China's high-speed rails journey to Latin America
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New standard, new brand and new market
When Chinese railway companies go to Latin America, they also bring their technical standards with them.
To build the Tinaco-Anaco railway line, the Chinese side and their Venezuelan counterpart have jointly set up factories to produce railroad ties and weld rails. The Chinese side transfers relevant technologies to its Venezuela partner and trains Venezuelan management team and technicians.
"The project mostly follows China's technical standards," said Liang, adding that Latin American countries used to follow U.S. and European standards.
Chinese railway companies have globally leading technologies. Bringing high technologies to Latin America can boost the image of Chinese companies, Deng said. He has been doing business with Latin American customers for a long time. He says he can feel that his customers' impressions of Chinese products have really changed.
"Years ago, when I just heard that China produced high-speed trains, I doubted their quality. Now I want to say that if the high-speed rail project from Rio de Janeiro to Campinas is restarted, China is a very strong competitor," said the marketing communication manager of Brazil's National Association of Railway Transport.
An engine for local economic development
"A high-speed railway line will not only bring ticket income, but also promote economic development along the line. The benefits of the development are tangible," said Bi.
The Tinaco-Anaco railway line connects a farming state and an oil producing state in Venezuela. It is expected to facilitate personnel flow to less developed regions and boost the transport of bulk commodities.
The Brazilian railway authority recently unveiled that it plans to invite bids for its national railway Line 4 in the first quarter of 2015. Through this east-west railway line, agricultural products in inland Brazil will be transported to ports in the southeast part of the country.
This railway line is also a section of the 5,000-km railway traversing the South American continent and connecting the Pacific coast with the Atlantic coast.
After its completion, the transcontinental railway will boost economic development along it.
A Brazilian minister was cited by Brazilian newspaper O Globo as saying that it is "the most important" project, as "it can lower the price of every ton of exports by 30 percent."
Realizing the enormous economic benefit of the transcontinental railway, Bolivian President recently required the railway to pass through his country, so that this inland country will be connected with neighboring countries.
Cao Gangcai, deputy chief economist of China CSR Co. Ltd., says he wishes that the high-speed rail industries of China and Latin American countries will develop hand in hand.
Be prepared and patient
Like other Chinese companies "going global," Chinese railway companies have also encountered challenges in Latin America.
In the beginning of last November, a consortium of companies such as China Railway Construction Corp. and CSR Co. Ltd. won the bid for the railway between Mexico City and Queretaro, the first high-speed rail with a speed of 300 km per hour in Latin America. But days later, Mexico cancelled the deal.
"Railway is an important component of infrastructure for any country, so relevant decisions are subject to influences of various interest groups," said a Chinese insider who has worked in the Latin America railway market for a long time.
Moreover, complicated policies and regulations have also created significant difficulties to companies.
The marketing communication manager of Brazil's National Association of Railway Transport reminds Chinese companies to be patient. "It may take a long time to build a high-speed railway line in Brazil. Environmental impact assessment alone takes at least one and a half years."
For projects not in public-private partnership, funding can be a problem.
After four years, China Railway Engineering Corp. has completed 75 percent of the civil engineering work for the Tinaco-Anaco railway line, and laid tracks in some sections of the line.
"If we had enough money, we would have progressed faster," said Liang. The Venezuelan side provides a total of $7.5 billion for the project, while the Chinese side is responsible for railway design, equipment purchasing and railway construction.
"Now petroleum prices are falling, and a batch of Venezuela's government debts mature at the same time, so the government is financially strained. It has very limited amount of money to build railway," Liang said.
Given these difficulties, some people worry whether Chinese railway companies will lose money in Latin America.
Deng says they have learned lessons and drawn experiences while "going global," so they now take profit into consideration when bidding for railway projects abroad.
A shared view among Chinese building high-speed railways in Latin America is that they should gain more in-depth and comprehensive understanding of the market.
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