On April 9, 2004, the Chinese government held a conference on modern railway equipment and rolling stock, in which they drafted the current Chinese plan to modernize the country's railway infrastructure.
On June 17, 2004, the Ministry of Railways launched the first round of bidding on the high-speed rail technology, but the company must be:
- legally registered in the PRC, with rail EMU manufacturing capacity
- able to manufacture trains with the ability to reach 200 km/h
High-speed EMU design and manufacturing technology companies, including Siemens, Alstom, Kawasaki Heavy Industries and Bombardier, initially had hoped to enter into a joint venture in China, but was rejected by the Ministry of Railways. The MOR set these guidelines for joint ventures to be acceptable:
- comprehensive transfer of key technologies
- lowest price in the world
- use of a Chinese brand
A comprehensive transfer of technology to Chinese enterprises (especially in systems integration, AC drive and other core technologies) was necessary to allow domestic enterprises to master the core technology. While foreign partners might provide technical services and training, the Chinese companies must ultimately be able to function without the partnership. Railway equipment manufacturers in China were free to choose foreign partners, but foreign firms must pre-bid and sign the technology transfer agreement with China's domestic manufacturers, so the Chinese rolling stock manufacturers could comprehensively and systematically learn advanced foreign technology.
In the first round of bidding, 140 rolling stock orders were divided into seven packages of twenty orders each. After extensive review and negotiation, three consortiums won the bid:
- Changchun Railway Vehicles Co., Ltd. (owned by CNR) with France's Alstom
- Sifang Locomotive (owned by CSR) with Japan's Kawasaki Heavy Industries
- Sifang Locomotive (owned by CSR) with Canada's Bombardier
These three consortiums were each given three, three, and one twenty order packages respectively. Germany's Siemens, as a result of an expensive technology bid — the prototype vehicle cost was 350 million yuan each column, technology transfer fee 390 million euros — did not get any orders in the first round. EMU tendered 22.7 billion yuan for technology transfer payments in the first payment, accounting for 51 per cent of the amount of the tender.
In November 2005, the Chinese Ministry of Railways and Siemens reached an agreement, and Siemens in a joint venture with Changchun Railway Vehicles and Tangshan Railway Vehicle (both owned by CNR) was awarded sixty 300 km/h high-speed train orders.
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