French train maker Alstom admits that is facing growing competitive pressure, especially in emerging markets, following the merger of Chinese rivals CNR Corp and CSR Corp.
Yves Mouillet, the Asia Pacific director of Alstom’s international network department, told EJ Insight during an interview in Paris this week that his group is facing a stronger challenge, especially in Africa and South America, and even in some European markets.
However, it is too early to say what the actual impact will be, the official said.
Meanwhile, the industry picture in China’s domestic market is unlikely to change much in the short term, “because competition between downstream subsidiaries of CNR and CSR still exists”, Mouillet said.
With the emerging markets stepping into a period of rapid growth, infrastructure firms are eyeing a big opportunity.
The African continent covers 23 percent of the world’s land area but only has about 7 percent of the global total length of railways. Thirteen African countries, in fact, have no railway at all. The shortage is about 20,000 to 30,000 kilometers, according to estimates.
Mouillet believes the largest demand will come from Africa in the future, but financing remains a challenge.
According to a recent regulatory filing from Alstom, a record 4 billion euro railway contract in South Africa help boosted the French firm’s new orders to 6.4 billion euros during the six months ended September, from 2.74 billion euros a year ago.
At the World Economic Forum in May, Chinese Premier Li Keqiang pledged US$10 billion loan to improve infrastructure in Africa and to help connect all of the continent’s capital cities by high-speed railways. The pledge has boosted China’s credit line for African countries to US$30 billion.
Alstom already has some cooperation with Chinese firms in several power projects in Africa.
His firm can help Chinese companies understand the market better due to “our years of experience… in Africa”, Mouillet said.
Philippe Paelinck, vice president overseeing portfolio and strategic positioning at Alstom’s Global Power Sales unit, said General Electric’s deal to acquire the energy business of Alstom is being reviewed by anti-trust authorities in some countries.
He believes Chinese rivals will not object to the deal, contrary to some rumors.
GE announced in June that it will acquire Alstom’s power and grid businesses in a deal worth more than US$15 billion at that time.
– Contact us at [email protected]