Rotem Taps Into Chinese Railway Market
By Kim Hyun-cheol
Staff Reporter
Hyundai Rotem, an affiliate of Hyundai Motor, announced on Sunday that it won a bid to supply equipment for a subway line in the Chinese industrial city of Shenzhen, marking it the first South Korean company to export electric equipment to the Chinese railway market.
The railway system company signed the deal contract in the special economic zone in China with CEO Lee Yong-hoon and top municipal officials present. The amount of the deal is estimated to be over 30 billion won ($28.8 million) but the exact figure was not revealed.
With the deal, Hyundai Rotem will supply main electric equipment including traction motors, train control and diagnosis systems, mains inverters and auxiliary power supply systems for the Shenzhen Subway Line 3, which is scheduled to start in 2011 in accordance with the Universiade Games.
About 40 percent of the total contract amount will be assembled and finished through a Chinese local partner to meet the Chinese governmental requirement of localization. In addition to equipment sales, Hyundai Rotem will collect loyalty fees for technology transfer, production supervision and training services.
Demand for railway transportation is constantly increasing in China with the country's rapidly growing economy and a series of upcoming international events like the Summer Olympics in August.
Major cities like Beijing and Shanghai are increasing investments in building express train railways and metro train lines as well as expanding existing subway lines. General Electric predicted last year China will become the No.1 market worldwide within 20 years.
The deal means it will have one more player in the world's second biggest market, which has been mainly dominated by Western European and Japanese companies, Hyundai Rotem said.
The Korean company expects the deal will help buoy its plan to flex its muscles in the Chinese market. It is planning to participate in the Guangzhou Metro 2008 Exhibition in June as part of seeking more aggressive promotion in the country.