CRRC explained

CRRC Corporation Ltd.
中国中车股份有限公司
Type:State-owned enterprise
public company
Founder:CRRC Group
Location City:Beijing
Location Country:China
Industry:Manufacturing
Revenue Year:2018
Net Income Year:2018
Assets Year:2018
Equity Year:2018
Num Employees:183,061
Num Employees Year:2016
Parent:CRRC Group
Footnotes:in consolidated financial statement, in IFRS[1]
Module:
Child:yes
S:中国中车股份有限公司
T:中國中車股份有限公司
P:Zhōngguó Zhōngchē Gǔfèn Yǒuxiàn Gōngsī
Order:st
Also Known As:CRRC
S2:中国中车
T2:中國中車
P2:Zhōngguó Zhōngchē

CRRC Corporation Limited (known as CRRC) is a Chinese state-owned and publicly traded rolling stock manufacturer. It is the world's largest rolling stock manufacturer in terms of revenue, eclipsing its major competitors of Alstom and Siemens.[2] [3] [4]

It was formed on 1 June 2015 through the merger of CNR and CSR. As of 2016 it had 183,061 employees. The parent company is CRRC Group, a state-owned enterprise supervised by the State-owned Assets Supervision and Administration Commission of the State Council. The State Council also owned additional shares via China Securities Finance and Central Huijin Investment.

History

Merger

CNR Group and CSR Group, were once one company, (LORIC). The company was split up in 2002.[5]

In late 2014, CNR Group and CSR Group agreed to merge, subject to approval by the Chinese state. Under the agreement, CNR Group would formally acquire CSR Group (but CSR Corporation Limited would acquire China CNR Corporation Limited), and the combined business would be renamed CRRC Group and CRRC Corporation Limited respectively.[6] [7] The rationales given for the merger were increased efficiency, and the ability to better compete internationally.

The merger came into effect 1 June 2015, with each CNR share exchanged for 1.1 CSR shares - the combined company became the largest railway rolling stock manufacturer in the world, and held over 90% of the Chinese market. Total employment of the combine was 175,700 persons, and the share capital was valued at .

Overseas expansion

After the re-merger, CRRC started expanding overseas; after being awarded a 284 vehicle order (later expanded to 404 vehicles) for metro cars for Massachusetts Bay Transportation Authority's Red and Orange lines with a US$556.6 million bid in October 2014, the company started constructing a assembly plant in Springfield, Massachusetts, at a former Westinghouse plant beginning in September 2015. Manufacturing work began in April 2018.[8]

In mid-2015, production began at a rolling stock plant in Batu Gajah, Perak, Malaysia, a satellite of CRRC Zhuzhou Locomotive, and the corporation's first plant outside China. Additionally the former CSR had acquired Emprendimientos Ferroviarios in Argentina in 2014 and announced in 2016 that it would begin maintenance and production of new rolling stock for export in the country.[9] Argentina had previously purchased a variety of rolling stock from the company over the years, including 704 EMU cars, 81 DMU cars, 44 passenger locomotives, 360 carriages, 107 freight locomotives and 3,500 freight cars, in addition to the 150 200 Series cars for the Subte.[10] [11] In 2017, the Argentine government purchased an additional 200 EMUs from CRRC.[12]

In mid-2015, CRRC formed a freight wagon joint venture, Vertex Railcar, as a minority partner with Hong Kong-based private equity firm Majestic Legend Holdings to establish production in Wilmington, North Carolina at a former Terex facility. CRRC provided railcar designs and some components, and Majestic Legend invested US$6 million;[13] the plant was operational by the beginning of 2016. In August 2016, at the request of a letter from 55 US House of Representatives members alleging that Vertex was being unfairly subsidized by the Chinese government, the United States Department of the Treasury began an investigation into whether the Chinese investment in Vertex constituted a national security risk. 42 US Senators sent a similar letter in September, conveying concerns about the state-owned enterprises behind Vertex.[14] The Treasury Department released its report in December and found that the joint ownership was not a risk.[15]

In late 2015, Yu Weiping, one of the vice-president of the company, stated the company planned to double overseas sales over five years, with North American passenger rail being one target. Interim six month financial results for the new company showed an increase in overseas revenue of over 60%. Half year revenue was, with a gross profit of . Non-rail revenue (car equipment, generators) was .

In March 2016, CRRC Qingdao Sifang was awarded a contract to build 400 7000-series cars for the Chicago Transit Authority (CTA), with an option for another 446 cars. The cost of the contract was US$632 million up to US$1.3 billion with options; as a consequence CRRC began development of a US$40 million assembly factory in Chicago, designed by Itasca, Illinois-based Cornerstone Architects Ltd.[16] [17]

In March 2017, the subsidiary CRRC MA (based in Quincy, Massachusetts) was awarded a contract by SEPTA to construct 45 bi-level rail cars with the option for 10 additional cars for delivery in October 2019. The SEPTA order was to be built at the Springfield plant[18] and car shell manufactured from the Tangshan plant.[19] CRRC was selected over Hyundai Rotem and Bombardier, which also bid on the bi-level contract and had each produced equipment for SEPTA in the past.[20]

Later in March 2017, CRRC was awarded a contract to build 64 HR4000 cars for the Los Angeles County Metropolitan Transportation Authority (LACMTA) that will replace existing vehicles on the agency's Red and Purple lines, with an option for another 218 cars.[21] The LACMTA order will result in a 41218square feet assembly plant (installing propulsion, HVAC and other general assembly) being built in LA.

Delivery of the MBTA Red and Orange Line cars was severely delayed, and problems with electrical shorts, loose brake bolts, and derailments led to several removals of the new trains from service. The company blamed supply chain issues caused by the COVID-19 pandemic, but an MBTA official told CRRC MA management it "has completely abandoned its core responsibilities and commitment to lead, monitor and support quality management", and cited 16 specific failure areas.[22] Workers at the site reported problems with quality tracking, trains being advanced through the assembly process despite missing parts, assembly occurring in the wrong order, and being left with nothing to do for months at a time because a disorderly invoice system failed to reliably pay suppliers for parts.[23]

In 2023, CRRC received the equivalent of US$214 million in state subsidies.[24] In April 2024, SEPTA terminated their order of bi-level rail cars, citing delays and poor build quality. They have stated “The authority is assessing its options for recouping funds that have been spent on the project” after spending $50 million on the project. CRRC expressed their disappointment at the cancellation, stating “[they] remain committed to completing the project.”[25] [26]

South African bribery allegations

In June 2016 a predecessor company of CRRC, CSR Corporation Limited, was implicated in allegations of bribery to obtain a 2012 US$6 billion tender to deliver 600 locomotives to the state owned Passenger Rail Agency of South Africa (PRASA).[27] [28] It was reported that the future South African Public Protector Busisiwe Mkhwebane was implicated in the deal when she worked as Counselor Immigration and Civic Services in South Africa's embassy in China.[29] [30] By 2020 it was reported that funds allocated to pay for an adjusted contract to deliver the locomotives produced by CSR Corporation, now reformed into CRRC, had been frozen by the South African Revenue Service due to possible instances of corruption paid to associates of the Gupta family.[31]

US sanctions

The United States Department of Defense alleges CRRC is a supplier to People's Liberation Army.[32] In November 2020, Donald Trump issued an executive order prohibiting any American company or individual from owning shares in companies that the United States Department of Defense has listed as having links to the People's Liberation Army, which included CRRC.[33] [34] [35]

In October 2022, the United States Department of Defense added CRRC to a list of "Chinese military companies" operating in the U.S.[36]

EU investigation

In February 2024, the European Union launched an investigation into CRRC for allegedly using state subsidies to undercut European suppliers.[37]

Shareholders

, CRRC was majority owned by CRRC Group directly and indirectly (via CRRC Financial and Securities Investment, for 1.64%[38]) for 55.91% of total share capital (all in A share). Other state-owned entities of the central government, such as China Securities Finance (2.87%) and Central Huijin Investment (1.12%), also owned a minority stake. In terms of different shares, BlackRock owned 6.13% H shares in long position (267,971,072 number of shares), or 0.98% in terms of total share capital. Himalaya Capital Investors, a Seattle based mutual fund also owned about 6.13% H shares in long position (267,904,000 number of shares).[39] Other shareholders each owned less than 1% shares in terms of total share capital.

CRRC US units

CRRC has two operating units:

CRRC Sifang America
Type:Subsidiary
Industry:Rolling Stock
Products:CTA 7000-series
Location:Chicago, Illinois
Area Served:Worldwide
Revenue: (20??)
Num Employees:200
Parent:CRRC

Subsidiaries

Locomotive

Rolling Stock

Locomotive & Rolling Stock

Other

Joint venture

Overseas

Other investments

On 8 January 2016 CRRC Corporation purchased 13.06% stake of China United Insurance Holding from China Insurance Security Fund for .[42] It also joint-owned Zhuzhou Times New Material Technology with parent company CRRC Group.

In November 2016 the company (via CRRC Zhuzhou Locomotive) confirmed plans to buy Škoda Transportation based in the Czech Republic.[43] [44] The deal eventually did not go through.

On 1 March 2024, CRRC 40% with Grupo Comporte 60% entered at Trens Intercidades Proposal with the possibility to deliver 22 inter-city trains, to be used from Luz Station to Campinas since supposidelly 2030.[45]

See also

Notes and References

  1. Web site: 2016 Annual Report. 27 April 2017. 22 June 2017. CRRC. Hong Kong Stock Exchange. 16 October 2022. https://web.archive.org/web/20221016204129/https://www1.hkexnews.hk/listedco/listconews/sehk/2017/0427/ltn201704272466.pdf. live.
  2. News: Siemens-Alstom Deal Teeters on Brink Amid Fierce Lobbying. Bloomberg.com. 20 January 2019 . 2019-01-23. https://web.archive.org/web/20190611112615/https://www.bloomberg.com/news/articles/2019-01-20/france-raises-pressure-on-vestager-to-allow-siemens-alstom-deal. 2019-06-11. live.
  3. News: Will Alstom-Siemens merger check CRRC's international expansion?. Smith. Kevin. 2017-09-29. en-gb. https://web.archive.org/web/20170929091055/http://www.railjournal.com/index.php/blogs/kevin-smith/will-alstom-siemens-merger-check-crrcs-international-expansion.html. 2017-09-29. live.
  4. News: Siemens-Alstom's Expected EU Veto Unleashes Political Storm. Bloomberg.com. 4 February 2019 . 2019-02-05. https://web.archive.org/web/20190207022454/https://www.bloomberg.com/news/articles/2019-02-04/european-champions-may-yet-rise-from-the-siemens-alstom-rubble. 2019-02-07. live.
  5. [wikisource:zh:国务院关于组建中国北方机车车辆工业集团公司有关问题的批复]
  6. Web site: CSR and CNR Joint Announcement. 11 May 2015. https://web.archive.org/web/20160509094428/http://en.chinacnr.com/Portals/0/LTN20150518007.pdf. 9 May 2016. dead.
  7. Web site: CSR and CNR Joint Announcement Update. 17 June 2015. https://web.archive.org/web/20160509235328/http://en.chinacnr.com/Portals/0/LTN201504271770.pdf. 9 May 2016. dead.
  8. Web site: First Orange Line T car shells arrive at CRRC factory in Springfield. Apr 11, 2018. masslive. 20 July 2018. https://web.archive.org/web/20180720110129/https://www.masslive.com/business-news/index.ssf/2018/04/first_t_car_shells_arrive_at_crrc_execs.html. 20 July 2018. live.
  9. News: Una empresa china quiere instalarse en la Argentina para fabricar vagones. 28 September 2016. La Nacion. 27 September 2016. 3 December 2018. https://web.archive.org/web/20181203023535/https://www.lanacion.com.ar/1941835-una-empresa-china-quiere-instalarse-en-la-argentina-para-fabricar-vagones. dead.
  10. News: Dietrich acordó con gigante ferroviario chino instalar taller en el país. 28 September 2016. El Cronista. 28 September 2016. es-LA. 23 September 2023. https://web.archive.org/web/20230923075738/http://www.cronista.com/economiapolitica/Dietrich-acordo-con-gigante-ferroviario-chino-instalar-taller-en-el-pais-20160928-0078.html. live.
  11. News: CRRC reitera sus intenciones de instalarse en la Argentina. 30 September 2016. EnElSubte. 30 September 2016. es-ES. 23 September 2023. https://web.archive.org/web/20230923194135/https://www.enelsubte.com/noticias/crrc-reitera-sus-intenciones-de-instalarse-en-la-argentina/. live.
  12. News: Compran 200 coches eléctricos adicionales para la línea Roca. 15 January 2018. enelSubte.com. 4 January 2018. es-ES. https://web.archive.org/web/20180110184944/http://enelsubte.com/noticias/compran-200-coches-electricos-adicionales-para-la-linea-roca/. 10 January 2018. live.
  13. Web site: Vertex: Signs Of Growth Or Trouble? . Wilmington Business Journal . 19 June 2015 . 5 May 2017 . https://web.archive.org/web/20170105065526/http://www.wilmingtonbiz.com/more_news/2015/06/19/vertex%C3%83%C2%A2%C3%A2%E2%80%9A%C2%AC%C3%8B%E2%80%A0signs_of_growth_or_trouble/13446 . 5 January 2017 . live .
  14. Web site: Letter to Treasury Secretary Lew regarding CFIUS investigation on Vertex . Sen. Jerry Moran . 29 September 2017 . 8 May 2017 . https://web.archive.org/web/20170413081249/https://www.moran.senate.gov/public/_cache/files/6/d/6d4f64f1-6129-4c75-99b8-6eff6874b42d/92FCFF776C1C8DE429273D4B2C830622.09.28.2016-to-treasury-secretary-lew-re-cfius-investigation-on-vertex.pdf . 13 April 2017 . live .
  15. Web site: Vertex's deal with China cleared by Feds . Star-News Online . 14 December 2016 . 5 May 2017 . 2 August 2021 . https://web.archive.org/web/20210802083311/https://www.starnewsonline.com/news/20161214/vertexs-deal-with-china-cleared-by-feds . live .
  16. Web site: CRRC to build up to 846 metro cars for Chicago. Keith. Barrow. 9 March 2016. www.railjournal.com. 15 April 2016. 14 August 2018. https://web.archive.org/web/20180814170131/http://www.railjournal.com/index.php/north-america/crrc-to-build-up-to-846-metro-cars-for-chicago.html. live.
  17. Web site: China's CRRC wins $1.3 bln deal to supply Chicago rail cars. Reuters. 10 March 2016. https://web.archive.org/web/20170211100508/http://www.reuters.com/article/crrc-usa-idUSL5N16I0LS. 11 February 2017. dead. 30 June 2017.
  18. Web site: CRRC MA CORPORATION > Home. www.crrcgc.cc. 2019-09-22. 2022-01-14. https://web.archive.org/web/20220114064438/http://www.crrcgc.cc/ma. live.
  19. Web site: CRRC puts Septa double-deck coach design to the test. April 11, 2018. September 22, 2019. https://web.archive.org/web/20190922030559/https://www.railjournal.com/rolling-stock/crrc-puts-septa-double-deck-coach-design-to-the-test/. September 22, 2019. live.
  20. Web site: SEPTA to pick Massachusetts-based company to build bilevel railcars over Hyundai Rotem in South Philly. PlanPhilly. 17 March 2017. Jim. Saska. 19 March 2017. https://web.archive.org/web/20170320053911/http://planphilly.com/articles/2017/03/17/septa-to-pick-massachusetts-based-company-to-build-bilevel-railcars-over-hyundai-rotem-in-south-philly. 20 March 2017. live.
  21. Web site: L.A. Metro inks pact with CRRC for up to 282 new rail cars . Progressive Railroading . 24 March 2017 . 24 March 2017 . https://web.archive.org/web/20170324221721/http://www.progressiverailroading.com/mechanical/news/LA-Metro-inks-pact-with-CRRC-for-up-to-282-new-rail-cars--51154 . 24 March 2017 . live .
  22. Web site: Has the company building MBTA trains 'completely abandoned its core responsibilities'? . . 2023-02-19 . 2023-01-09 . https://web.archive.org/web/20230109104230/https://www.bostonglobe.com/2023/01/04/opinion/factory-thats-building-new-mbta-rail-cars-is-hot-mess/ . live .
  23. Web site: Workers building the new Orange and Red Line cars in Springfield describe a toxic, error-prone factory . . 2023-02-19 . 2023-02-19 . https://web.archive.org/web/20230219045219/https://www.bostonglobe.com/2023/01/14/metro/workers-building-new-orange-red-line-cars-springfield-describe-toxic-error-prone-factory/ . live .
  24. News: Douglas . Jason . Leong . Clarence . August 3, 2024 . The U.S. Has Been Spending Billions to Revive Manufacturing. But China Is in Another League. . subscription . August 5, 2024 . The Wall Street Journal.
  25. Web site: SEPTA terminates contract for double-decker rail cars after spending $50 million . 2024-06-09 . www.fox29.com.
  26. Web site: Fitzgerald . Thomas . 2024-04-12 . SEPTA cancels $185 million Chinese contract for double-decker Regional Rail cars . 2024-06-09 . www.inquirer.com . en.
  27. Web site: amaBhungane - Guptas' R51bn train grab. 2016-07-16. amabhungane.co.za. 2016-07-24. https://web.archive.org/web/20160724185631/http://amabhungane.co.za/article/2016-06-19-guptas-r51bn-train-grab. dead.
  28. Web site: SOLE. STEFAANS BRÜMMER and SAM. The Guptas' R51bn train grab. 2016-07-16. Sunday Times. 2016-07-19. https://web.archive.org/web/20160719030651/http://www.timeslive.co.za/sundaytimes/stnews/investigations/2016/06/19/The-Guptas-R51bn-train-grab. live.
  29. Web site: Cameron. Jackie. 2019-07-31. HSBC joins dots from Gupta-friendly public protector to Chinese rail company kickbacks. 2019-08-01. BizNews.com. en-GB. 2019-07-31. https://web.archive.org/web/20190731153404/https://www.biznews.com/global-citizen/2019/07/31/hsbc-joins-dots-from-gupta-friendly-public-protector-to-chinese-rail-company-kickbacks. live.
  30. Web site: $5,000 payment to Mkhwebane flagged by HSBC bank: report. 2019-08-01. TimesLIVE. en-ZA. 2019-08-01. https://web.archive.org/web/20190801002613/https://www.timeslive.co.za/politics/2019-07-30-5000-payment-to-mkhwebane-flagged-by-hsbc-bank-report/. live.
  31. Web site: Brümmer. Stefaans. 2020-12-04. amaBhungane: At a minute to midnight SARS tries to secure R4bn State Capture loot. 2020-12-08. Daily Maverick. en. 2020-12-06. https://web.archive.org/web/20201206050359/https://www.dailymaverick.co.za/article/2020-12-04-at-a-minute-to-midnight-sars-tries-to-secure-R4bn-state-capture-loot/. live.
  32. News: Allen-Ebrahimian. Bethany. June 24, 2020. Defense Department produces list of Chinese military-linked companies. Axios. live. June 24, 2020. https://web.archive.org/web/20200625220923/https://www.axios.com/defense-department-chinese-military-linked-companies-856b9315-48d2-4aec-b932-97b8f29a4d40.html. June 25, 2020.
  33. News: Chen. Shawna. November 12, 2020. Trump bans Americans from investing in 31 companies with links to Chinese military. Axios. November 12, 2020. October 28, 2021. https://web.archive.org/web/20211028203620/https://www.axios.com/china-military-trump-investments-ban-a0458e29-2245-4bde-920b-d1c6bc698370.html. live.
  34. News: Pamuk. Humeyra. Alper. Alexandra. Ali. Idrees. 2020-11-12. Trump bans U.S. investments in firms linked to Chinese military. en. Reuters. 2020-11-12. https://web.archive.org/web/20201113055456/https://www.reuters.com/article/us-usa-china-securities-exclusive-idUSKBN27S2X3. 2020-11-13. dead.
  35. News: Swanson. Ana. 2020-11-12. Trump Bars Investment in Chinese Firms With Military Ties. en-US. The New York Times. 2020-11-13. 0362-4331. 2020-11-13. https://web.archive.org/web/20201113000328/https://www.nytimes.com/2020/11/12/business/economy/trump-china-investment-ban.html. live.
  36. Web site: 2022-10-05 . DOD Releases List of People's Republic of China (PRC) Military Companies in Accordance With Section 1260H of the National Defense Authorization Act for Fiscal Year 2021 . 2022-10-05 . . en-US . 2022-10-05 . https://web.archive.org/web/20221005182828/https://www.defense.gov/News/Releases/Release/Article/3180636/dod-releases-list-of-peoples-republic-of-china-prc-military-companies-in-accord/ . live .
  37. Web site: EU launches anti-subsidy probe into Chinese train maker . subscription . 2024-02-21 . . 2024-02-21 . https://web.archive.org/web/20240221112506/https://www.ft.com/content/6dbc828f-03bc-4418-bbd0-4ff194d3f830 . live .
  38. Web site: 3 August 2017. 南车投资向中车金证无偿划转中国中车(01766)0.32%股本. live. https://web.archive.org/web/20170929044031/http://stock.qq.com/a/20170803/048739.htm. 29 September 2017. 28 September 2017. 智通财经网. zh. qq.com.
  39. Web site: About our investing philosophy. live. https://web.archive.org/web/20180612140817/http://www.himalayacapital.com/index.htm. 12 June 2018. 5 June 2018. himalayacapital.com. Himalaya Capital.
  40. Web site: 中车兰州机车有限公司 > 关于我们 > 公司简介. 2021-03-10. 2021-04-12. https://web.archive.org/web/20210412054550/http://www.crrcgc.cc/lz/g9363.aspx. live.
  41. Subsidiary of Zhuzhou CRRC Times Electric
  42. Acquisition of 13.06% Equity Interests in China United Insurance. 8 January 2016. 13 October 2016. CRRC. 13 October 2016. https://web.archive.org/web/20161013231832/http://www.crrcgc.cc/Portals/73/Uploads/Files/2016/1-11/635881025282842048.pdf. live.
  43. Web site: CRRC confirms plan to buy Škoda Transportation. 30 November 2016. 27 July 2017. Railway Gazette International. https://web.archive.org/web/20170730003243/http://www.railwaygazette.com/news/business/single-view/view/crrc-confirms-plan-to-buy-skoda-transportation.html. 30 July 2017. live.
  44. Announcement in relation to proposed offshore acquisition by a subsidiary . 27 November 2016. 27 September 2017. CRRC. Hong Kong Stock Exchange. https://web.archive.org/web/20161207191100/http://www.hkexnews.hk/listedco/listconews/sehk/2016/1127/LTN20161127005.pdf. 7 December 2016. live.
  45. Web site: Linhas de trens leiloadas em SP na Bovespa ao Grupo Comporte. March 2024. 2024-03-01. 2024-03-01. https://web.archive.org/web/20240301171845/https://g1.globo.com/sp/campinas-regiao/noticia/2024/03/01/proximos-passos-tarifas-prazos-tudo-que-voce-precisa-saber-sobre-linhas-de-trens-leiloadas-em-sp.ghtml. live.

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