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CRRC

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Not to be confused with Combat Rubber Raiding Craft.

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.[6][7][8]

CRRC Corporation Ltd.
中国中车股份有限公司
Company typeState-owned enterprise; public company
SSE: 601766(A share)
SEHK: 1766(H share)
IndustryManufacturing
Predecessor
Founded1 June 2015; 9 years ago (1 June 2015)[1]
FounderCRRC Group
Headquarters
Beijing
,
China
Area served
  • China
  • exported worldwide
Key people
Liu Hualong(chairman of the board, party secretary)[2]
Xi Guohua(vice-chairman, deputy party secretary, president)[2][3]
Sun Yongcai(executive director, vice-president)[3][4]
Xu Zongxiang(executive director)[4]
Wan Jun(chairman of the supervisory board, deputy party secretary)
Zhan Yanjing(CFO & vice-president)
Wang Jun(vice-president)
Lou Qiliang(vice-president)
Yu Weiping(vice-president)[5]
Products
RevenueIncrease CN¥214.521 billion (2018)
46,062,360,000 renminbi (2018) Edit this on Wikidata
Increase CN¥012.998 billion (2018)
Total assetsDecrease CN¥357,523 billion (2018)
Total equityIncrease CN¥149.684 billion (2018)
Owner
CRRC Group(55.91%)[3]: 85 
CSF(02.87%)[3]: 83 
Central Huijin(01.12%)[3]: 83 
general public(40.10%)
Number of employees
183,061 (2016[3]: 60 )
ParentCRRC Group
Chinese name
Simplified Chinese中国中车股份有限公司
Traditional Chinese中國中車股份有限公司
Transcriptions
Standard Mandarin
Hanyu PinyinZhōngguó Zhōngchē Gǔfèn Yǒuxiàn Gōngsī
CRRC
Simplified Chinese中国中车
Traditional Chinese中國中車
Transcriptions
Standard Mandarin
Hanyu PinyinZhōngguó Zhōngchē
Websitecrrcgc.cc
Footnotes / references
in consolidated financial statement, in IFRS[3]

It was formed on 1 June 2015 through the merger of CNR and CSR. As of 2016 it had 183,061 employees.[3] 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

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Merger

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CNR Group and CSR Group, were once one company, China National Railway Locomotive & Rolling Stock Industry Corporation [wikidata] (LORIC). The company was split up in 2002.[9][10]

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.[11][12] The rationales given for the merger were increased efficiency, and the ability to better compete internationally.[13]

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 CN¥27.289 billion.[1]

Overseas expansion

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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 13,900 square metres (150,000 sq ft) assembly plant in Springfield, Massachusetts, at a former Westinghouse plant[14] beginning in September 2015.[15] Manufacturing work began in April 2018.[16]

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.[17] 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.[18][19] 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.[20][19][21] In 2017, the Argentine government purchased an additional 200 EMUs from CRRC.[22]

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.[23] CRRC provided railcar designs and some components, and Majestic Legend invested US$6 million;[24] the plant was operational by the beginning of 2016.[25] 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.[26] 42 US Senators sent a similar letter in September, conveying concerns about the state-owned enterprises behind Vertex.[27] The Treasury Department released its report in December and found that the joint ownership was not a risk.[26]

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.[28] Interim six month financial results for the new company showed an increase in overseas revenue of over 60%. Half year revenue was CN¥91.8 billion, with a gross profit of CN¥19.5 billion. Non-rail revenue (car equipment, generators) was CN¥20.94 billion.[29]

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.[30][31]

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[32] and car shell manufactured from the Tangshan plant.[33] 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.[34]

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.[35] The LACMTA order will result in a 41,218 square feet (3,829.3 m2) assembly plant (installing propulsion, HVAC and other general assembly) being built in LA.[32]

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.[36] 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.[37]

In 2023, CRRC received the equivalent of US$214 million in state subsidies.[38] 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.”[39][40]

South African bribery allegations

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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).[41][42] 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.[43][44] 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.[45]

US sanctions

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Further information: United States sanctions against China

The United States Department of Defense alleges CRRC is a supplier to People's Liberation Army.[46] 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.[47][48][49]

In October 2022, the United States Department of Defense added CRRC to a list of "Chinese military companies" operating in the U.S.[50]

EU investigation

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In February 2024, the European Union launched an investigation into CRRC for allegedly using state subsidies to undercut European suppliers.[51]

Shareholders

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As of 31 December 2016, CRRC was majority owned by CRRC Group directly and indirectly (via CRRC Financial and Securities Investment, Chinese: 中车金证投资 for 1.64%[52]) for 55.91% of total share capital (all in A share).[3]: 85  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.[3]: 83  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.[3]: 85  Himalaya Capital, a Seattle based mutual fund also owned about 6.13% H shares in long position (267,904,000 number of shares).[53][3]: 85  Other shareholders each owned less than 1% shares in terms of total share capital.[3]: 83–85 

CRRC US units

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CRRC has two operating units:

  • CRRC Sifang America - focus market for Chicago
CRRC Sifang America
Company typeSubsidiary
IndustryRolling Stock
Founded2019; 5 years ago (2019)
HeadquartersChicago, Illinois
Area served
Worldwide
ProductsCTA 7000-series
RevenueUS$$21.4 million (20??)
46,062,360,000 renminbi (2018)  
12,998,507,000 renminbi (2018)  
Total assets357,523,050,000 renminbi (2018)  
Number of employees
200
ParentCRRC
Websitewww.crrcsifangamerica.com

Subsidiaries

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Other investments

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On 8 January 2016 CRRC Corporation purchased 13.06% stake of China United Insurance Holding (Chinese: 中华保险) from China Insurance Security Fund for CN¥4.455 billion.[55] 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.[56][57] 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.[58]

See also

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Notes

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  1. ^ Subsidiary of Zhuzhou CRRC Times Electric

References

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  1. ^ a b "Chinese rolling stock manufacturers merge to form CRRC Corp". Railway Gazette International. 2 June 2015. Archived from the original on 12 February 2020. Retrieved 19 June 2015.
  2. ^ a b "Senior roles filled at CRRC". Railway Gazette. 25 June 2015. Archived from the original on 25 February 2016. Retrieved 22 January 2016.
  3. ^ a b c d e f g h i j k l m "2016 Annual Report" (PDF). CRRC. 27 April 2017. Archived (PDF) from the original on 16 October 2022. Retrieved 22 June 2017 – via Hong Kong Stock Exchange.
  4. ^ a b "List of Directors and their Role and Function" (PDF). CRRC. Hong Kong Stock Exchange. 20 June 2017. Archived (PDF) from the original on 16 October 2022. Retrieved 22 June 2017.
  5. ^ "股份领导" (in Chinese). CRRC. Archived from the original on 11 June 2017. Retrieved 22 June 2017.
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  10. ^ 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 (in Chinese)
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  22. ^ "Compran 200 coches eléctricos adicionales para la línea Roca". enelSubte.com (in European Spanish). 4 January 2018. Archived from the original on 10 January 2018. Retrieved 15 January 2018.
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  29. ^ Briginshaw, David (1 September 2015). "CRRC first-half profits up while overseas revenue soars". International Railway Journal.
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  32. ^ a b "CRRC MA CORPORATION > Home". www.crrcgc.cc. Archived from the original on 2022-01-14. Retrieved 2019-09-22.
  33. ^ "CRRC puts Septa double-deck coach design to the test". April 11, 2018. Archived from the original on September 22, 2019. Retrieved September 22, 2019.
  34. ^ Saska, Jim (17 March 2017). "SEPTA to pick Massachusetts-based company to build bilevel railcars over Hyundai Rotem in South Philly". PlanPhilly. Archived from the original on 20 March 2017. Retrieved 19 March 2017.
  35. ^ "L.A. Metro inks pact with CRRC for up to 282 new rail cars". Progressive Railroading. 24 March 2017. Archived from the original on 24 March 2017. Retrieved 24 March 2017.
  36. ^ "Has the company building MBTA trains 'completely abandoned its core responsibilities'?". The Boston Globe. Archived from the original on 2023-01-09. Retrieved 2023-02-19.
  37. ^ "Workers building the new Orange and Red Line cars in Springfield describe a toxic, error-prone factory". The Boston Globe. Archived from the original on 2023-02-19. Retrieved 2023-02-19.
  38. ^ Douglas, Jason; Leong, Clarence (August 3, 2024). "The U.S. Has Been Spending Billions to Revive Manufacturing. But China Is in Another League". The Wall Street Journal. Retrieved August 5, 2024.
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  40. ^ Fitzgerald, Thomas (2024-04-12). "SEPTA cancels $185 million Chinese contract for double-decker Regional Rail cars". www.inquirer.com. Retrieved 2024-06-09.
  41. ^ "amaBhungane - Guptas' R51bn train grab". amabhungane.co.za. Archived from the original on 2016-07-24. Retrieved 2016-07-16.
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  47. ^ Chen, Shawna (November 12, 2020). "Trump bans Americans from investing in 31 companies with links to Chinese military". Axios. Archived from the original on October 28, 2021. Retrieved November 12, 2020.
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  49. ^ Swanson, Ana (2020-11-12). "Trump Bars Investment in Chinese Firms With Military Ties". The New York Times. ISSN 0362-4331. Archived from the original on 2020-11-13. Retrieved 2020-11-13.
  50. ^ "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". U.S. Department of Defense. 2022-10-05. Archived from the original on 2022-10-05. Retrieved 2022-10-05.
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  52. ^ "南车投资向中车金证无偿划转中国中车(01766)0.32%股本". 智通财经网 (in Chinese). 3 August 2017. Archived from the original on 29 September 2017. Retrieved 28 September 2017 – via qq.com.
  53. ^ "About our investing philosophy". himalayacapital.com. Himalaya Capital. Archived from the original on 12 June 2018. Retrieved 5 June 2018.
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  55. ^ "Acquisition of 13.06% Equity Interests in China United Insurance" (PDF) (Press release). CRRC. 8 January 2016. Archived (PDF) from the original on 13 October 2016. Retrieved 13 October 2016.
  56. ^ "CRRC confirms plan to buy Škoda Transportation". Railway Gazette International. 30 November 2016. Archived from the original on 30 July 2017. Retrieved 27 July 2017.
  57. ^ "Announcement in relation to proposed offshore acquisition by a subsidiary" (PDF) (Press release). CRRC. 27 November 2016. Archived (PDF) from the original on 7 December 2016. Retrieved 27 September 2017 – via Hong Kong Stock Exchange.
  58. ^ "Linhas de trens leiloadas em SP na Bovespa ao Grupo Comporte". March 2024. Archived from the original on 2024-03-01. Retrieved 2024-03-01.
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