After riding the domestic growth wave for more than three decades, CRRC Zhuzhou Electric Locomotive Co, a part of China’s largest train manufacturer, is taking advantage of opportunities in South Africa’s vast rail-equipment market.
CRRC Zhuzhou, a unit of China Railway Rolling Stock Corp, invested more than $100 million to build a plant in South Africa’s Pretoria in January, which is CRRC (South Africa) Railway Vehicles Co and will act as the company’s gateway to other African markets, including Zambia, Zimbabwe, Angola and Mozambique.
South Africa is experiencing surging demand for railway-related infrastructure projects, which can help to improve sustainable development in urbanization and industrialization, as well as in the service and communications sectors.
With an 85-percent market share in South Africa, CRRC Zhuzhou has become the largest rail-equipment supplier in the country with close links to other African nations in Sub-Saharan Africa.
The company started business in South Africa in 2012 when it signed a contract with Transnet SOC Ltd to supply 95 locomotives to the state-owned rail, port and pipeline operator.
Last year, CRRC Zhuzhou signed its largest export deal: a $2.1 billion contract for electric locomotives to Transnet. Most of the locomotives will be used to transport coal and ore in South Africa.
The six-axle locomotives can haul freight trains at up to 100 kilometers per hour. They will be delivered between August this year and February 2018.
“Because most countries in Sub-Saharan Africa have just begun to build new railway lines or bought new trains, they are keen to acquire technological support from China to assist in the daily operations, maintenance, staff training and other services,” said Zhou Qinghe, president of CRRC Zhuzhou.
The South Africa plant will be involved in production, assembly, testing, maintenance and refurbishment, with an annual production capacity of 100 locomotive and light rail vehicles.
This plant can significantly improve the efficiency of freight and rail operations in South Africa and provide technology transfers. Up to 400 jobs will be created at the facility and annual sales revenue is estimated to be $55 million.
“Even though a lot of money can be made from selling trains, providing maintenance services in our South African base can also be very profitable,” said Luo Chongfu, vice-general manager of CRRC Zhuzhou.