CNR’s percent lower than next competitor). International partnerships with

CNR’s and CSR’s consolidation to form CRRC makes it an
undisputed industry leader with 44 percent market share in the rail industry.  China’s political environment and strong
financial support enable CRRC to possess high export ambitions.  To penetrate international market, CRRC plans
to enter the global market with highly competitive price (at times, estimated
to be 15-25 percent lower than next competitor).

International partnerships with European suppliers to
bridge the technological gaps have also assisted CRRC in making its products
competitive and expanding its client portfolio.  Expectations are therefore that its competitors
will increasingly concentrate on cost-efficiency and continue moving production
to low-cost countries to remain capable of competing at an attractive price
level and securing profitability.

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High Demand for Intercity and High-speed Railway

It is evident from the growth of EU rail and Asian rail market that
the demand for long-distance rail journeys is already growing in many countries.
 As the economy and urbanization grows,
the demand for high-speed trains will increase with further development of the rail
network in Europe and Asia.  High-speed
trains traveling at 250-300 kmph allow 1,000 km distance to be covered in 5 to
7 hours.  This will attract individuals
to opt for high-speed trains and avoid the inconvenience of air travel.  The new technology will enable express freight
to be offered, ensuring faster deliveries and optimized supply chain.  Expectations of rail experts see substantial
revenues of these infrastructures and rolling stock segment, which will attract
private market investments to contribute to their cost and thus relieving
public budgets.

Outsourcing Maintenance Activities to the Third Parties

Traditionally, the maintenance of rolling stock and rail
infrastructure was carried out by the maintenance divisions of the rail
operators.  Even today still 70 percent
of the total market is accounted for by rail companies that maintain their own
vehicles.  However, with the increasing
degree of liberalization and the disintegration of the incumbent railway
operators, the number of enterprises in the railway sector has multiplied.  In addition, railway operators and
infrastructure managers are increasingly concentrating on their core business.  As a result, maintenance activities are
becoming outsourced to third parties instead of relying on in-house maintenance
divisions.  With new rolling stock, the
maintenance is increasingly performed by the original manufacturer that holds
contract for both the delivery and maintenance of rolling stock.