France hoping rail project leads to China deal
As France's state-owned railway, SNCF, and engineering giant Alstom SA launched the new high-speed rail link they built for South Korea, they had their sights set on a bigger prize - China.
South Korean Prime Minister Goh Kun last week inaugurated the first phase of the US$17-billion Korea Train Express, or KTX, that will cut journey time by one-third between Seoul, in the northwest, and the southern cities of Pusan and Mokpo.
Due to be completed by 2010, the program, based on Alstom's locomotives and SNCF's rail and station infrastructure technologies, will reduce journey times for the country's longest routes to about two hours, from almost five using existing services.
At last week's opening ceremony in the South Korean capital, SNCF Chairman Louis Gallois and Alstom Chief Executive Officer (CEO) Patrick Kron rubbed shoulders with visiting officials from China, where Alstom expects bidding to open later this year for a planned 1,150-kilometre rail link from Beijing to Shanghai.
Both men later flew to China.
"It's a very important project," said Alstom spokeswoman Severine Gagneraud. "We're impatient for the bidding to start."
Gagneraud declined to say whether Kron was lobbying for the railway deal during his visit. The SNCF did not return calls.
The competition will pit SNCF and Alstom - still desperately in need of cash to reduce its 4.5-billion euro (US$5.5 billion) debt with creditor banks after a government bailout last year -- against bids from Germany's Siemens AG and the Shinkansen, or Japanese bullet train.
Gagneraud denied a report in financial daily La Tribune that Alstom and SNCF had already been lined up for the deal.
She stressed the Chinese Government had not announced whether it was opting for a traditional rail link or magnetic levitation (Maglev) technology.
The Maglev train developed by Siemens and its joint venture partner ThyssenKrupp is plying the 30-kilometre Shanghai airport link at 430 kilometres per hour, making it the world's fastest train in commercial service.
But, as Siemens CEO Heinrich von Pierer has conceded, the higher costs of the magnetic technology makes it an unlikely contender for the massive Shanghai-Beijing project.
That could set the stage for a contest between the German company's ICE rolling stock and the Alstom-SNCF bid.
Both Alstom and Siemens already have factories in China, and the contract would boost either company's development in the region.