Train Wheel-Maker Deal Puts Chinese Firm on Track to Break Monopoly
(Beijing) — A Chinese company has bought a German train wheel maker in a play to break the near-monopoly one Sino-Italian manufacturer has in China over supply of a key component known as wheelset for high-speed carriages.
Full Hill Enterprises Ltd. purchased Bochumer Verein Verkehrstechnik GmbH (BVV), one of the five largest wheelset manufacturers in the world, Full Hill Chairman Xuan Ruiguo told Caixin. The amount of the deal, completed in late March, wasn’t disclosed.
A wheelset is a key component of trains and consists of a pair of wheels attached to an axle.
BVV used to control about 30% of the wheelset market in China. But its share has declined in recent years because of the poor service offered by its domestic sales agents, Xuan said.
BVV now has about 10% of China’s market, while Zhibo Lucchini Railway Equipment Co. Ltd., a Sino-Italian wheel manufacturer, dominates, with more than 80% control, people familiar with the matter told Caixin.
Full Hill’s “goal is to raise BVV’s market share in China to 50% in three to five years,” Xuan said.
Full Hill has also acquired two other train suppliers, Germany’s axle maker Bahntechnik Brand-Erbisdorf GmbH (BTBE) and Brazil’s MWL Brasil Rodas & Eixos Ltda (MWL), which supplies wheelsets to the U.S. Those companies, and BVV, were once owned by German steel giant Georgsmarienhütte Holding GmbH.
Although China has become a global player in rail technology, it has long relied on imports of wheelsets needed for high-speed trains.
Zhibo’s domination in the Chinese market has made it difficult for CRRC to bargain to get lower prices, a CRRC employee told Caixin.
“CRRC is happy to see the arrival of more competitors that supply wheelsets for high-speed trains, which can break Zhibo’s monopoly,” the CRRC employee said.
Xuan is also the chairman of China Automation Group Ltd., which supplies power equipment for the railway industry, and vice chairman of Guangdong Kaiping Chunhui Co. Ltd., which makes textile and high-speed rail facilities.
Contact reporter Coco Feng (firstname.lastname@example.org)
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