CRRC Wins Train Supply Deal in Montreal

(Beijing) — Leading Chinese railway equipment maker CRRC Corp. Ltd. has won a contract to supply cars to the Montreal area’s mass transit operator, marking its first deal in Canada and the latest in a recent string of similar contracts in the lucrative North American market.

But the victory also raised strong objections from hometown incumbent Bombardier Inc., the only other bidder, which complained that its Chinese rival was unqualified for the work.

CRRC won the award from the Agence Métropolitaine de Transport, the transport authority for the Montreal area in Canada’s French-speaking Quebec province, several sources familiar with the deal told Caixin. The deal is worth about 350 million yuan ($51 million), and requires CRRC to begin supplying cars for the city’s commuter rail network within 24 months of the signing of an agreement.

An initial round of bids for the project failed after the tender attracted Bombardier as the lone bidder. That prompted the Montreal rail authority to say that only 15% of production for the cost of the project be localized, relaxed from a previous requirement of 25%. Even after that change, a second round of bidding only attracted Bombardier and CRRC.

The size of CRRC’s bid was far smaller than Bombardier’s, about half as large, the sources told Caixin.

On losing the deal, Bombardier complained that CRRC had no experience building such cars, even though it has won a recent string of deals to supply subway cars to systems in a number of U.S. cities, including Chicago, Philadelphia and Boston.

CRRC also recently scored its first contract to supply subway cars to India.

Bombardier also complained that CRRC’s car designs have yet to receive approval from relevant Canadian transport authorities, a spokesman told local publication Les Affaires, which first broke the news of the deal.

China has spent trillions of yuan over the last decade building up state-of-the-art subway and high-speed rail systems throughout the country, providing greater mobility within and between cities as part of its transition from a planned to a free-market economy. That process has created a group of companies like CRRC, which have developed cutting-edge technologies that many are now trying to export.

As the domestic spending spree starts to taper off, CRRC and other rail specialists are trying to make up for the slowdown by looking for opportunities abroad.

Contact reporter Yang Ge (geyang@caixin.com)