about quality of their data

By staff reporter Lu Bingyang

(Beijing) – The country’s two largest state-owned railroad giants have both claimed to hold more than half of the domestic metro market in 2013, casting doubt of the accuracy of their data and raising concerns regarding overcapacity.As the last round of subway procurements ended in December, China South Locomotive & Rolling Stock Corp. Ltd (CSR) told Caixin that it occupied 54.24 percent of the domestic market in 2013. However, China North Locomotive & Rolling Stock Corp. Ltd (CNR) said it has received contracts for 2,000 metro cars this year, totaling more than 50 percent of the market.

Meanwhile, a third player, Beijing Subway Rolling Stock Equipment Co. Ltd., has entered the market in recent years. It claimed 7.7 percent of the metro vehicle market in 2012, but has not released figures for this year.

CSR officials said 20 Chinese cities bought 3,982 metro cars in 2013, and CSR contracts mounted to 2,160 in total, making them the largest manufacturer in the domestic market.

However, a CNR spokesman also said its data is reliable.

The subway market has expanded rapidly amid frenzied building of rail transit in growing cities, and CSR and CNR have both aggressively pursued expansion on each other’s turf. CNR signed contracts in 2011 with southern cities such as Shenzhen and Zhuhai, both in Guangdong Province, and Chengdu, in the southwest. The southern company entered its northern cousin’s territory by setting up a manufacturing center in Tianjin.

The current metro rail manufacturing capacity of CSR is 2,000 cars a year, and the figure for the northern company is 2,500.

The combined capacity apparently exceeds demand. Experts from CNR say that the domestic market needs less than 4,000 new subway cars a year.

A CNR source said the tough competition cut the profit margins for subway vehicles to 10 percent, much lower than producing cars and parts for high-speed rail.

The central government has approved urban rail projects in 36 Chinese cities, projects that total 5,790 kilometers of line.  Industry insiders predict that city metro lines will have a total length of 3,000 kilometers by 2015 and 7,000 kilometers by 2020.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: