Alstom chief executive Philippe Mellier told the Financial Times that China is also exporting trains with some foreign technology that was supplied on condition that it not be used outside China.

"The (Chinese) market is gradually shutting down to let the Chinese companies prosper," Mellier said.

"We don't think it's a good idea for other countries to open their markets to such a technology because there's no reciprocity any more."

He said tenders for high-speed trains for a new link between Beijing to Shanghai included specifications that they be entirely Chinese-built and designed.

"We're starting to see Chinese companies answering tenders around the world with Chinese freight locomotives, some of them being based on transferred technology," he said.

As China upgrades its railway network and expands metro systems in major cities, it is consolidating its position as one of the world's main markets for rolling stock.

China recently approved a two-trillion-yuan (290-billion-dollar) plan for investments in its railway infrastructure as part of a spending package aimed at lifting growth in the face of the global slowdown.

See also:

Alstom is rattled by Asia's train exports

Financial Times: January 2 2009
By Robert Wright, Transport Correspondent

Other countries, suggests Philippe Mellier, chief executive of Paris-based Alstom Transport, should consider blocking Chinese train exports. It is only the latest sign of worsening tension about increasing competitiveness of Asian train manufacturers.

Builders in China, Japan and South Korea tended in the past either to develop technology for purely domestic use or to work with technology imported from one of the three big international manufacturers - the German-based trainmaking operation of Canada's Bombardier, France's Alstom or Germany's Siemens.

Now trainmakers in Asia's three biggest economies benefit from rapidly increasing domestic rail investment, using it as the springboard for an export drive that leaves many in the European heart of the industry uncomfortable.

None of these Asian countries has in modern times allowed the import of a wholly foreign-built, foreign-designed train.

The issues are all the more acute because many European governments are investing heavily in their railways, for environmental reasons and to boost battered economies.

Europe's big three builders are unwilling to see orders for trains go to markets where they cannot export products back.

China's position gives particular grounds for concern because of suspicion many of its builders' designs draw heavily on technology transferred from Europe, North America or Japan.

Some appear to be using that technology to compete with those suppliers' home markets.

It seems likely there will be few further opportunities for outsiders to participate in the investment of at least $180bn in railways under way during China's 2006-10 five-year plan.

Mr Mellier says that, after designs are bought from Hitachi or Kawasaki of Japan - both of whom have supplied technology used in Japanese Shinkansen trains to China - or Bombardier, the technology is "made Chinese".

"They will use them, adapt them, aggregate them to [form] a Chinese technology based on foreign technology being leased by them," he says. "I sincerely believe that all the many tenders for rolling stock and signalling will be for Chinese companies and the access for non-Chinese companies will be kept to a bare minimum."

Issues about Japanese and Korean markets are similar to those in China, Mr Mellier reckons.

Japan's manufacturers have their own technology and face no foreign competition in their protected home market.

Korea's market is closed. Hyundai Rotem, the country's biggest trainmaker, has begun to produce its own high speed train after a technology transfer deal by which it used Alstom's TGV design for Korea's 300kph KTX express.

"We sold the Koreans a technology for very high speed trains, which is now 20 years old, and they have 'developed' their own technology based on our old technology."

Mr Mellier's concerns are far from theoretical. Japan's Hitachi is building its first European order, a series of 225kph trains for high-speed domestic services between London and Kent in the UK, Europe's most open rail market.

Two China State Railways subsidiaries won an order to supply three 200kph trains to Grand Central, a British company, in 2007, while CSR Nanjing Puzhen was on a shortlist to supply 200 diesel train carriages to the UK announced on December 22.

Hyundai Rotem was on the same British shortlist and has supplied trains to the Athens metro.

But Mr Mellier insists companies like his have means to manage the conflict between selling trains to emerging Asian markets and risking losing valuable technology - they should not sell their latest technology.

"It is very important for Alstom to sell [older] technology when we're shooting a little bit ahead and we are developing and selling a newer technology that is going to give us a competitive edge," he says.

Koreans have a 300kph domestically produced, single-deck train, but Alstom markets its double deck, 320kph Duplex and 360kph single deck AGV.

"Transfer of technology is good," he says. "But it has to be entered into carefully, so that the selling company isn't damaged in return."