For decades the high-speed railway sector has been dominated by a handful of companies in Europe, Japan and North America that have mostly focused on their own regional markets.
But now, just as the industry witnesses a proliferation of high-speed rail projects across the globe, the rapid rise of Chinese state-owned rail producers is posing a serious threat to the dominance of companies such as Germany's Siemens, France's Alstom, Canada's Bombardier and Japan's Kawasaki.
“Chinese companies are changing the landscape of the global railway market because of the dimensions of their home market and because they are becoming involved in international tenders, which is new,” says Dominique Pouliquen, Asia-Pacific managing director for Alstom.
While Chinese companies are new to the global stage and lag their European rivals in terms of quality and technology, they have some significant advantages.
“Price is their number one competitive advantage and they are very well organised, with financing support from Chinese state-owned banks,” Mr Pouliquen says.
“They offer a global package which is usually combining technical solutions with financing so it is very easy for governments to make a decision to use their products.” The Chinese Ministry of Railways, which directly owns many of the country's rail companies, co-ordinates tenders so they do not bid against each other. It also encourages foreign companies to join Chinese consortiums by holding out the prospect of greater access to the enormous Chinese market.
Analysts say Chinese companies are already very active in bidding for projects in the Middle East and Latin America. They are also targeting projects in Australia and the US and have already made significant inroads in their own region, with contracts in Thailand and Hong Kong.
The rise of a Chinese rail industry with global aspirations has happened virtually overnight. Iain Carmichael, managing director of consultants Lloyd's Register Rail (Asia), says that as recently as three years ago Chinese companies did not have the know-how for many parts of their own rail systems, such as signalling and high-speed technology.
“But as the Chinese gained the know-how, the relationship changed, so now the Chinese have the upper hand and the Europeans have to work co-operatively if they want to compete.”
The main constraint on Chinese exports of rolling stock is capacity, as Chinese producers try to keep up with orders at home in what is now the largest market in the world.
“Some big manufacturers are tripling their output this year and we're seeing a vast expansion of metro systems as well as high speed rail,” Mr Carmichael says.
China's market for rail equipment, including trains, components and equipment such as signalling systems, is expected to quintuple from an average of $10bn a year between 2004 and 2008 to more than $50bn between 2009 and 2013, according to McKinsey.
This year, China is expected to account for more than half of the total global expenditure on rail equipment.
The government plans to build at least 30,000km of new railway, most of it high speed, over the next five years and China is expected soon to overtake Russia to have the second-largest rail infrastructure in the world after the US.
Expansion has been accelerated following the financial crisis to help boost growth. Target dates for completion of many projects are up from 2020 to 2015.
The size and scale of the Chinese market partly explains why European and international rail equipment providers are scrambling to partner Chinese state producers inside the country and around the world.
But co-operation has come at a price.
“European manufacturers have complained that they have transferred technology to China as required [by Beijing] and now the Chinese are using their technology to compete on price in the international market and even in the European home markets,” says Evan Auyang, an executive at Hong Kong-based Transport International.
