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Eu Gateway Market Study Railway Technologies Services Japan 2019
Eu Gateway Market Study Railway Technologies Services Japan 2019
Eu Gateway Market Study Railway Technologies Services Japan 2019
JULY 2019
© Copyright EU Gateway | Business Avenues
The information and views set out in this study are those of the author(s) and do not necessarily reflect the official
opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their
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in the EU Gateway | Business Avenues Programme an introductory understanding of the target markets countries
and support them in defining their strategy towards those markets. For more information, visit www.eu-gateway.eu.
EU Gateway to Japan
July 2019
List of Tables
Table 1: Japan Railways Group Turnover FY2017 .................................................................... 41
Table 2: © JR East Consolidated Subsidiaries, JR East website ................................................ 45
Table 3: © JR East Equity-Method Affiliated Companies JR East website ................................. 45
Table 4: Major Private Railway Companies, Japanese websites of Big 16 railway operators .... 46
Table 5: Top 10 Busiest Stations Worldwide .............................................................................. 47
Table 6: Procurement Outlook FY2020, JR East Website ......................................................... 64
Table 7: Big 16 Low Energy Cars, Private Railways Big 16 Data Book 2018 ............................ 75
Table 8: JR East Investment Value, JR East Website ............................................................... 87
Table 9: JR Central, West, Kyushu and Freight Investment Plans, respective websites
of each JR operator...................................................................................................... 87
Following the model of the Industrial Revolution in Europe 100 years earlier, Japan decided to
Westernise the country at the beginning of the Meiji Restoration in 1868. With this, the
government decided to build a domestic railway system based upon British hardware and
technology.
In 1871, the first imported rolling stock from the United Kingdom arrived at Yokohama seaport,
and in June 1872, the first daily passenger rides between Yokohama Terminal and Shinagawa
Station in Tokyo commenced services. This inaugural service took 35 minutes and ran on
29 kilometres of newly laid tracks. One year later, railway freight services started with Shinbashi
as the main terminal.
Considering these passenger figures, it is not surprising that all ten of the busiest railway stations
in the world are located in Japan.
The Asakusa line in Tokyo was the first subway service and launched in 1927. This ran between
Ueno and Asakusa stations, covering 2.2 km. At that time, steam locomotives were mainly used,
but Japan decided to develop their own electric subway locomotives, which were better suited to
subway services. This era marked the start of domestic manufacturing of railway rolling stock and
equipment by Japanese companies. Nowadays, 12 major Japanese cities operate
45 underground lines stretching over 800 km and carrying over 16.7 million passengers daily.
At the end of FY2017 (March 2018), 134,000 Shinkansen1 ran annually, representing more than
420 million passengers 2 , while the average delay per run was below one minute. This is
remarkable, considering that the shortest intervals between train departures is only 4 minutes
during peak hours, or up to 15 trains per hour leaving Tokyo station.
Presently, there are seven main Shinkansen lines include Tokaido (552.6 km), Sanyo (622.3 km),
Kyushu (288.9 km), Tohoku (713.7 km), Hokuriku (450.5 km), Joetsu (333.9 km) and Hokkaido
(148.8 km). Together these lines span over 3,100 kilometres of HST tracks nationwide,
connecting Kyushu in the south, over main island Honshu to Hokkaido in the north.
Near future Shinkansen extensions include the Hakata-Nagasaki (2022, 66 km) route on the
Kyushu line, the Kanazawa-Tsuruga extension (2022, 113 km) on the Hokuriku line and the Shin-
Hakodate-Sapporo (2030, 201 km) extension on the Hokkaido Shinkansen line.
Finally, as Japan continuously develops, tests and implements new railway technologies, next is
the Maglev (Linear) service, designed to run at over 500 km/h. During initial testing, a Maglev test
ride set a new world speed record of 603 km/h in April 2015.
The Maglev Chuo Line, connecting Shinagawa Station with Nagoya Station, is expected to
commence commercial operations from 2027 onwards. Tokyo station will be connected with
Osaka Terminal by 2037, 8 years earlier compared to the initial plan of 2045.
With over 25 billion passengers transported per year and employing approximately 160,000
people in FY20173, Japan is the biggest railway market in the world. The total business retail
1
https://company.jr-central.co.jp/ir/annualreport/_pdf/annualreport2018.pdf
2
https://biz-journal.jp/2018/06/post_23575.html
3
https://www.mlit.go.jp/k-toukei/tetsuyu-kekka.html
The total domestic railway business during fiscal year 2017 was estimated at a market value of
JPY 495.4 billion (EUR 4.12 billion). The breakdown for fiscal year 2017, ending at March 2018,
includes rolling stock at JPY 202.8 billion (EUR 1.69 billion; 26.1% export), electric parts at
JPY 204.6 billion (EUR 1.705 billion; 36% export) and spare parts at JPY 158.9 billion
(EUR 1.32 billion; 11.6% export).4 The workforce in the industry is estimated at 17,500 people in
manufacturing and approximately 7,500 in the security and safety market segment.
About 1,850 new cars were produced on average in the last 10 years, of which almost 97% are
electric cars nowadays. The JR group companies use 700 new cars for conventional rail and 300
new Shinkansen cars for HST. The Big 16 private operators have a combined demand of about
600 new cars annually. 5 The remaining 15% of domestic production is exported to overseas
markets, mainly Asia. For European and US markets, local in-country subsidiaries of the
Japanese parent company usually manufacturers the cars.
In production value, JR represents approximately 50% of total domestic output, which includes
the rather hefty price tag of Shinkansen cars, priced at around JPY 300 million (EUR 2.5 million)
each. In comparison, conventional railway passenger cars are priced at JPY 100 million
(EUR 833,000) per car.
As of April 2018, the total inventory of rolling stock in the Japanese market amounted to 61,300
cars. This includes 49,000 passenger cars, 7,450 freight cars, 4,850 Shinkansen units,
560 electric locomotives, 360 diesel locomotives and 21 steam locomotives.6
Japan still has nine major domestic rolling stock manufacturers but the biggest are Nippon
Sharyo, Hitachi Railway Systems and Kawasaki Rolling Stock Company. All Japanese rolling
4
https://www.tetsushako.or.jp/english/english01.html
5
https://www.tetsushako.or.jp/data.html
6
https://www.tetsushako.or.jp/data04.html
The three biggest rolling stock manufacturers mentioned above are also the most active players
in new overseas railway projects. In particular, Hitachi Railway Systems became a dominant
player in Europe in recent years through their local UK entity and the complete acquisition of
Ansaldo STS in Italy at the end of January 2019.7
Long-term planning combined with continued investments in public infrastructure and real estate
are very typical for Japan. This proactive approach keeps the existing infrastructure in top shape
while enhancing urban lifestyle convenience and public transportation comfort.
All long-term investments by the railway companies are related to safety/ security improvements
(their key area of focus), proactive infrastructure maintenance aims to prevent accidents while
enhancing the safety, comfort and service levels for passengers. Examples of current major
investment project include:
■ Ongoing upgrades and refurbishments of existing prime real estate like Shibuya station, one
of the six main terminals on the JR Loop line in Tokyo, where the first phase of a major
transformation will be completed before the Tokyo Olympics in 2020;
■ Continuous and enhanced revenue schemes, including retail sales in and around major
terminals, payments via electronic money cards and cashless mobile apps for smartphones
like Mobile Suica;
7
https://www.railwaygazette.com/news/business/single-view/view/hitachi-completes-ansaldo-sts-takeover.html
■ Enhanced barrier-free and universal access design stations through installation of additional
escalators and elevators;
■ Faster installation of new light-weight platform doors (ceiling height and half size) to avoid
passenger and train contact accidents;
■ Additional pushes into new overseas markets with state-of-the-art Japanese HST railway
technology for Asian markets but also in the US and European markets through affiliated
local subsidiaries.
For large-scale global railway projects with big financial impact, major Japanese trading houses,
with extensive worldwide networks of offices and local companies, are also getting involved as
consortium partners.
According to a 2011 study done by the Railway Bureau of the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT), these continued countermeasures to improve railway safety and
security have resulted in notable lower accident rates in Japan compared to Europe and the US.
Since 1965, Japan has been systematically replacing all older signals systems at road crossings
with equipment that is modern, safer, automated and remote-controllable. In addition, elevated
railway tracks have increased in densely populated urban areas. These ongoing efforts have paid
off with a remarkable 90% reduction in road crossing-related accidents.
Even during the devastating Tohoku earthquake in March 2011, the 4th biggest ever registered,
all running trains stopped within 90 seconds after the initial alert and zero railway casualties were
directly linked to the earthquake.
UNIFE, the Association of the European Rail Industry, estimates that only 2% of total public
railway procurement volume in Japan is open to overseas railway equipment manufacturers, and
of that percentage, only 15% is awarded to non-Japanese companies.
As Japan is a member of the World Trade Organisation (WTO) and the Agreement on
Government Procurement (GPA) clause, reciprocal and non-discriminatory market access is a
core value.
The main issues faced by overseas railway business companies during public procurement
projects in Japan can be summarised as:
■ For decades, Japan implemented specific technical, customised and domestic standards,
which make the preparation of financial and solution proposals often complex and time
consuming for non-Japanese companies. The most famous example is the Operational
Safety Clause (OSC) for product operation and safety during major earthquakes. The
elimination of the OSC is a core element of the 2019 ratified European Economic
Partnership Agreement (EPA) between the EU and Japan;
■ Tight submission deadlines, typically within two or three months after publication of the
required tender documents, create extra hurdles for overseas manufacturers;
■ Nowadays, major railway companies publish their procurement documents in both Japanese
and English, but second-tier operators usually publish in Japanese only;
■ Local presence in Japan is an important factor for success as Japanese customers are
meticulous and demanding when it comes to swiftly handling quality problems, after-service
and long-term, ongoing maintenance of delivered products.
As for potential business contracts, four of seven (six + JR Freight) JR companies, namely JR
East (Tokyo & Northern Japan), JR Central (Nagoya, Tokaido Shinkansen and Maglev Chuo
Procured equipment and products are often in small quantities from an overseas supplier
viewpoint, as Japanese railway companies favour Just-in-Time deliveries instead of keeping
inventory. Although real estate and overhead costs for stock storage facilities is a prohibitive
reality, this business style reduces the economic scale merits for foreign suppliers.
Tokyo Metro, operating nine subway lines in Tokyo, had total procurements of JPY 45.8 billion
(EUR 381 million) in FY 2018, and is expected to open and award tenders to foreign suppliers in
the near future.
Among the market leaders, JR East is the pioneer in sourcing, awarding and implementing
innovative European railway technology in their day-to-day operations. In 2018, they procured a
total value of JPY 223.5 billion (EUR 1.86 billon) in new equipment, both from domestic and
overseas vendors.8
JR East will continue this trend of international procurement in the Japanese railway business by
improvements like their real-time updated procurement website pages in English and faster
harmonisations of technical standards to ease market access and actual deployment.
Regarding public procurement in the Japanese railway industry, the aforesaid EPA is gradually
eliminating these hurdles being,
8
https://www.jreast.co.jp/order/procurement/results_and_procured.html
The regularly high-level EU-Japan Railway Industry Dialogues, held already seven times to date
and alternatively hosted in Brussels and Tokyo, have been very effective in enhancing mutual
understanding and increasing the railway business volume of European companies in Japan.
The European Business Council (EBC), the umbrella organisation of all European Chambers of
Commerce in Japan, has its own Railway Committee, and it formulates concrete industrial
recommendations in its annual White Paper to improve business conditions for European
companies in the Japanese market.
Business Opportunities
■ Systems and products preventing derailments and secondary accidents are considered the
key future investment target of all major railway companies;
■ Solutions and technologies improving free-gauge systems (Japan has two systems – wide-
gauge Shinkansen at 1435mm and conventional gauge at 1067mm, the latter being 87% of
the entire network) has been decided for implementation in the new Hakata-Nagasaki route
of the Kyushu Shinkansen line in 2022;
■ Brake systems and technologies that assure safe operations at high speed, especially in the
300-400km/h speed range (Japan has already announced future Shinkansen lines to
operate at 380~420 km/h);
■ Automatic train control systems for both high speed rail (four-minute departure intervals
between trains) and conventional rail (two-minute intervals);
In 2004, JR East began testing Germany’s Knorr-Bremse friction brakes sets on their FASTECH
360 test car for Shinkansen lines (operating at top speeds of 320 km/h) in the northern
mountainous areas of Japan under harsh conditions. After extensive testing spanning several
years, Knorr-Bremse friction brakes were selected based upon superior performance compared
to domestically manufactured brake sets. The brake sets were delivered to JR East in 2010.
Knorr-Bremse friction brake sets are installed on E5, H5, E7 and W7 series Shinkansen cars,
all operating at top speeds exceeding 300km/h on the Tohoku, Akita and Hokuriku Shinkansen
lines.
In 2015, JR West awarded a large public procurement contract to Mermec of Italy, for the
implementation of three inspection sets for measurement, track surface and head-check, based
upon the V-Cube technology developed in-house by Mermec. Delivery was done in 2017 and
total contract value is estimated at EUR 6.65 million. This contract was announced during the 3rd
EU-Japan Railway Industry Dialogue, held in Belgium.
Japan Factsheet
Population (2018; Final Estimate) 126,435,000 inhabitants9
Capital Tokyo
Gross Domestic Product (GDP) 2018 JPY 549 trillion (EUR 4.5 trillion)10
Foreign Direct Investment (FDI) FY2017 JPY 28.6 trillion (EUR 238 billion)12
It is well known that Japan rapidly increased its position in the global economy during the post-
war period. Historically, the primary drivers of Japan’s strong economic growth have been high
rates of investment in production plants and equipment, application of efficient industrial
techniques, a high education standards, good relations between labour and management, ready
access to leading technologies with significant investments in research and development, an
increasingly open world trade framework and a large domestic market of discerning consumers –
all of which have given Japanese businesses an advantage in scale of operations.
9
http://www.stat.go.jp/english/data/jinsui/tsuki/index.html
10
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/1903_abenomics.pdf
11
https://www.mof.go.jp/english/jgbs/reference/gbb/e201812.html
12
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/1903_abenomics.pdf
13
https://www.stat.go.jp/data/roudou/sokuhou/tsuki/index.html
14
https://www.nippon.com/en/features/h00250/life-expectancy-for-japanese-men-and-women-at-new-record-high.html
15
https://www.nippon.com/en/features/h00250/life-expectancy-for-japanese-men-and-women-at-new-record-high.html
Japan is a constitutional monarchy, with the Emperor as the symbolic head of state. The system
is a parliamentary democracy with the National Diet the sole legislative body. The Diet is
composed of an Upper House (House of Councillors) and a Lower House (House of
Representatives). The Prime Minister, chosen by a Diet ballot, appoints a cabinet, with the
majority required to be Diet members.
Japan’s voting system is non-obligatory, and the voting age was lowered from 20 to 18 years in
2015, resulting in 104 million Japanese eligible to cast votes.
The Liberal Democratic Party (LDP) has governed Japan for most of the last 70 years, only being
briefly out of power in 1993-1994 and in 2009 when the Democratic Party of Japan (DPJ), led by
Yukio Hatoyama, secured a historical victory putting the DPJ into governing powers, albeit for a
short period.
Since then, following a landslide election victory for the Liberal Democratic Party (LDP), Prime
Minister Shinzo Abe took office as Japan’s 97th re-elected Prime Minister in 2012. Since the
general election in 2017, Abe retained his two-thirds majority with Komeito. Abe’s Cabinet has 20
ministers16, including the Prime Minister himself. Under his reign, Japan’s economic and financial
situations have undergone noticeable changes.17
The Upper House (Sangi-in, House of Councillors) currently has 242 seats, each with six year
terms. Following the July 2016 elections, the LDP coalition won a comfortable 146 seats out of
16
https://japan.kantei.go.jp/98_abe/meibo/daijin/index_e.html
17
http://japan.kantei.go.jp/
The Lower House (Shugi-in, House of Representatives) has 475 seats, selected by proportional
representation. The Lower House is elected every four years, but elections are often held before
a term is completed. The House of Representatives is the more powerful of the two houses, able
to override vetoes on bills imposed by the House of Councillors with a two-thirds majority and it
can be dissolved at-will by the Prime Minister.
Since the October 2017 election, the LDP majority coalition, together with the Komeito Party,
occupies 312 out of 465 seats.18
The Supreme Court system is similar to that of the US. Judges are appointed by the cabinet, and
they preside over a legal system of lower courts divided into four arms: High courts, district courts,
family courts and summary courts.
Under Article 76 of the constitution, all judicial power is vested in the Supreme Court, which
administers eight high courts. Since May 2009, the Supreme Court has a jury system and in
general, judicial precedent is considered binding in Japan.
Today, aiming for a future GDP of JPY 600 trillion (EUR 5 trillion), Japan is still the 3rd biggest
global economy, after the US and China. Japan’s main industries are automotive, consumer
electronics, computers, other electronics and pharmaceuticals. Services are 75% of the GDP,
industrial activities 23.5% and agriculture 1.5%.
18
http://www.shugiin.go.jp
The centrepiece of Abenomics is the “Three Arrow Policy” targeted at an active monetary policy,
a flexible and stimulant fiscal policy and a sustainable long-term growth strategy all carried out
through structural reforms that sparks private investments. The economic parameters mainly
focus on boosting productivity, driving innovation and trade, and stimulating corporate activity. As
a result of the aforesaid measures, the exchange rate of the JPY has been hovering around 120
for 1 Euro, in recent years.
Figure 1: © Abenomics Targeting GDP of JPY 600 trillion, Cabinet of the Prime Minister website
Given the long-term low interest rates by the Central Bank of Japan, it is believed that the yen will
remain relatively strong for the near future versus other global currencies, including the euro, thus
creating ample export business opportunities for overseas manufacturers and suppliers.
Since 2016, multinationals like Apple (US), Nexeon (UK)19 and Gestamp (ES) have created local
Research and Development (R&D) centres in Japan. Internet companies like Facebook, Google
19
https://www.jetro.go.jp/invest/newsroom/2016/c81cf91c963e7d75.html
Tokyo is and remains the favourite city to establish a presence (67%) while Osaka takes about
6% of the total Foreign Direct Investment (FDI) value. Nagoya remains a popular destination for
automotive manufacturing and related businesses, given Toyota Motors has their global
headquarters there. Yokohama is especially popular for larger scaled R&D centres with an FDI
share of 10%. Of all foreign direct investments in Japan, totalling JPY 28.55 trillion
(EUR 237 billion) at the end of FY2017, Europe represented 49.4%, North America 24% and Asia
18.6%.20
Since Prime Minister Abe took office in 2012, the annual corporate profits have increased to
JPY 81 trillion (EUR 675 billion) in FY 2018. As an indicator, the Nikkei 225 Index has remained
in the JPY 22,000 range during the same period.
These results were mainly obtained through large-scale monetary easing policies, consecutive
tax reforms (corporate tax ratio was 37% in 2013 and Abe’s cabinet realised a lowered rate of
29.74% in FY2018 21 ) and major market deregulations like the complete liberalisation of the
electric supply retail market in 2016.
20
https://www.jetro.go.jp/ext_images/invest/ijre/report2018/pdf/jetro_invest_japan_report_2018en.pdf
21
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/1903_abenomics.pdf
Japan is the EU’s 2nd biggest trading partner in Asia, after China, while Europe is Japan’s 3rd
biggest partner worldwide.22 The total trade value in actual goods between the EU and Japan
accounted for EUR 135.1 billion in 2018, with a trade deficit on the EU side at EUR 5.6 billion.23
Figure 3: © Trade Flows Total Goods with Japan, 2008-2018, European Commission
On the other hand, in 2017, the EU exported a value of EUR 34.7 billion of services to Japan,
while imports of services from Japan amounted to EUR 18.3 billion. For services, the EU had a
surplus of EUR 16.3 billion in 2017.24
22
http://www.customs.go.jp/toukei/suii/html/data/y3.pdf
23
http://ec.europa.eu/trade/policy/countries-and-regions/countries/japan/
24
http://ec.europa.eu/trade/policy/countries-and-regions/countries/japan/
The EU-Japan Economic Partnership Agreement (EPA), initiated in March 2013 by the then
Commissioner Karel De Gucht, entered into force on 1 February 2019. The EPA is one of the
world’s largest bilateral free trade deals ever and will eliminate nearly all customs duties on
products traded between the EU and Japan. It will also be a model for 21 st century economic
order, based on free and fair-trade rules.
The EU and Japan together account for 33% of the world’s GDP and have a combined population
of 635 million people.25
Japan is and remains a major direct foreign investment player in the European market with over
3,750 in-country local branches and employment of 470,000 people, which represents 0.2% of
the total work force in Europe. In FY2017, Japan’s FDI in EU-28 amounted to EUR 228.9 billion
versus EUR 99.4 billion from the EU-28 Member States into Japan.26 Hence, easy and continued
market access to the EU is key for Japan’s future sustainable economic growth.
The EU hopes that the EPA will result in enhancing access for European enterprises to Japan’s
railway procurement market, in which the European railway industry has a large interest. This
slightly older but still very relevant 2014 graph below clearly shows the significant imbalance of
the bilateral imports between Japan and the EU within the railway industry segment.
25
http://trade.ec.europa.eu/doclib/press/index.cfm?id=1976
26
http://ec.europa.eu/trade/policy/countries-and-regions/countries/japan/
27
Trade Sustainability Impact Assessment of the FTA between EU and Japan, Final Report 2016, Directorate-General for Trade; unit: millions
of euros
Railway History
Near the end of 1869, Harry Parkes, the British Minister to Japan, urged the Meiji government
officials to start domestic railway construction as soon as possible. The necessary financing funds
for these public works were to be procured through Horatio Nelson Lay, an Englishman introduced
by Parkes.
Through Lay’s introduction, many British engineers were hired to design and build railways in
Japan. Their specialities ranged from civil engineering and machinery for manufacturing and
repairing rolling stock, to scheduling train services and operations. Simultaneously, Lay also
began purchasing the necessary railway equipment for the Meiji government.
The first locomotives and 58 two-axle passenger carriages, imported directly from the United
Kingdom, arrived in Yokohama in September 1871.
On 12 June 1872, less than a year later, two daily rides between Shinagawa (Tokyo city) station
and Yokohama (Kanagawa prefecture) station were launched. The 29 kilometres of newly laid
track marked the true start of railway passenger travel services in Japan. The ride itself took 35
minutes from terminal to terminal. A mere two days after official opening, the rides were increased
to six services daily.
A year later, on 15 September 1873, domestic freight railway services began, with Shinbashi
station functioning as the main terminal.
On 11 May 1874, regular passenger service between Kobe and Osaka was launched, thanks
again to the tremendous support and railway business know-how of the UK. This line also
included the first wrought-iron bridge and first tunnel ever in Japan.
Subway History
Subway services started in Tokyo as early as in 1927, with services between Ueno and Asakusa
on the Asakusa line spanning 2.2 kilometres. At that time, steam locomotives were the main
choice for rail, but Japan quickly developed a special electric subway locomotive named the 1000
series, which also marked the start of Japan developing their own domestic railway equipment.
28
www.koken-archi.xsrv.jp
In 1933, Osaka opened its own subway network between Umeda and Shinsaibashi, followed by
Nagoya city during the 1950s. Presently, 12 major cities in Japan operate 45 underground lines
that serve over 16 million passengers daily over a combined total of 800 kilometres.
To put the total market scale into perspective, in Tokyo alone, Tokyo Metro Lines operate nine
lines (Chiyoda, Fukutoshin, Ginza, Hibiya, Marunouchi, Namboku, Tozai, Yurakucho, Hanzomon)
and Toei Subway Lines operate four (Asakusa, Oedo, Mita, Shinjuku) lines, connecting 142
unique subway stations. Most subway lines continue above ground in direct connection with
private railways to increase convenience for passengers, especially during the morning peak
commuting hours into central Tokyo.
Shinkansen History
Probably the Japanese railway transport system best-known to the rest of the world is the epic
Shinkansen (Bullet Train). The Shinkansen was the first commercial High Speed Rail (HSR)
network ever globally, and its operations began in 1964, when the Tokyo Olympics were held.
29
http://toursmaps.com
30
https://www.eesi.org/papers/view/fact-sheet-high-speed-rail-development-worldwide
Independent from the operational JR Railway companies, the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT) has allocated a total FY2019 budget of JPY 396.3 billion 31
(EUR 3.3 billion) for large infrastructure works for the future approved Shinkansen line
extensions.
2. Hokkaido Shinkansen: Shin-Hakodate Hokuto~Sapporo: JPY 48.7 billion (EUR 405 million)
4. Kyushu Shinkansen: Takeo Onsen~Nagasaki: JPY 75.8 billion (EUR 631 million)
These new extensions aim at increased local and inbound tourism, with minimal environmental
burden, maximal safety and barrier free access for an all-inclusive society.
Important to note is the importance of free gauge technology32, allowing eased switching forth
and back to the wider shinkansen tracks (1,435mm with expected speeds of 270km/h) from
smaller local high speed tracks (1,67mm with expected speeds of 130km/h33),will be pro-actively
promoted by MLIT, both from a cost and environmental perspective, This technology, being tested
since FY2015, will be applied at the new Kyushu Shinkansen routes and the Hokuriku
Shinkansen, including snow melting features. The central government is shouldering ⅔ of the
total development and testing budget of +30,000 kilometres for this new technology.
This new Free Gauge Train Technology (FGT) is said to save about JPY 530 billion 34
(EUR 4.41 billion) in costs for the 50 kilometre route between Shin-Tosu station and Takeo Onsen
in Saga Prefecture and would allow to be operational 9 years earlier compared to the initial planning.
31
http://www.mlit.go.jp/common/001266324.pdf
32
http://www.mlit.go.jp/common/001061722.pdf
33
https://www.sankei.com/west/news/180330/wst1803300051-n2.html
34
http://www.mlit.go.jp/common/001229421.pdf
In 2015, the Hokuriku Shinkansen was extended from Nagano Station to Kanazawa-city in
Ishikawa prefecture, resulting in a tourism and economic boom to the city of Kanazawa. Since the
extension, the E7 model (rolling stock of 228 cars) is operating at a speed of 260 km/h.
An extension from Kanazawa to Tsuruga is scheduled to begin operations in 2023.
On 26 March 2016, the first leg of the Hokkaido Shinkansen was launched from Shin-Aomori
station to Shin-Hakodate, on the most northern island of Hokkaido. The total length of almost
150 kilometres include a tunnel nearly 54 kilometres long that runs for 23 kilometres under the
sea, connecting the Honshu and Hokkaido islands. The extension from Shin-Hakodate to
35
www.jreast.co.jp
Since May 2019, JR East is testing the E956, aka ALFA-X, with 10 cars on the Tohoku
Shinkansen tracks (Sendai-Shin-Aomori) with a new top speed ranges between 360 to 400 km/h.
These tests will continue till March 2022 at a pace of 2 runs per week, during night-time.
These tests are in line with JR East’s ‘Change 2027’ plan aiming at:
■ Improved Comfort
36
www.pixer.com
Passengers can select from the Nozomi (300 km/h) super express with the famous 700 series
(2 hours and 30 minutes), the Hikari semi-express services (3 hours) and the Kodama local
services (+4 hours). Tokyo station, a terminal servicing several Shinkansen lines, sees 368
departures daily with an average of 1,300 seats per train.
37
https://company.jr-central.co.jp/ir/annualreport/_pdf/annualreport2018.pdf
In Japan, it is said that HST services like the Shinkansen can compete with domestic air transport
for distances up to 900 kilometres, when considering a total travel time of four hours’ door-to-
door. In the greater Tokyo and Osaka metropolitan areas, for a total travel time below four hours,
71% of users will select trains, 19% will choose air travel and 10% will use private cars.
38
https://www.youtube.com/watch?v=kt92-ZDm-HM
Finally, the Maglev (Linear) Chuo Line between Shinagawa and Nagoya (286 kilometres), with
expected operational speeds over 500km/h, is scheduled to open in 2027, while the extension
from Tokyo Station to Osaka Terminal is slated for 2037, initially planned for 2045, bridging the
total distance of 438 kilometres between Japan’s 2 major cities in a mere 67 minutes. At present,
the total budget for the Maglev project is estimated at JPY 90 trillion (EUR 750 billion).39
Figure 14: © Maglev Road Map, Abenomics, website of the Prime Minister
The new Maglev train, combined with the traditional Tokaido Shinkansen, is expected to carry
165 million passengers per year which is equivalent to 12 times air travel capacity. During peak
hours, it will operate a maximum of 15 trains per hour, meaning leaving Tokyo Station every
4 minutes.40
Given the high priority that Prime Minister Abe 41 and Japan has placed on increasing tourism to
60 million visitors by 2030, additional Shinkansen and future Maglev construction investments are
key cornerstones for sustainable economic growth and increased inbound tourism. In FY2018,
31 million foreign tourists visited Japan, spending a total amount of JPY 4.5 trillion
(EUR 37.5 billion)
39
https://www.mlit.go.jp/common/001292355.pdf
40
https://linear-chuo-shinkansen.jr-central.co.jp/future/
41
www.kantei.go.jp
Given the geographic isolation of Japan, a long archipelago of 4 major islands from Hokkaido in
the north, Honshu (main island), Shikoku to Kyushu in the south, it is understandable that the
railway market became closed to overseas railway manufacturers from 1925 on, when Japan
gradually established its own domestic railway production technology.
From then on, the need for importing overseas railway technology weakened, and for decades
through the early 1990’s, all procurement was done almost exclusively using domestically
manufactured railway products and services. The visual below shows the main types of railways
currently used in Japan.
From the 1990’s on, there was a small revival of railway-related imports from Europe for global
standardised railway products resulting in initial cost reductions at time of procurement. State-of-
the-art European railway technology that was not yet developed or deployed in Japan also saw
increased demand, but the overall business volume remained limited.
One of the main reasons behind this increase of imported railway products was political pressure
(often referred to as “gaiatsu” in Japanese) following distorted trade imbalances between Japan
and Europe.
42
Railway Bureau, Ministry of Land, Infrastructure, Transport and Tourism
Therefore, when doing business with Japan, it is necessary to not only grasp and understand the
past delivery results of both overseas and Japanese competitors, but also the quality expectations
of the final customers, standard business practices, recent business consolidations and their
financial, strategic and “keiretsu” alliances with major operators.
The total domestic railway manufacturing business during fiscal year 2017 was estimated at a
market value of JPY 495.4 billion (EUR 4.12 billion). The breakdown for fiscal year 2017, ending
at March 2018, includes rolling stock at JPY 202.8 billion (EUR 1.69 billion; 26.1% export),
electric parts at JPY 204.6 billion (EUR 1.705 billion; 36% export) and spare parts at
JPY 158.9 billion (EUR 1.32 billion; 11.6% export).
Spare Parts
Cars
29%
34%
Electric Parts
37%
The biggest railway operator is the Japan Railways (JR) Group operating an extensive nationwide
railway network of over 20,000 kilometres. The JR Group was originally a state-owned company
known as Japanese National Railways (JNR), which accumulated total losses of JPY 2 trillion
(EUR 16 billion) in 1987. As a result, it was privatised and split into seven JR companies (6 + JR
freight), each serving a specific geographic region in the Japanese market.
11. Nippon Restaurant Enterprise Restaurant business, retail sales, hotel 100.0
operations
12. JR East Food Business Restaurant business 100.0
43
JR East, Annual Report 2016
29. Sendai Terminal Building Hotel operations and shopping center 99.5
operations
30. Morioka Terminal Building Hotel operations and shopping center 100.0
operations
31. Akita Station Building Hotel operations and shopping center 98.2
operations
32. East Japan Marketing & Communications Advertising and publicity 100.0
63. JR East Rail Car Technology & Maintenance Machinery and rolling stock 100.0
maintenance
64. JR International Consultants for Transportation Consulting 52.5
44
JR East, Annual Report 2017
In addition to the JR group, Japan has 16 major private railway companies that operate near
Japan’s major urban clusters like Tokyo, Osaka, and Nagoya on the main island of Honshu, and
Fukuoka in Kyushu. In FY2017, the Big 16 carried more than 10 billion passengers.45
Table 4: Major Private Railway Companies, Japanese websites of Big 16 railway operators
45
https://www.mintetsu.or.jp/activity/databook/pdf/18databook_p02-05.pdf
At the end of FY2018, Japan Railways operated over 20,000 km of railways (13th on a global
scale) and carries more than 25 billion passengers annually, making it the top railway carrier
globally from a passenger perspective.
The Big 16 Private Railway companies together manage another 3,000 kilometres of railway
tracks. All railway companies together, besides the JR Group, carried over 15 billion passengers
during FY2017, ending in March 2018.46
The retail railway market size in 2017 was estimated at JPY 14.6 trillion (EUR 121 billion), with a
total workforce of 156,000 employees. In Japan’s major cities, a person boards a train on average
750 times/year. Additionally, given that all ten of the world's busiest train stations are located in
Japan, lucrative business opportunities exist in and around stations.
46
https://www.e-stat.go.jp/stat-search/files?page=1&layout=datalist&toukei=00600350&kikan=00600&tstat=000001011026&
cycle=8&year=20171&month=0&result_back=1&result_page=1&second=1&second2=1&tclass1val=0
One of the current most visible railway projects is the complete overhaul of Shibuya station and
the surrounding area. The renovation started in 2013, the 1st phase scheduled to be completed
during 2019 and the final phase by 2027. The station overhaul investment value alone is
estimated at JPY 63.1 billion (EUR 525 million).
This joint venture, is led by the three Shibuya station operations partners Tokyu Corporation, JR
East and Tokyo Metro in close cooperation with the Urban Renaissance Agency.
The total redevelopment covers 276,000m2 including a brand-new East, Center and West
skyscrapers. The multiplexes will also have 73,000m 2 of high-grade office space and 70,000m2
of commercial space.
One of the reasons why railway operators are investing heavily into their stations of prime real
estate value is to offset the expected decline of future ridership and ticket revenues due to a
shrinking and aging population.
In 2016, JR East also announced the building of a new station on the Yamanote line, becoming
the 30th station of the famous loop line around Tokyo. This was big news as the last new
Yamanote station dates back to the opening of the Nishi-Nippori station in 1971.
Located on a 13-acre former JR freight depot between Shinagawa and Tamachi stations, the new
station will be named Takanawa Gateway, and is scheduled to open before the 2020 Olympics.
The total redevelopment cost for this is budgeted at JPY 500 billion (EUR 4.16 billion).
■ Proximity to Haneda airport, which is being upgraded from a domestic to international hub
■ Shorten the longest stretch (2.2 kilometres) between the two stations on the Yamanote line
Figure 18: © Takanawa Gateway, the New Yamanote Loop Line Station, JR East
Harajuku JR station, famous for its old wooden structure of 1924, will also get a major overhaul
by 2020, together with the neighbouring JR Sendagaya and JR Shinanomachi stations. These
three stations will act as key gateways to the new 2020 Olympic venue as they are all in walking
distance. The total renewal budget for these stations is estimated at JPY 25 billion
(208 million Euro).
This renewal trend is not limited to only Tokyo. Other main terminals Yokohama, Chiba, Saitama,
Atami and Sendai stations will also be renewed in the coming years.
Since 2003, the Eki Naka (retail businesses inside the automatic ticket gates in stations) and Eki
Soto (retail businesses outside the ticket gates but within the station building itself) economic
business models, have become key revenue streams for most railway operators in business
segments like real estate rents, sales commissions on realised turnover (profit sharing model)
Electronic money and mobile payments via Suica, the JR brand, are also bringing in sales
commissions with each transaction. For a company like JR East, with +17 million passengers47
using their Tokyo region stations daily, this cash flow is not to be underestimated.
Shops in and around major stations are often managed by JR-related subsidiaries but in recent
years, there has been a remarkable inflow of convenience store operators and other external
commercial tenants with ample retail experience.
This slightly older data from a www.nikkei.com 2007 article shows clearly that on average, 1m2 of
retail sales in a station generates almost eight times the value in traditional retail outlets.
For books and magazines, the sales in stations exceed eleven times.
4,860,000
4,240,000
2,960,000
1,400,000
1,320,000
960,000
890,000
660,000
500,000
470,000
410,000
Figure 19: © Average Retail Sales per sqm in Stations, Nikkei website
47
https://www.moblab-conference.ch/Current-Strategy-under-Competitive-Transport-market-and-future-vision-JR-East-bea39400?i=1
One of the reasons why Japan keeps on investing in both new and improved railway
infrastructure, not only in major urban areas but nationwide, is to continue reducing future CO 2
emissions targets, following the Kyoto Protocol, effective since February 2005, and the more
recent COP 21 Paris Agreement.
In 2008, the Japanese government enacted the Green New Deal on a Global Scale, a total
investment of JPY 51 trillion (EUR 425 billion) which includes JPY 20 trillion (EUR 166 billion)
allocated to future railway investments and continued infrastructure improvements via major
public works.
Railway operators have implemented energy saving lighting and air conditioners in addition to
lighter materials in cars to become ecological friendly. Renewable energy sources are also used
for reduce the environmental impact as much as possible.
A famous but nowadays bit dated Japan railway image, is the station staff with white gloves
pushing Japanese businesspeople into the passenger cars during the morning rush hour.
The effect of extremely crowded trains has been fought off gradually in the last decade thanks to
the introduction of flexible working hours at major companies, campaigns by the railway operators
to avoid rush hour commuting and teleworking from home on an awareness level. Passenger cars
with larger transportation capacities combined with longer trains on the newer railway and subway
lines have reduced the morning rush commute stress.
48
https://www.jreast.co.jp/investor/factsheet/pdf/factsheet_05.pdf
During fiscal year 2017, the JR East Sobu line, between Kinshicho and Ryogoku stations, carried
over 76,000 passengers during the 7:30am~8:30am rush hour slot, representing a congestion
ratio of 197%.
For a similar example, the JR East Chuo rapid service line between Nakano and Shinjuku stations
carried over 81,000 passengers during the 8am ~ 9am morning rush hour, representing a 184%
congestion ratio despite having trains timed at 2-minute intervals.49
In 2018 for the first time ever, over 30 million overseas tourists visited Japan. The government
hopes to increase this figure to 40 million by 2020, the year the Olympics will be held in Tokyo
and the surrounding areas. Following this trend of increased inbound tourists, JR railway
companies have opened several duty-free counters in their commercial facilities in station
buildings.50
Tourists visiting Japan often make long distance trips using the popular Japan Rail Pass, which
is available only to short-term visitors to Japan. For FY 2022, JR East targets JPY 38 billion
(EUR 316 million) in sales of inbound tourism, mainly consisting of Japan Rail Passes.51 All major
49
https://www.mlit.go.jp/common/001245347.pdf
50
https://www.jnto.go.jp/jpn/statistics/since2003_visitor_arrivals.pdf
51
https://www.jreast.co.jp/investor/moveup/pdf/all.pdf
This surely creates new business opportunities for overseas companies that have vast experience
and global sales in these segments. The railway operators pin their hopes on the increased
inbound tourists to curb their declining future domestic ridership especially in more remote tourist
areas. In urban areas, the ridership has remained constant in recent years.
Therefore, Japan has been proactively investing in better railway connections between airports
and urban centres over the last decade. Yet another example of this is the 2010 Keisei Rapid
Limited Express Skyliner service that connects in only 36 minutes Nippori Station on the
Yamanote Line with Narita International Airport.
Payment Methods
Fare payments with electronic money cards at the entrance gates of stations were introduced by
JR’s Suica card as early as 2001, followed by the subway operators’ Pasmo brand in 2007. Since
2008, both card systems can now be used interchangeably on both lines. Since 2013, all nine
major national brands of electronic money cards are compatible nationwide.
Most of the cards below can also be used for paying bus or taxi fares, in addition to micro
payments at shops within stations. At the end of March 2018, +895,000 shops and vending
machines outside the typical railway ecosystem also accept these electronic money payments
nowadays. On average, over 6.5 million Suica cashless transactions are recorded on a daily basis
nationwide.52
52
https://www.jreast.co.jp/youran/pdf/2018-2019/jre_youran_group_p68-73.pdf
Since 2010, automatic re-charging via credit cards was added and is now one of the most popular
features, taking away the hassle of adding cash payments via ticket booths when the card balance
is down.
Over 390 million electronic money cards have been issued since 2001 and the total user base
surpasses 50 million registrants.
As for the latest trend in Suica business, JR East announced on 15 February 2019 their brand
new Welcome Suica card for overseas visitors to Japan. The most typical characteristic of this
card is its Japanese style design combined with no requirement for the normal JPY 500 (EUR 4.1)
deposit. The new card is usable for 28 days and will go on sales on 1 September 2019.
53
www.kinri.jp
Payments via mobile phones have been available since 2006 by all three major Japanese mobile
phone carriers NTT DoCoMo, au and Softbank. Android smartphones sold by the same carriers
have been payment enabled since 2011. With already +11.5 million registered users in Japan,
mobile cashless payments are the next big thing in the domestic railway business. 55 Market
forecasts predict 20 million mobile cashless users by 2021.56
Apple’s CEO Tim Cook was the first to use Apple Pay on JR’s Yamanote Line in Tokyo on
23 October 2016, with the actual service starting on 25 October 2016, following the iOS 10.1
update release.
54
https://www.jreast.co.jp/press/2018/20190221.pdf
55
https://www.jreast.co.jp/youran/pdf/2018-2019/jre_youran_group_p68-73.pdf
56
ICT Research Institute 2018
Some of the biggest Japanese companies like Hitachi Railway Systems, Kawasaki Rolling Stock,
Nippon Sharyo, Mitsui & Co, JR East, are now bidding, winning and delivering new projects as
active players in the global railway business.
It is believed that the global railway market will grow at an annual pace of 2.5%, to reach a total
value of JPY 22 trillion (EUR 183 billion) by 2020. As the scale, value and complexity of new
57
www.twitter.com/tim_cook
A first successful project with a Japanese business partner overseas, could be a smart move to
enter the Japanese market together on a long-term basis.
In recent years, JR, Tokyo Metro and the Big 16 private railway operators have been open to
overseas procurement following the EPA between EU and Japan. JR East recently awarded a
new project for friction brakes to Knorr Bremse of Germany.
Obstacles like smaller quantities (limited scale merits for foreign suppliers), specific domestic
standards (resulting in complex adaptations and time-consuming calculation in preparing bids),
tight deadlines (for example, within 2-3 months after publication) and procurement information
only available in Japanese, still remain.
That said, for European companies, it is also important to understand that a domestic presence
in Japan for after-service and maintenance are key for the procurement policies of the seven JR
Group companies, which collectively account for 60% of the total railway market in Japan.
A March 2016 report by UNIFE, the European Rail Industry Organisation, points out that only 2%
of rail market is open in Japan, as calculated in accordance with international procurement rules.
Of this 2%, a mere 15% is awarded to non-Japanese firms on grounds of operational safety in
case of earthquakes.
Conversely, Japan has been exporting Javelin trains (valued at EUR 435 million) to Europe and
in 2009, Hitachi Railway Systems won the Intercity Express Programme bid (IEP, valued at
EUR 5.3 billion), creating a huge railway sector imbalance when compared to the export and
business volume of European companies to Japan. It was Bombardier’s local manufacturing plant
in Derby that lost the IEP project, considered the world’s largest ever single rail contract, to Hitachi
Railway Systems.
“East Japan Railway Company (JR East) invested EUR 1.64 billion in new equipment in 2015 but
EU suppliers accounted for less than 5% of this. Japan’s total market for railway equipment is
worth EUR 5.8 billion but only 0.03% of rolling stock is imported”
UNIFE claims that, although Japan is a member of the Agreement on Public Procurement (GPA)
of the World Trade Organisation (WTO), overseas companies only won 0.25% of the Japanese
rolling stock market.
For easier market entrance, several organisations like UNIFE, the European Business Council
(EBC) and the EU-Japan Railway Industry Dialogues, have been putting forward the following
points that need improvement or change.
■ Recognition and harmonisation of European regulatory standards and test results by Japan;
■ Assure that all received bids are evaluated in a clear, transparent and non-discriminatory way,
including the evaluation of the extensive Operational Safety Clause (OSC), which covers
earthquake safety for railway projects in Japan. This OSC is one of the main non-tariff barriers
for European railway companies wishing to do business in Japan;
■ Japan should live up to its unilateral commitment and make concrete proposals before the
Review Clause;
The first Railway Dialogue was held in Brussels on 27 March 2014, when the EU was represented
by 30 participants from railway business organisations and companies like CER, SNCF, UNIFE,
Alstom and Bombardier as well as EU officials.
Japan had a delegation of almost 70 representatives that included government officials as well
as, private representatives from all JR companies, Tokyo Metro, Tokyo Metropolitan Bureau of
Transportation, Osaka Municipal Transportation Bureau, Hitachi Railway Systems, Mitsubishi
Electric, Mitsui & Co and JORSA.
UNIFE has been especially active and effective in levelling the playing field between the EU and
Japan over the last couple of years, the railway business market access is gradually becoming
more reciprocal, now also with the EPA in place since early 2019.
The agenda of the 5th EU-Japan Industrial Dialogue on Railways mainly focused on the removal
of the Operation Safety Clause, improved market access similar to the level that Japanese railway
companies enjoy in Europe and more understandable railway procurement procedures in general.
During his closing speech of the 5th dialogue, Yuji Morimoto, Executive Director of JR East,
pointed out that they are pro-actively seeking business opportunities related to innovative and
quality products produced by European railway companies. The 7 th and last Industrial Dialogue
on Railways was held on 24 September 2018 in Brussels, aiming for tangible outcomes in the
future EPA between the EU and Japan.
Some obstacles that still need to be tackled are a lack of transparency in English of an online and
centralised information system for public tenders and procurement in general, and discriminatory
procurement procedures, which are very often based on unfounded domestic railway safety
criteria. Harmonization of European and International Railway Standards makes the list complete.
Some concrete changes and results of these past rounds of dialogue are the redesign by some
Japanese railway companies of their websites with English information on material procurement,
lists of main procurements expected in the fiscal year, and an overview of contractual procedures
and elements to be considered during supplier screening.
Since the start of the Railway Industrial Dialogues, especially JR East has been actively reaching
out to overseas manufacturers by opening a new international tender process for the procurement
of railcars and by holding seminars to promote mutual understanding with European suppliers
while exchanging information on procurement procedures, existing products and domestic
technologies.
In recent years, JR East has been the forerunner of international procurement, especially for
products and services from Europe. Interested vendors can register themselves online at the JR
East procurement website, available in English. They are mainly looking for products and services
that comply with the following basic procurement guidelines and corporate philosophy.
■ Fair Business Conditions: Objective selection approach via study, selection, technology
disclosure and tests based upon rational economic aspects such as reliability towards quality
and safety, technological capacity, price, delivery, accident response time and after-care
service
■ Business Conditions for Mutual Growth: Mutual trust and communication, long-term and
sustainable relations for continuous product improvements, product availability, reliability and
just-in-time delivery
■ Corporate Social Responsibility and Privacy Policy: Legal compliance and environmental
responsibility, intellectual property protection and strict privacy policy
■ Japanese and English real time Procurement Updates and Information Disclosure on Website
58
https://www.jreast.co.jp/e/data/procurement/pdf/rolling_stock_related_products.pdf
59
https://www.jreast.co.jp/e/data/procurement/pdf/facilities_related_products.pdf
60
https://www.jreast.co.jp/e/data/procurement/pdf/electric_related_products.pdf
61
https://www.jreast.co.jp/e/data/procurement/pdf/signaling_communication-related_products.pdf
Overall, the JR Group consists of seven companies but the four publicly listed companies below
are the most active and offer real business procurement potential for European companies
through their online bilingual updates, actual volume and commitment to purchase competitive
overseas products.
JR East: www.jreast.co.jp/e/data/procurement
JR Central: https://global.jr-central.co.jp/en/company/material_procurement/
62
www.jreast.co.jp/order/procurement/trackrecords.html
JR Kyushu: www.jrkyushu.co.jp/company/business/procurement/info.html
In November 2017, the City of Utsunomiya in Tochigi prefecture announced a public tender for
barrier free LTR cars, to which 3 companies, including 1 overseas manufacturer, confirmed their
interest but only one company, namely Niigata Transys applied by the deadline of February 2018.
The total budget of this LRT project is estimated at JPY 45.8 billion (EUR 381 million) of which
half is borne by Utsunomiya City and the remaining part by the central government of Japan.
The tracks of the new LRT line will be launched in 2022 and will run from Utsunomiya Station to
the Industrial Area of Takanezawa over a length of 14.6 kilometres, covering the distance with 19
stops in approximately 45 minutes. The final winner of the project was the only bidder, namely
Niigata Transys and their winning design was as per below.
Figure 28: © Niigata Transys Winning Yellow LRT Design for Utsunomiya City 2019
The rerailing system of Holmatro Industrial Equipment, from The Netherlands, is a set of
instruments that can return derailed rolling stock to rail tracks. The system is composed of
hydraulic jacks, beams, a remote control for operation and a power generator, amongst others.
This product made by Holmatro was superior to previous other models in terms of transport and
operation due to the more lightweight design. It now can also be used with a remote-control
device. It was delivered to JR East’s Omiya General Rolling Stock Center in March 2019, by
Daisen Sangyo, the Japanese agent of Holmatro, following quality approval in May 2018.
Figure 29: © Rerailing System for JR East, Holmatro Industrial Equipment 2019
Tokyo Metro, operating nine major subway lines, procures materials, components and supplies
ranging from rails and other track material, passenger car components, signal and communication
systems, power transmission systems, machinery to work instruments and motor vehicles.
Following the footsteps of pioneer JR East and following its active presence at all EU-Japan
Railway Industry Dialogue meetings held in the past, Tokyo Metro, will also begin awarding
contracts to excellent overseas railway industry companies.
For FY 2019~2022, Tokyo Metro is scheduled to procure traction motors, traction inverters, brake
equipment, rails, track motor cars, onground ATP equipment, transportation and sales system,
breath alcohol testers, warning signages for platform screen doors and floor signages to name
only a few. 63 For details, please visit Tokyo Metro English Procurement website pages at
www.tokyometro.jp/lang_en/corporate/business/procurement .
63
https://www.tokyometro.jp/lang_en/corporate/business/procurement/pdf/procurement_plan_gpa_railway_products_fy2019_20-
2021_22_en.pdf
Figure 31: © Supplier Registration Procedures for Tokyo Metro Procurement, Tokyo Metro Website 64
On 27 September 2016, the Brussels Office of the EU-Japan Centre for Industrial Cooperation,
held a webinar titled, “What are the current developments in the Japanese railways market and
do EU SMEs have business opportunities there?” by speaker Lyckle Griek of Japan Unlimited.
This webinar is archived and can be viewed online, free of charge, but prior user registration is
required and subject to internal approval, which can take a couple of working days.
www.eu-japan.eu/events/webinar-78-japanese-railway-market
64
http://www.tokyometro.jp/en/corporate/procurement/pdf/process.pdf
As of April 2018, the total inventory of rolling stock in the Japanese market amounted to
61,300 cars. This includes 49,000 passenger cars, 7,450 freight cars, 4,850 Shinkansen units,
560 electric locomotives, 360 diesel locomotives and 21 steam locomotives.
Freight Cars
12%
Electric Cars
79%
Figure 32: Rolling Stock Inventory 2018, Japan Rolling Stock Association (JARi)
In recent years, Japanese railway operators had a constant domestic demand of 1,700 passenger
cars per annum. However, from 2000 through 2010, the average annual production, including
overseas deliveries, was around 2,000 cars. This downsizing created some negative effects on
the business results of major domestic rolling stock manufacturers and resulted in corporate
consolidations in the market.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Export 463 328 276 38 184 97 53 186 94 297
Private 795 673 465 535 470 423 452 628 699 699
JR 669 737 741 618 673 764 722 712 782 872
Shinkansen 352 408 513 400 336 290 385 250 193 252
Figure 33: Rolling Stock Production per Year, Japan Rolling Stock Association (JARi)
Over the past two decades, JR Railway Group has had an average demand of 700-800 new cars
per year, while Shinkansen services required 500-600 new Shinkansen cars. Private railways
needed about 500 new cars per year, representing a market share on average of 35%. The export
ratio of rolling stock manufactured in Japan, given a fluctuating exchange rate, varies from year
to year but usually hovers around 15%.
For value shares, JR represents almost 50% of the total as the Shinkansen cars are known to be
expensive, averaging JPY 300 million (EUR 2.5 million) per car and costing almost triple the cost
of a normal commuter cars at JPY 100 million (EUR 833,000) each.
The export of new cars was limited to 200-300 per year, and this number has decreased even
further over the past five years. However, this is due mainly to increased production capacity at
local Japanese manufacturer plants overseas both in Europe and the US. Players like Hitachi
Rail, Kawasaki and Nippon Sharyo have become active global suppliers of rolling stock, especially
in the segments of high-end HST cars, urban public transport lines and subways.
Freight Cars
12%
Electric Cars
78%
Figure 34: Rolling Stock Inventory per Type FY2018, Japan Rolling Stock Association (JARi)
The total inventory of all JR rolling stock in 2018 stood at 33,422 cars, which includes 18,011
passenger cars, 7,448 freight cars, 4,857 Shinkansen cars and 2,226 electric cars. Total private
railway rolling stock was 27,884 cars, of which 26,588 are passenger cars.
A breakdown of new Shinkansen cars manufactured during 2000-2015 shows that approximately
4,500 new cars were manufactured by the following companies: Nippon Sharyo (1,600 cars),
Hitachi (1,400 cars), Kawasaki (1,200 cars), Kinki Sharyo (200 cars) and J-TREC (100 cars).
Nippon Sharyo
Kawasaki 36%
27%
Hitachi
31%
Figure 35: Manufacturer Share Shinkansen Cars 2000-2015, Toyo Keizai Net
There is also a strong link between the geographic location of each manufacturer’s plants and
their respective final local customers, the railway operators, from the perspective of deliveries,
after-service and maintenance.
Due to shrinking domestic demand of new cars, Japan no longer has real independent rolling
stock manufacturers as they either belong to railway operators or are part of a bigger industrial
conglomerate. That is why it is so important to bear in mind the financial liaisons between the
manufacturer and the final customer.
■ JR West owns 5% holding shares of Kinki Sharyo in Osaka while Kintetsu owns another 48%
Market Trends
■ Low remittance CO2 (light materials like stainless steel and aluminium). Typical Shinkansen
cars weigh less compared to high speed rolling stock in Western countries. As their carriage
bodies are made of a special aluminium alloy, they are relatively light, which leads to higher
speeds in combination with economic efficiency;
■ Comfortable interior car space (between chairs but the width of the cars is also key);
■ Large transportation capacity (extra added cars per locomotive plus more passengers to travel
comfortably in the car);
■ Low maintenance costs (light materials reduce rail wear and tear);
■ Extra space for wheelchair users (almost 40% of the Big 16’s private railway cars have
designated spaces for wheelchair users).
Table 7: Big 16 Low Energy Cars, Private Railways Big 16 Data Book 2018
Nippon Sharyo has been the leader in the domestic rolling stock manufacturer category ever since
its establishment in 1896. The company’s core business is focused mainly on the manufacturing
of passenger cars. Having manufactured over 4,000 Shinkansen cars in the past, it is still the only
domestic manufacturing company that has delivered more than 4,000 cars for Shinkansen use.
The group employs 1,900 employees 65 , operates three manufacturing plants and is
headquartered in Nagoya. Its Toyokawa manufacturing plant mainly focuses on rolling stock
65
https://www.n-sharyo.co.jp/company/index.html
Nippon Sharyo also launched a new manufacturing plant with an annual production capacity of
120 cars in Rochelle, Illinois (US) in 2012. In August 2016, the 160th High Liner II for METRA
(Northeast Illinois Regional Commuter Railroad Corporation) was delivered from the Rochelle
plant, which was closed at the end of September 2018.66
Other export projects include Virginia Rail, diesel cars to Canada, Taiwan HST trains, 296 cars
(JPY 44 billion value, EUR 366 million) to Taiwan Railways Administration (TRA) together with
Sumitomo Corporation in 2012, another 136 tilted cars (JPY 30 billion value, EUR 250 million) to
TRA in 2011, and Venezuela.
In 2015, 96 subway cars were manufactured by Nippon Sharyo for Indonesia’s first subway line,
the North-South Line of the Jakarta Mass Rapid Transit system. The contract value is estimated
at JPY 13 billion (EUR 108.3 million).
Despite being a major market player, Nippon Sharyo has no real links with Europe yet as it
focuses mainly on the USA and Taiwan markets for global projects.
As Shinkansen projects are planned far in advance, and if European businesses are focused on
HST in general, Nippon Sharyo could make a good fit as a long-term business partner in the
Japanese HST market. Top-notch quality, impressive global sales references at the right pricing,
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Shinkansen standards are said to be amongst the most stringent globally, but if you can clear
them, it will positively affect all other global HST business. Keep in mind, however, that revenues
might vary widely from year to year.
Kawasaki Rolling Stock Company has been in the railway car manufacturing business for over
100 years and is operates two manufacturing plants in Hyogo prefecture (Osaka area). The
company itself is part of the larger and globally operating Kawasaki Heavy Industries Group.
The sales breakdown of Kawasaki Rolling Stock for FY 2017 was: 33% in Japan, 33% for the
combined US and Europe markets and 33% in Asia. Their long-term business plan is to grow
Hitachi Railway Systems (HRS), is a 100% subsidiary of the global Hitachi conglomerate and is
very active on the global railway market, especially in Europe. In September 2015, HRS opened
its new manufacturing plant in Newton Aycliffe (UK). In the same year, HRS also acquired 40%
of the Italian Ansaldo STS/Breda shares for EUR 761 million.
The product line of the Hitachi Railway Business unit, is quite varied and covers rolling stock, on-
board components, power supplies, depot systems, signalling systems and traffic management
to station equipment.
Figure 38: © Total Rail Systems Supplier, Hitachi Railway Systems Website
The complete business employs 12,400 people globally (including 4,300 employees at Ansaldo
STS) with manufacturing plants in Japan, UK, Italy and the US.68
Global sales turnover exceeded JPY 500 billion (EUR 4.16 billion) for the first time ever in 2016,
and consisted of 56% in cars, 29% in transportation systems and 15% is turnkey solutions.
67
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68
https://www.hitachi.co.jp/New/cnews/month/2018/06/0608/20180608_05_rs_presentation_ja.pdf
Founded in 1946, became Tokyu Car in 1953 and in 2012, the company was rebranded to J-
TREC. J-TREC is a total transport engineering firm manufacturing rolling stock, cargo containers,
railway tracks and turnouts. J-TREC is a 100% subsidiary of JR East since April 2014.
Headquartered in Yokohama, its main car manufacturing plant is located in Niitsu, Niigata
prefecture. Railway containers are manufactured at the Wakayama plant in the Kansai (Osaka
area) region. The workforce of 1,197 employees generated a sales turnover of JPY 56 billion
(EUR 466 million) in FY 2017.
J-TREC is the leading stainless steel (comparable to aluminium weight, eco-friendly) car
manufacturer with a total volume of over 23,000 cars since 1958, including more than 14,000 cars
manufactured in stainless steel, J-TREC’s signature product.
Sustainability is currently the top priority company policy, and their newest product “Sustina" is
the crystallisation of that. The first domestic Sustina cars were delivered on March 2015 to JR
East for deployment on the JR Yamanote loop line around Tokyo. There are 3 Sustina models
being the commuter, regional and intercity version. There is also a hybrid variant for diesel and
battery. Major advantages of hybrids are 60% NOx and other harmful exhaust reductions, 10%
fuel efficiency improvement and 30dB noise reduction while stopped at stations.
The key takeaway for J-TREC is that they are now a 100% subsidiary of JR East, their biggest
client, together with Tokyu Railway. Given their limited international business experience, besides
their agreement with Alstom for Citadis, joint sales in the European market will definitely help in
getting into the international procurement system of JR East.
As sustainable business is high on their corporate agenda, any product or services re-using
materials, recycling, noise-reduction or lighter weight materials could make J-TREC a perfect
match partner in Japan.
Kinki Sharyo was established in and has been headquartered in Osaka since 1920. Its core
business focuses on manufacturing passenger cars. With its 1,000 staff, it has a production
capacity of 600 cars per annum, resulting in JPY 42 billion (EUR 350 million) turnover for 2018.
Kinki Sharyo is the manufacturer of the famous super-deluxe Mizukaze Twilight Express Train,
delivered to JR West at the end of December 2016.
Shareholders include 48% for the Kintetsu Group and 5% for JR West, since 2012. Main client is
JR West but also numerous regional private railway operators in the Kansai region use their cars.
Quite remarkable is that 76% of all sales is generated from overseas projects. In 1962, Kinki
Sharyo started exports to Egypt of trams and subways reaching a total volume of over 1600 cars
to date. During the fiscal years 2015-2016, cars were delivered from Japan to the Hong Kong
Metro project.
Kinki Sharyo International (KSI) is located in El Segundo, US and was incorporated in 1991.
KSI has exported 225 cars for subway projects in Dubai, 60 trams to Los Angeles County MTA
followed by a contract option for 175 cars exercised in 2012-2013. In addition, 35 cars were
delivered to New Jersey Transit and another 35 trams in 2014 following the execution of the
contract option. KSI will also provide additional 105 cars to Qatar Railways Company from 2020.
Kinki Sharyo, besides having extensive selling and production experience overseas, is also open
to procurement from reliable overseas companies.
The company started out as an independent operation in 1910, then delivering its first diesel
engine in 1919. In 1949, it went public but filed for bankruptcy protection in 2001. It was reborn
as Niigata Transys in 2003, a 100% subsidiary company of the large Ishikawajima-Harima Heavy
Industries (IHI) group. Turnover stood at JPY 19.9 billion (EUR 165 million) in 2018 with 341
employees.
Its main business line focuses on rolling stock manufacturing, automated guideway transit, light
rail transit, maintenance vehicles for railway and passenger cars.
Overseas sales mainly originate from its Hong Kong and Taiwan projects in recent years. In 2004,
Niigata Transys signed a technology licensing agreement with Bombardier for low floor light rail
car production in Japan.
It is among the smaller rolling stock production companies, but being a member of the large IHI
group, it can be an interesting business prospect in the future.
As it has had an agreement in place with Bombardier for over a decade, it is open to innovative
overseas technologies and services if those can help grow its business in Japan.
Started as Naniwa Industries in Hyogo prefecture, became Alna in 1975 and Alna Sharyo in 2001,
when it also became a 100% subsidiary of Hankyu Railway. The smallest company in the rolling
stock production segment employs 133 people and specialises in delivering locally to Osaka and
smaller railway operators nationwide.
Historically, Hankyu Railways in Osaka and Tobu Railways in Tokyo have been its major clients
and the cumulative actual sales quantity surpasses 1,000 cars in total to each of them. In total,
the production output counter stands at +5,000 cars.
Alna Sharyo also produces passenger cars, performs maintenance services and car overhauls,
combined with the manufacturing of spare parts and other railway related equipment.
Figure 43: © Tram Product Line Up, Japan Overseas Railway System Association69
Alna Sharyo is a smaller domestic rolling stock manufacturing company with no direct
international business relations, but its acquisition in 2001 by Hankyu Railways, one of Osaka’s
major railway operators, might change that in the future.
For European railway companies with a business line related to trams, Alna Sharyo could be an
interesting and potential business lead.
European railway industry companies that have safe, top-notch, advanced and financially
competitive products, systems and technologies for application in rolling stock and locomotives
have concrete business opportunities in the future Japanese railway market.
■ High performance wheel-mounted friction brakes for Shinkansen and High Speed Train (HST)
lines that enhance safe operations at maximum speeds over 300km/h;
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■ Remote and external control systems that can monitor brakes, endurance and status
(temperature, wear level of brake pads and disks);
■ Shorten brake distance systems (newest Shinkansen cars need 20% less braking distance to
full stop compared to earlier model cars);
■ Train Operation Control (TOC) systems with Global Position Systems (GPS) embedded:
provide updates on exact status, route and location of car in real time;
■ Eco-friendly and energy saving technologies (newest Shinkansen cars consume 16% less
energy and CO2 emissions are now 1/12 the levels of airplanes);
In June 2013, J-TREC, a subsidiary of JR East and headquartered in Yokohama, and Alstom
from France signed a Memorandum of Understanding (MOU) regarding the introduction of Citadis
into the Japanese market.
J-TREC will review the Japanese market potential for Light Rail Transit (LRT) business
opportunities through in-depth market research. In the first phase, to be reviewed by both
partners. J-TREC was especially excited about the superior features of Citadis such as 100% low
floors enabling barrier-free boarding, no need for overhead wires, acceleration performance and
the smooth riding on the designated tracks.
Given the impressive global track record of Citadis over the past couple of years, combined with
the fact that most Japanese trams and existing LRT services, have been in operation for over 30
years, replacement business chances could be perfect timing. Key issues for business will be to
overcome the detailed Japanese technical specifications and the specific requirements of the
regional operators.
For FY 2019, JR East intends to invest a total of JPY 515 billion (EUR 4.29 billion), for improvements
and maintenance of their existing rolling stock, infrastructure and environmental services. This is an
increase of JPY 83 billion (EUR 69 million) versus their FY 2018 investment results.
JR Central, the future operator of the Maglev Line, announced a total investment value of
JPY 583 billion (EUR 4.86 billion) for FY 2019. This amount includes JPY 312 billion (EUR 2.6 billion)
for Shinkansen-related investments of which JPY 159 billion (EUR 1.32 billion) is allocated to generic
safety improvements. Almost half of the total budget, JPY 310 billion (EUR 2.58 million), will be used
for the Maglev construction work. Investments into Maglev infrastructure should only rise over the
next decade given the expected inauguration of the service in 2027.
Others 50 80 210 0
Table 9: JR Central, West, Kyushu and Freight Investment Plans, respective websites of each JR operator
As for multi-annual long-term investments, the major railway companies have announced as follows.
■ JR Central will invest a total of JPY 700 billion (EUR 5.83 billion) for major improvements into
the present Shinkansen infrastructure from 2014 through 2024.
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■ JR Kyushu, considering their Shinkansen services to Kagoshima and their recent Initial Public
Offering (IPO) in October 2016, will likely see similar long-term investment budgets in the
future, creating new business opportunities for European railway industry related companies.
At the beginning of 2017, its market capitalization was over JPY 600 billion (EUR 5 billion).
Separately, in the last 3 years, JR Kyushu invested about JPY 200 billion (EUR 1.66 billion)
in real estate development projects around Hakata and Kumamoto Station.72
Historically, Japan has operated trains on two different gauge systems namely the 1435mm (13%
of all tracks) wider standard gauge for high speed Shinkansen services and the 1067mm (87% of
all tracks) narrow gauge for conventional railway tracks.
Following market deregulations in 2002 specifying that final safety responsibility lies with the
railway operator, free-gauge trains will be deployed on the new Kyushu Shinkansen route from
Hakata (Fukuoka) to Nagasaki, scheduled for service launch in 2022. These new trains will
automatically adapt the distance between their car wheels to fit the different gauges.
Most of Shinkansen railway maintenance work is done overnight, between the arrival of the last
train in the evening around 11:30 pm and the departure of the first in the morning, at around 6 am.
For example, the Tokaido Shinkansen line is inspected by the famous “Doctor Yellow” car every
ten days at speeds of 270 km/h, covering over 1,100 kilometres from Tokyo to Fukuoka (Hakata
Terminal).
As for the spare parts market segment, this is directly linked to the long-term maintenance plans
of the major railways. The total market value was estimated at JPY 142.7 billion (EUR 1.2 billion)
in FY 2016, with the majority share of 87% for the domestic market and the remaining 13% for
exports.
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The biggest share of JPY 236.5 billion (EUR 1.97 billion) was set apart for safety
countermeasures like replacing old rolling stock with new and improved cars, cross road safety
enhancements like new signals, emergency stop buttons, objects hindering detection, home
doors on platforms, track obstruction detection, evacuation space under platform next to tracks,
earthquake resistant improvements and bringing ground tracks to elevated bridged level.
JPY 66.5 billion (EUR 554 million) was allocated to enhancing transport capacity, smoother
connections with lines to/ from the centre of Tokyo and upgrading of stations74.
On a service level, JPY 150.4 billion (EUR 1.25 billion) was invested in both new and extra
escalators, including elevators for improved barrier-free access to stations and tracks during FY
2017. New train schedule displays with bilingual functions were also largely implemented. 75
There are some differences year by year but on average the private operators invest about 15%
in better transportation capacity, around 60% in safer crossroads and maintenance in general,
24% for better services and 1% goes to miscellaneous investments.
73
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Infrastructure 86 87 79 80 57 33 33 32 32 18
Service 542 548 679 536 813 643 760 1011 1038 1496
Maintenance 2066 2123 1803 1646 1633 1753 1835 2245 2287 2365
Rolling Stock 1329 1185 1021 608 593 566 502 612 598 665
Figure 44: Big 16 Long Term Investments, Private Railways Big 16 Data Book 2018
Market Trends
As mentioned before, all major Japanese railway operators are continuously improving passenger
comfort and convenience through long-term investments into railway equipment, increased
transport capacity, service enhancements and expansion of barrier free provisions.
■ Create smooth and easy connections between with new and existing railway lines, operated
by other railway operators (interconnectivity);
■ Adopt common Integrated Circuit (IC) cards for commuter passes and electronic fare payments;
■ Expand ICT media investments through updated and bilingual Japanese and English websites;
■ Mobile devices and smartphones announcements via mailings, social network services (SNS)
updates on popular platforms like Twitter, Facebook and LINE;
■ Install multilingual displays with real time information (JR East recently installed information
displays at 249 stations);
Nabtesco’s main products like brake shoes, brake systems and door operating units, seat turning
equipment, various test equipment and snow removal devices are delivered to both domestic and
overseas markets. It has a 50% market share for brake systems and a 70% share for door
operating units in passenger cars in Japan. Nabtesco’s door operators are installed on all
carriages of the N700 Series Shinkansen.
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■ Innovative technologies that assist safe railway operations of free gauge trains in high speed
networks;
■ Products, systems and technologies allowing safe operations at increased speed up to 360 km/h;
■ Snow melting systems for stable railway operations such as warm-water plates, warm-water
jet machines or sprinkler snow melting systems in mountainous areas for application on the
Tohoku, Joetsu, Akita and Hokkaido Shinkansen lines;
■ Multilingual signage boards with smart internet connections and low-energy consumption
features;
For the development of new Shinkansen cars with maximum speed capacity exceeding 300 km/h,
in 2004 JR East did long-term runs using both German and Japan made brake discs installed on
a FASTECH 360 test car.
Based on the test results, Knorr-Bremse friction brakes were officially selected as the main brake
system on all the E5 Shinkansen series that operate at a top speed of 320 km/h. In 2010, Knorr-
Bremse delivered the Shinkansen brakes to JR East.
■ Knorr-Bremse friction brakes are also installed on the E7 and W7 series of the Hokuriku
Shinkansen line running between Takasaki and Karuizawa, where the tracks can
ascend/descend 30 meters in a 1000 meter stretch, profoundly burden the braking systems
of high speed cars. These severe operational conditions in mountainous areas clearly
demonstrate the durability of the German-made brakes.
From a risk management perspective, in order to avoid complete reliance on overseas products,
some E5 Shinkansen cars are equipped with similar domestically made brake systems.
One of the main reasons why Knorr-Bremse friction brakes are superior in durability and quality
to similar domestic brake systems is historical. In Europe, usually locomotives pull passenger
cars, often under severe operating conditions through mountainous areas.
In Japan, where nearly all the high-speed Shinkansen cars have motors embedded in each car,
electric brakes have been used for reducing speed. Under speed loads under 300km/h, the
default electric brakes did not show any major quality issues but once the maximum speed
exceeded 300 km/h on newer Shinkansen lines, problems began to surface. In Japan, friction
brakes were mainly used as a sub-brake system to be activated only in emergencies or just before
the train comes to a complete stop.
As a note, the complete friction brake set includes the callipers, friction pads (lining) and discs
connected to both sides of the wheels. The system that controls the air pressure sent to the
callipers is manufactured domestically. Till recent, the complete brake set for Shinkansen cars
were made in Japan.
Automatic Train Protection (ATP) systems and Automatic Train Control (ATC) systems have been
used widely in Japan since 1945. Via remote control rooms monitoring all railway traffic, these
systems provide back-up to prevent operational errors by train drivers and staff.
For some Shinkansen operations and certain regional JR railway operators, Japan employs
systems similar to the European Train Control System (ETCS). The high accuracy level allows
Shinkansen to safely run at over 300 km/h, even at mere 4-minute intervals between trains.
In 1996, JR East put in use the Autonomous Decentralised Transport Operation Control System
(ATOS) for 19 conventional lines around Tokyo. It was first used on the Rapid Express Chuo Line.
After 15 years of extensive ATOS usage, JR started to add gradually on-board Advanced Train
Administration and Communications System (ATACS) Radio Train Control System devices,
where older systems required ground equipment for train detection and control.
In 2016, JR East deployed a 100 Mbps Ethernet-based Train Communications Network (TCN)
called Integrated Train Communication/ Control networks for the Evolvable Railway Operation
System (INTEROS) in the new E235 series Sustina passenger cars on the Yamanote loop line in
Tokyo.
At speeds 10 times faster the previous system, INTEROS operates in real time and allows optimal
information sharing among the driver, onsite staff, control centre and maintenance depot.
INTEROS is also fully compliant with the International Electric Standard IEC61375-3-4.
Regarding the value of the electric components market, it is split between 64% for domestic use
and 36% exports. The total value of this market for the railway industry in Japan is estimated at
JPY 204.6 billion (EUR 1.7 billion) for FY 2017.77
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https://www.tetsushako.or.jp/english/english01.html
To further reduce future human errors leading to accidents, Japanese railway operators are
constantly looking for faster, more reliable, real-time control and communications systems.
Examples of smart monitoring systems like temperature sensors, electricity and track facility
monitoring devices are shown below for the new Sustina E235 series car, operating on the
Yamanoto line since 2016.
In 2015, JR East decided to test the new Communications-Based Train Control System (CBTC)
technology of Thales from France for potential deployment in 2020 on the Joban line. It was
evaluated against the domestic Advanced Train Administration & Communications System
JR East debuted the ATACS system on 12 November 2017 on their Saikyo Line, between
Ikebukuro and Omiya over a distance of 23.5 kilometres.79
Meidensha has a consolidated turnover of JPY 241 billion (EUR 2 billion) for FY2018, with 10%
generated by its railway business. It is the market leader for supplying Alternating Current (AC)
and Direct Current (DC) traction power supply systems to railway operators (35% market share
for Shinkansen, 15% for JR and Big 16 operators).
It also supplied the new 149 kilometres long Hokkaido Shinkansen line’s 3 new stations with
traction power supply systems. This project was completed by the end of FY2017 at a contract
value of JPY 10 billion (EUR 83 million).80
Meidensha is an active global player and is especially strong in Asia with recent projects in
Singapore (JPY 40 billion [EUR 333 million], 102 kilometres, 23 stations), Malaysia
(JPY 12 billion [EUR 100 million], 51 kilometres, 31 stations) and India. Meidensha is aiming for
a 1.6% global market share by 2020.
Meidensha also manufacturers Overhead Catenary Systems (OCS), inspection systems and
power monitoring systems.
78
https://www.nikkan.co.jp/articles/view/00446042
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https://www.jreast.co.jp/press/2017/20171004.pdf
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Kyosan Electric Manufacturing is a major player in domestic railway signalling systems, Automatic
Train Control (ATC) and Automatic Train Stop (ATS) equipment, platform safety gates, traffic
control systems, traffic control centrum, signal and info boards and power supply units for signals.
For FY 2018, consolidated turnover was JPY 111 billion (EUR 925 million) with 4,096 employees.
Kyosan Electric mainly exports its products to Asian markets, but the US, Brazil and Venezuela
have been serviced in the past.
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As for EU business and market entrance opportunities in the Japanese Railway Command,
Control and Communications segment, the below mentioned bullet points show the largest
potential for innovative European railway technology manufacturers.
■ Train Operation Control (TOC) systems providing real time status, route and car location;
■ Signalisation and telecommunications for Automatic Train Control (ATC) and Automatic Train
Stop (ATS) systems;
■ Signalisation and Indicators using Light Emitting Diodes (LED) for reduced power
consumption (1/4 of traditional signals) and less frequent light bulb replacements;
At the end of 2014, Harting Japan, a subsidiary of the Harting technology group from Germany,
announced that its Ethernet connectivity products were adopted for the on-board network of all
new 10000 series Tokyo Monorail trains.
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Its products provide a seamless Ethernet connection at 100Mbps per second, including intercar
jumpers that ensure high transmission quality that enable reliable train operations and multilingual
passenger information services in up to four languages on on-board LCD screen. This helps keep
international passengers informed while they travel to and from Haneda Airport.
Siemens Japan was established in 1981 and its railway division, Siemens Mobility Japan, has
been delivering key electrical parts for various Japanese railway operators since then. Its
components are included in cars of the E501 series, E2 series Shinkansen cars and ED57 series
of JR, Tokyu 2100 series, Tokyu Shin 1000 series, Enoshima Railway 1 series, Meitetsu Bisai
EL1 series, Hiroshima Railway 5000, Joshin Railway DeHa 1 and SaHaNi 1 series, Joshin
Railway DeKi 1 series and Tokyo Metro E5000 series.
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Railway Technologies & Services - Japan Market Study - Page 100 of 143
3.5 Railway Security, Safety and Crisis Prevention and Management
From its establishment in 1987 until 2018, JR East has invested nearly JPY 4 trillion
(EUR 33.33 billion) in the security, safety and prevention segment. For the 5-year period
beginning 2019, JR East will invest almost JPY 1.5 trillion (EUR 12.5 billion) in safety-related
areas in order to target zero railway related accidents in the future. A similar approach in security
and safety investments can be seen at all other JR companies and major railway operators
nationwide.
Although the data85 are from 2011, a comparison between the number of accidents (including
collisions, derailments and fires) in Japan, EU and the US, clearly shows the high safety level in
the Japanese railway business.
Even during the 2011 Tohoku earthquake in Japan, no casualties were linked to Shinkansen
operations. As Shinkansen cars are equipped with a state-of-the-art early earthquake detection
system, all trains in operation stopped safely within 90 seconds of sensing the earthquake, even
those that were running in excess of 300km/h at the time the earthquake hit Japan.
From 1965 to 2015, all Japanese railway operators have been replacing the older Type 2 signals
at railroad crossings with safer and automatic Type 1 signals and bars. Thanks to these
replacements, total incidents have decreased from 1,298 in 1965 to 248 in 2018. Presently, 99%
of all railway crossings nationwide are Type 1.
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Railway Bureau, Ministry of Land, Infrastructure, Transport and Tourism
Railway Technologies & Services - Japan Market Study - Page 101 of 143
For the remaining 1%, most of the railway operators are negotiating with the local municipalities
for the installation of Type 1 signals and bars.
Increased safety and security measures are not limited to signal replacement only. Some
operators like Odakyu and Seibu have elevated their ground tracks, thus reducing the incident
rate to zero for both passengers and vehicles.
Given the rather high suicide rates involving trains and subways, a strong emphasis is placed on
the instalment of platform doors in recent years. These doors not only reduce accidents of
disabled passengers but have also proven effective in reducing incidents involving drunk
passengers.
There are two kinds of safety doors - floor-ceiling walls, usually installed on new lines, and shown
below on the Namboku Subway Line in Tokyo.
86
Railway Bureau, MLIT
Railway Technologies & Services - Japan Market Study - Page 102 of 143
Figure 54: © Floor-Ceiling Walls, Kawasaki Heavy Industries Website87
Half-sized walls and doors are usually added to existing lines to increase safety and security on
the platforms near the tracks. These are more common for outdoor installations and at older
stations that lack the physical structure to support the full floor to ceiling type.
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Railway Technologies & Services - Japan Market Study - Page 103 of 143
Figure 55: © JR East New Style Smart Home Doors
JR East will add these new light weight home doors at 15 extra stations by the Tokyo 2020
Olympics in July 2020.
Market Trends
New control and management systems continue to be introduced to achieve zero accidents and
to reduce internal management risks through active utilisation of innovative developments in ICT,
big data analysis, and Global Positioning Systems (GPS).
Additionally, technologies and systems that minimize or decrease effects of external risks and
natural disasters such as torrential rains, strong winds and worst case scenarios, major
earthquakes like the Hanshin (1995), Tohoku (2011), Kumamoto (2015) and Hokkaido (2018), all
of which created major operational disruptions are needed.
Railway Technologies & Services - Japan Market Study - Page 104 of 143
Especially, products and systems preventing derailments in any case are being sought after by
many Japanese railway companies at present.
Nippon Signal is one of the main domestic players in signal, control and safety systems such as
railway signal systems, traffic information systems, Automatic Fare Collection (AFC) systems,
and Communications-Based Train Control (CBTC) systems. The group, with 1,255 employees
realized a consolidated turnover of JPY 99 billion (EUR 825 million) in FY 2018. The signal and
traffic business segment represents about 55% and the AFC segment is the remaining 45% of its
total turnover.
Nippon Signal has global export experience to over 20 countries including Turkey, Argentina,
Brazil and Taiwan, but none in Europe so far.
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Railway Technologies & Services - Japan Market Study - Page 105 of 143
Railway signalization represents 90% of its consolidated JPY 24.8 billion (EUR 206 million)
turnover, with JR East being their biggest customer at 50% value share. Private railway operators
account for an additional 30% and other JR companies make up the remaining 20%. Daido Signal
has almost no export experience.
Opportunities exist for European railway industry companies with top quality and innovative
products and control systems featuring accident prevention and specific focus areas like
derailments for both low and excessive speed and railway crossing derailments.
All major Japanese railway companies consider this to be a key safety factor in their future long-term
safety investments and would consider overseas procurement if the competitive advantage is clear
when compared to domestic systems. Additional areas of opportunity are in the following areas.
■ High-performance wheel mounted and friction brakes for Shinkansen and High Speed Train
(HST) lines that enhance safe operations at speeds exceeding 300km/h;
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Railway Technologies & Services - Japan Market Study - Page 106 of 143
■ Back-up brake systems and brake systems to assist trains in immediate stopping (emergency
train-stop systems);
■ Remote and external control systems that can monitor brakes, endurance and status
(temperature, wear levels of brake pads and disks);
■ Reduced braking distance systems (newest Shinkansen cars now need 20% less distance to
come to a full stop compared to earlier models);
■ Electric power management systems to ensure optimal operations during natural disasters;
■ Products, systems and technologies allowing safe operations exceeding 300km/h for newest
Shinkansen cars;
Eiji Tsubone, General Manager of JR West, announced during the 3rd EU Japan Railway Industrial
Dialogue, Brussels, in May 2015 that MerMec from Italy was awarded the implementation of a track
surface inspection, measurement system and a head-check inspection system in one platform.
After a long tendering and evaluation process for machine-vision technology suppliers, MerMec
was selected, becoming the first overseas supplier to deliver and install machine-vision inspection
technology in Japanese railways.
Railway Technologies & Services - Japan Market Study - Page 107 of 143
The contract includes supplying 3 V-Cube sets with 3 track inspection and 3 fishplate inspection
systems installed on selected JR West vehicles. Over 5,000 km of JR West tracks at 1,067mm
gauge, including almost 650 km at 1,435 mm gauge of the Sanyo Shinkansen line, will be
inspected by MerMec’s products.
MerMec’s V-Cube technology automatically identifies and evaluates various types of defects such
as sleeper cracks, fastener conditions, missing bolts, corrosion and welding during the visual track
inspection.
Partial deliveries were done in 2016, with the remaining balance that was refilled at the beginning
of 2017. The total order value is estimated at 6.65 million euro and includes trading powerhouse
Mitsui & Co as contractual partner.
MerMec is presently also in commercial talks with several other Japanese railway operators and
hopes that this first JR West project triggers additional new orders.
Railway Technologies & Services - Japan Market Study - Page 108 of 143
4. Regulations
The last major revision to the Japanese Technical Railway Standards was done in March 2002,
when the Railway Bureau of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT)
Railway Bureau decided to add new 3rd layer, being governmental guidelines based upon
suggestions from the railway industry. The previously mentioned Operation Safety Clause (OSC)
belongs in this category and is often referred to as one of the major non-tariff barriers for overseas
suppliers.
Even after this revision, the top principle remains passenger safety. Railway operators can now
adapt easier new technologies that enhance safety, without prior governmental approval, but bear
complete responsibility for the actual implementation.
90
UIC Senior Advisor High Speed, JR East Paris Office, 2011
Railway Technologies & Services - Japan Market Study - Page 109 of 143
The Railway Operations Law and the Technical Regulatory Standards on Japanese Railways are
mandatory, and each Japanese railway company is required to comply.
The main clauses of the mandatory technical standards consist of safety, policies, convenience
and environmentally friendly operations.
Railway Technologies & Services - Japan Market Study - Page 110 of 143
Figure 61: © Framework of the compulsory railway technical standards in Japan91
An English translation of the Ordinance of the Ministry for Technical Standards for Railway is
available in pdf format (424 pages) at the MLIT website.
www.mlit.go.jp/english/2006/h_railway_bureau/Laws_concerning/14.pdf
91
www.jica.go.jp
Railway Technologies & Services - Japan Market Study - Page 111 of 143
Figure 62: © Table of Content Ordinance of the Ministry for Technical Standards for Railway
The Railway International Standards Centre promotes standardisation activities such as the
development and revision of international standards for railway applications for inclusion of
advanced Japanese railway technologies in IEC and ISO international standards.
Within the Japanese Industrial Standards (JIS), railway-related identification begins at the
alphabetic letter E (JIS E 1101).
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5. Annexes
For European railway industry companies wishing to access the Japanese market, the Japan
Overseas Railway System Association (JORSA) could be a good start. It provides direct
introductions to its members most suitable for specific business segments. JORSA’s website in
English can be found here: http://www.jorsa.or.jp/en/
Its corporate members are internationally business minded. They all have in-house English-
speaking staff and are looking actively to increase their business volume in overseas markets.
Further they are open to any future business tie-up that could be beneficial for them in the
competitive Japanese domestic market to differentiate them from their competitors.
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Figure 63: © Examples of Domestic Railway Equipment, JORSA website
Railway Technologies & Services - Japan Market Study - Page 114 of 143
Railway Industry Organisations
Contacting professional railway organisations in Japan will help establish faster business relations
as finding the exact division and person in charge within large companies like the JR Group or
the Big 16 private railway operators can be very time consuming and expensive.
Visiting or participating in railway-specialised trade fairs in Japan will help build a deeper
understanding of the Japanese railway market while putting you in direct contact with potential
customers at both the major and smaller railway equipment manufacturers.
When visiting trade fairs in Japan, distributing your business cards and product brochures
prepared in Japanese to potential customers and business contacts are ideal business
development tools.
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Railway Industry Specialised Press
Marketing and communications through Japanese press releases on global project references,
via specialised railway press and their websites might help in acquiring sufficient brand
recognition and trustworthiness as a potential business partner for overseas procurement.
■ JR Gazette: www.kotsu.co.jp/magazine/gazette/
■ SUBWAY: www.jametro.or.jp/publication
■ Mintetsu: www.mintetsu.or.jp/association/mintetsu/
Participation in the above-mentioned and regularly held EU-Japan Railway Industrial Dialogues
could be the fastest way to meet decision makers and executives of major Japanese railway
companies as all stakeholders are present at these conferences.
www.ebc-jp.com/index.php/about-the-ebc/734
The EBC Report on the Japanese Business Environment, a white paper aimed at improving
business conditions for European companies in Japan, is published annually and contains useful
recommendations for all stakeholders, including the railway industry.
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Foreign Railway Industry Companies in Japan
As the world's leading manufacturer of braking systems for rail and commercial vehicles, Knorr-
Bremse has been pioneering development, production and marketing of modern braking systems
for a variety of applications for over 100 years. The group has manufacturing plants in over 25
countries, more than 24,000 employees, and consolidated global sales exceeding 5.8 billion euro
in 2015.
Knorr-Bremse Railway Systems KK was established as a joint venture named Koshin Knorr KK
in 1992. Their core business was focused on compressors but was later merged into the Knorr-
Bremse Railway System Japan KK, a 100% subsidiary, which also acts as their Asia Pacific
headquarters.
www.knorr-bremse.jp/ja/
Siemens KK was established in Japan in 1981, including the Mobility Business Division that
oversees their railway business in Japan. It provides mainly motors and electrical railway-related
products and services.
■ Cars for both short and long distance, subway cars, trams and light rail, unmanned cars, steam
locomotives
■ Signal and signal control technology for passenger and freight railways
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■ Payment systems for public transport
■ Management, construction, financial procurement, planning and consulting for turnkey mobility
systems
http://www.siemens.com/jp/ja/home.html
Harting KK
In 1985, Harting KK was established in Japan with headquarters Yokohama and three regional
sales offices in Nagoya, Osaka and Fukuoka to ensure delivery of perfect after-service and quality
assurance. Harting KK, part of the German Harting Group, supplies connectors for railway
applications in both rolling stock and railway equipment.
The high-quality reputation of its products in Japan is thanks to its automated production. Another
important reason for its business success has been a flexible production approach to customized
products.
www.harting.com
Mersen Japan
Mersen from France is a global expert in electrical power and advanced materials, and designs
innovative solutions to address specific client needs. This enables Mersen to optimise its
manufacturing processes in various industrial sectors. It is famous for industrial fuses used in
subways, trams, trolley busses, electric and diesel locomotives which are also applicable for
almost all railway systems.
Mersen Japan was established in Japan with 4 sales offices in 1981. They are well known for
high quality electrical products that have superior technology and high safety levels.
www.mersen.com/en/
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Souriau Japan
A 100% owned subsidiary company of Souriau SA from France, Souriau has been present in
Japan since 1963. Souriau Japan was incorporated in 2003 and currently employs 25 people.
Souriau supplies full interconnection systems to Japanese railway operators for the interior of
cars and equipment within cars, in addition to signalization purposes like beacons, speed control
devices and traffic control systems.
www.souriau.com
A subsidiary of the German Weidmueller Group, present in over 80 countries globally. In Japan
since 1980, its is headquartered in Tokyo with sales offices in Nagoya, Osaka and Fukuoka.
Its core business involves importing and selling electrical components to railway operators of
HST, trams, subways and locomotives.
www.weidmuller.co.jp
Thales Japan
Thales from France is one of leading suppliers of advanced solutions for railway transport. A wide
product line-up includes automated signalling and train control, operation control centres and
passenger information, contactless ticketing technology systems. All products aim at increasing
performance and line capacity while reducing operating, maintenance and infrastructure costs.
Since 1970, Thales has been active in the Japanese market for over 45 years, and currently
employs about 55 staff at offices in Tokyo, Haneda and Osaka. In Japan, it mainly supplies
signalization systems, communication systems and automatic gates to public transport operators.
JR East recently did a pilot test with Thales to design their new generation CBTC systems for the
Joban line but stopped the test in favour of domestic technology.
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In 2015, Thales Japan became a member of a Japanese consortium of four companies, including
Mitsubishi Heavy Industries, Mitsubishi Trading, Hitachi and Kinki Sharyo, to collaborate on new
projects in global markets. Together, it won the Dubai metro tender, which is one of the largest
global subway projects ever. Completion of this project is scheduled for end of 2019.
www.thalesgroup.com/en/global/activities/ground-transportation
Consolis Rail International Japan is recent newcomers in the Japanese market. It was established
in November 2014 and is a 100% subsidiary of the France-based Consolis Rail International,
which specializes in the design and manufacture of sleepers for railway operators.
Consolis Rail does business in 14 countries and manufacturers over 3.5 million sleepers per year.
Strong R&D capacities assure a continuous flow of innovative products for applications on HST,
express lines, public transport and heavy freight lines.
www.consolis.com/rail/
Goldschmidt-Thermit Japan
Since 1979, together with its long-term Japanese business partner, Mi-ne Seisakusho, they
supply rail welding solutions using the latest technology. Goldschmidt-Thermit Japan also imports
and distributes track equipment and measuring devices.
www.goldschmidt-thermit.co.jp
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Schunk Carbon Technology Japan
Schunk Carbon Technology from Austria is the leading global manufacturer of carbon sliding
strips and carbon brushes for railway applications, including high speed railways, electric freight
locomotives and subways. Its Japanese subsidiary is located in Yokohama.
www.schunk-group.com
Nihon Getzner
Since 1969, Austria-based Getzner has specialized in vibration isolation that minimizes the need
for maintenance and repairs on tracks and vehicles. The Tokyo office of Nihon Getzner was
launched in 2002.
www.getzner.com
Saft Japan
The newest kid on the block in Japan, is Saft from France, who incorporated its Japan subsidiary
in February of 2016. Saft is a leading manufacturer of advanced technology for the railway
industry, amongst others.
For almost 30 years, Saft was represented in Japan by Sumitomo Corporation, one of the biggest
Japanese trading houses.
In December 2016, Saft was awarded a contract by Kawasaki Rolling Stock to provide batteries
for the 91 Singapore unmanned Mass Rapid Transit (MRT) cars, valued at several million USD,
their biggest Asia contract till date. Deliveries will start in August 2017 and last till January 2021.
www.saftbatteries.com
Since 1978, TUV Rheinland has been present in Japan as a 100% subsidiary of the global TUV
Rheinland Group from Germany. TUV Rheinland Japan has seven office locations nationwide.
Railway Technologies & Services - Japan Market Study - Page 121 of 143
TUV Rheinland Japan specializes in providing product safety services for the railway industry,
including evaluation and certification of railway systems, rolling stock and components for
deployment in the Japanese market.
www.tuv.com/en/japan/home.jsp
TUV SUD Japan was established in 1993 and provides a wide range of consulting, engineering,
testing, certification and training services for conventional, high-speed, metro and light rail but its
expertise is not limited at all to the railway business segment only.
Globally, TUV SUD possesses 50 years of experience in delivering safe and reliable railway
systems and processes for rolling stock, infrastructure, electrical and mechanical systems as well
as for generic safety components.
www.tuv-sud.jp
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Japanese Railway Business Overseas
As the global railway market is expected to see an average annual growth of 2.5% over the next
few years, and revenues expected to reach JPY 22 trillion (EUR 183 billion) by 2020, it is easy to
understand why Japanese railway companies are looking for opportunities beyond their domestic
borders.
This will be key for future sustainable growth and the Hitachi Railway business unit has been one
of the first to grab business opportunities via a long-term growth strategy in the UK market,
combined with a proactive global M&A strategy in Italy in recent years.
The Hitachi Railway Business unit product line is very wide and includes rolling stock, on-board
components, power supplies, depot systems, signalling systems, traffic management and station
equipment.
Figure 64: © Total Railway Systems Supplier, Hitachi Railway Systems Website
Its complete global business employs 12,400 people (including the 4,200 employees of Ansaldo
STS) with manufacturing plants in Japan, UK, Italy and the US in FY2017.
Global sales turnover capped JPY 563 billion (EUR 4.69 billion) in FY2017. The breakdown
mainly includes 53% cars, 26% transport systems and 12% turnkey solutions. Considering its
Railway Technologies & Services - Japan Market Study - Page 123 of 143
total sales was JPY 168 billion (EUR 1.4 billion) in 2014, this growth is quite remarkable and
sustainable as the order book balance stands at JPY 2.85 trillion (EUR 23.75 billion), its highest
ever. 92 According to CEO Alistair Dormer, Future sales targets stand at JPY 640 billion
(EUR 5.33 billion) for 2018, with 80% of all sales coming from overseas projects, while targeting
25% of all sales as turnkey projects. Hitachi’s CEO Higashibara is targeting JPY 1 trillion
(EUR 83 billion) in sales by 2020 via continuous global M&A efforts. Hitachi is deeply committed
to become a real global player that shows clearly in the fact that the CEO of the Hitachi railway
business unit is Alistair Dormer, who joins three other non-Japanese on their eight-member board.
This ambitious Hitachi global growth plan is making the Big 3 worried as its present turnover is in
the JPY 800 billion to JPY 900 billion (EUR 6.66 ~ 7.5 billion) range. Once on that level, Hitachi’s
competition will not be limited only to the Big 3 as the Chinese competition with CRCC, boasting
JPY 3.5 trillion (EUR 29 billion) turnover, will also be watching their moves.
Hitachi entered the UK market in 1999, and their new manufacturing plant in Newton Aycliffe,
County, Durham, went into production at the end of 2014. The total investment value of the plant
stands at almost 100 million euros and has a monthly production capacity of 35 cars. Its railway
service and maintenance depot in North Pole opened in September 2015. Presently, Hitachi
Railway Europe employs over 1,000 people but is also targeting 2,000 jobs spread over 14
locations in the UK by 2019.
In June 2014, Hitachi Rail received an IEP (UK Intercity HST) order valued at JPY 550 billion
(EUR 4.58 billion), the biggest railway order ever awarded in the UK. This was also the moment
when the Big 3 clearly witnessed the high evaluation of Japanese railway technology in an
overseas market. In December 2016, the first UK-built Intercity Express Train rolled out of the
Newton Aycliffe plant.
92
https://www.hitachi.co.jp/New/cnews/month/2018/06/0608/20180608_05_rs_presentation_ja.pdf
Railway Technologies & Services - Japan Market Study - Page 124 of 143
Figure 65: © Intercity Express Train, Hitachi Railway Systems Europe Website93
End of 2015, Hitachi acquired Ansaldo Breda-Newco three manufacturing plants: One each in
Pistoia, Naples and Reggio Calabria (both Italy), and one in Pittsburgh (US). As a result, Hitachi
Railway Systems, doubled its global sales from JPY 167.4 billion (EUR 1.395 billion) in 2014 to
JPY 352.6 billion (EUR 2.938 billion) in 2015.
Recent orders in the UK include the First Group (2016, 70 million Euros value, five AT300 trains
with five cars), TransPennine Express, First Great Western, Scotland Glasgow Subway and
Schedule Management Projects.
On a global scale, deals were recently closed in Russia, India, Thailand, Italy (2015,
EUR 190 million, additional 136 rail vehicles consisting of 112 intermediate double-decker
93
www.hitachirail-eu.com
Railway Technologies & Services - Japan Market Study - Page 125 of 143
coaches and 24 driving cars out of total contract of 706 carriages, consisting of 575 intermediate
double-decker cars and 131 driving cars to Trenitalia), a monorail project in Korea, the Ho Chi
Minh City Metro project in Vietnam, a large inverter project for the Sint Petersburg subway,
signalization projects in China, car deliveries to Taiwan, Singapore, Myanmar and the US. These
are in addition to sales in the home Japan market where it had new Shinkansen cars and battery-
powered cars. Hitachi Rail also opened a sales office in Singapore.
Finally, in March 2016, Hitachi Rail US opened a new Miami manufacturing facility, creating 100
new jobs. The plant will start manufacturing 136 cars and 272 motor bogies for delivery to the
County's Metrorail fleet starting from early 2017. The total production run will continue through
the first half of 2019.
Inspired by the successful footsteps of Hitachi into the UK market, Mitsui Trading is the newest
Japanese entry into the global railway business, In January 2017, Mitsui acquired 40% of shares
from Abellio UK, a subsidiary company of Dutch Rail and investor East Anglia since February
2012, a local UK railway operator. East Anglia is active mainly in the Eastern part of England,
operates 1,300 trains daily, and employs almost 3,000 people. This is also the first project where
a Japanese company has gotten directly involved in railway operations in the UK.
The total investment value has not been disclosed but is estimated at several billions JPY. The
HST line between London and Cambridge/Norwich (areas acting as bed towns to London) was
selected due to increased population along the line and brisk overseas railway business in
general. Total length of the line exceeds 1600 kms of East Anglia rail network and Dutch Rail and
Mitsui aims to replace the 1240 older cars with 1000 new ones, in addition to improving the time
schedules to enhance passenger comfort and convenience. The contract period runs through
October 2025. Increases are targeted to double present ridership of 350,000 daily. On an annual
basis, 140 million passengers are currently served.
Railway Technologies & Services - Japan Market Study - Page 126 of 143
Figure 66: © East Anglia Cars, BBC website94
This recent move into the UK market follows railway business experience that Mitsui built in the
Brazilian market since 2007 and was not only related to passenger and freight but also to delivery
of cars and infrastructure work.
Mitsui is also teaming up with Abellio and JR East for increasing business beyond the UK in
Europe overall through participation in public tenders like the West Midlands, with the
announcement expected in June 2017.
In 1906, Kawasaki started with rolling stock manufacturing and was the first to develop steam
locomotives and aluminium cars in Japan. Presently, Kawasaki has a large car, bogie and
equipment division supplying all major railway and subway operators in Japan. Its two
manufacturing plants are located in Hyogo prefecture, near Kobe.
94
www.bbc.co.uk
Railway Technologies & Services - Japan Market Study - Page 127 of 143
To date, Kawasaki has produced over 90,000 cars. The production range varies from passenger
trains (high speed, intercity, rapid transit and monorail), locomotives, freight EMU and cars and
finally bogies. In recent years, their business of safety doors on platforms has been performing
well due to brisk demand by the major railway operators.
The Kawasaki Railway division realized a turnover of JPY 135 billion (EUR 1.125 billion) in FY
2016, JPY 146 billion (EUR 1.21 billion) in FY 2015 and JPY 147 billion in 2014. Kawasaki rolling
stock manufacturing is a 100% wholly owned company of the Kawasaki Heavy Industries Group
which employs almost 35,000 people worldwide and boasts global turnover of JPY 1.54 trillion
(EUR 12.83 billion).
The company has two had US overseas manufacturing plants in Yonkers (New York) and in
Lincoln (Nebraska) since 2002. It has sold over 1,000 cars to the New York Transport board since
1985. Cities like Washington, Philadelphia and Boston are also using Kawasaki rolling stock
Railway Technologies & Services - Japan Market Study - Page 128 of 143
equipment. At the beginning of 2017, Kawasaki announced their USA plant produced a
cumulative quantity of 2,000 cars.
In 2011, Kawasaki Rolling Stock signed a contract with Alstom Transport S.A. of France and CTCI
Corporation of Taiwan to provide the Department of Rapid Transit Systems, Taipei City
Government (DORTS) with a railway system for the Taichung City Government. Singapore's Land
Transport Authority Ordered 364 MRT Cars for a New Line in 2014 and an extra 12 MRT trains
with 72 cars in 2015.
In 2015, Kawasaki received a 400 million USD order from the Washington Metropolitan Area
Transit Authority (WMATA) for an additional 220 subway cars. All 220 of the Series 7000 subway
cars will be manufactured at Kawasaki's Lincoln plant and are scheduled for delivery between
2018 and 2019. This optional order completes a contract of 748 cars, signed in 2010, with a total
value of 1.47 billion USD. Once completed, over 50% of all WMATA cars will be Kawasaki-made.
In the past, Kawasaki has also delivered its products and services in the UK, China, Africa and
Central and South America.
China Railway Construction Corporation Limited (CRCC) is a Chinese publicly traded rolling stock
manufacturer, formed on 1 June 2015 with the merger of China CNR Corporation and CSR
Corporation Limited. CRCC had a consolidated turnover of JPY 3.8 trillion (EUR 31 billion) in
2015 and 175,000 employees on its payroll.
CRCC has quickly become new major global competitor for not only Japanese manufacturing
companies overseas but also for the traditional global Big 3, Bombardier (Canada JPY 900 billion
[EUR 7.5 billion] in FY2014), Siemens (Germany JPY 860 billion [EUR 7.16 billion] in 2014) and
Alstom (France JPY 800 billion [EUR 6.66 billion] in 2014).
In 2014, a shockwave went through the global railway market when China delivered, for the first
time, Made in China rolling stock cars to Australia. The total delivery consisted of 624 cars valued
Railway Technologies & Services - Japan Market Study - Page 129 of 143
at US$ 3.8 billion and delivered to Sydney for HST services. The order consisted of 78 pairs of
eight cars, each with two floors.
However, quality and durability levels are and will remain major issues following deployment. The
first major recall of Chinese rolling stock was announced by Singapore. The tragic HST Wenzhou
accident, in which 30 people died in 2011, is well remembered by the global railway community.
This accident happened only three years after the launch of HST services in China in 2008.
Railway Technologies & Services - Japan Market Study - Page 130 of 143
List of Japanese Railway Equipment Manufacturers
Railway Technologies & Services - Japan Market Study - Page 131 of 143
Manufacturers of Non-Electric Equipment and Parts
Railway Technologies & Services - Japan Market Study - Page 132 of 143
Manufacturers of Railway Related Products and Services
Railway Technologies & Services - Japan Market Study - Page 133 of 143
■ Kyosan Kogyo: www.kyosankogyo.co.jp
■ Lecip Corporation: www.lecip.com/index.htm
■ Lonseal Corporation: www.lonseal.co.jp/english/
■ Mersen Japan: www.mersen.com/en/group.html
■ Mitsui & Co: https://www.mitsui.com/jp/en/index.html
■ Metro Sharyo Corporation: www.metosha.co.jp
■ Moog Japan: www.moog.com
■ Murabayashi Industry: www.live-rubber.co.jp
■ Nabtesco Service: www.nabtesco-service.co.jp
■ Nikkeikin Aluminium Core Technology: www2.nikkeikin.co.jp/act/
■ Nihon Weidemüller: www.weidmueller.com
■ Nikko Electric Manufacturing: www.nikko-el.co.jp
■ NOK Corporation: www.nok.co.jp/en/index.html
■ Ongakukan: www.ongakukan.co.jp
■ Panasonic System Solutions Service: https://panasonic.co.jp/cns/psss/
■ Railway Freight Association: www.rfa.or.jp
■ Sankosha: www.sankosha-s.co.jp
■ Siemens: www.siemens.com/entry/cc/en/#/startscreen
■ Souriau-Sunbank: www.souriau.com
■ Starlite: www.2nd.starlite.co.jp/english/index_e.html
■ Suminoe Textile: www.suminoe.jp/english/index.html
■ Sumitomo Bakelite: www.sumibe.co.jp/english/
■ Sumitomo Riko: www.sumitomoriko.co.jp/english/
■ Thales Japan: https://www.thalesgroup.com/en/asia-pacific/japan
■ Taiyo: www.taiyo-ltd.co.jp/eg/index.html
■ Takara Kenzai Seisakusho: www.takarakenzai.co.jp
■ Tatsuta Electric Wire & Cable: www.tatsuta.co.jp/en/
■ Tenryu Composite: www.tenryu-cmp.co.jp
■ Toa Engineering Corporation: www.toae.co.jp
Railway Technologies & Services - Japan Market Study - Page 134 of 143
■ Toack Corporation: http://www.toack.co.jp/eng/
■ Toho Denki Industry: www.toho-elc.co.jp
■ Tokai Material: www.tokai-material.co.jp
■ Tokai Rolling Stock & Machinery: www.t-ckk.co.jp/index.html
■ Tokyu Techno System: www.tokyu-techno.co.jp
■ Toshiba Transport Engineering: www.toshiba-tre.co.jp
■ Toyo Chemical Industrial: http://www.toyochemical.jp/en/aisatsu/index.html
■ Tsuha Sharyo Industry: www.tsuha.co.jp
■ Tuv Sud Japan: www.tuv-sud.jp/jp-en/about-tuev-sued-1/tuev-sued-in-japan/tuev-sued-
zacta_1
■ TE Connectivity Japan: www.te.com/en/home.html
■ Ueda Brake: www.uedabrake.co.jp
■ Wabtec Corporation Japan: www.wabtec.com
■ Washion Kyoritsu Keiki: www.washion.co.jp/en/
■ West Japan Railway Technos Corporation: www.wjrtechnos.co.jp
■ Yashima: https://www.yashima-co.co.jp/ja/index.html
■ Yashiro Composites Corporation: http://www.ycp.co.jp/eng/
■ Yaskawa Controls: https://www.yaskawa-control.co.jp/
■ Yokohama Seiki: www.yokosei.co.jp/index_e.html
■ YTT International: www.yttinc.co.jp/
Railway Technologies & Services - Japan Market Study - Page 135 of 143
Railway Operators and Government Owned Companies
Railway Technologies & Services - Japan Market Study - Page 136 of 143
■ Tokyo Monorail: www.tokyo-monorail.co.jp/english/
■ Tokyu Corporation: www.tokyu.co.jp/global/index.html
■ Tokyo Metropolitan Government, Bureau of Transportation: www.kotsu.metro.tokyo.jp/eng
■ West Japan Railway Company: www.westjr.co.jp/global/en/
■ Yokohama City, Transportation Bureau:
https://www.city.yokohama.lg.jp/lang/residents/en/living/bus_subway/
Railway Technologies & Services - Japan Market Study - Page 137 of 143
Important Bibliography
■ Trade in Goods with Japan, European Commission Directorate-General for Trade, 2019,
10p, English
■ Annual Report 2018, East Japan Railway Company, 2018, 84p, English
■ EU-Japan Trade Relationship-Facts and Figures, European Commission, 2018, 1p, English
■ JR East stopping Thales’ CBTC Pilot Project, Nikkan Kogyo Newspaper, 2017, 4p,
Japanese
■ Hitachi trains to push into Europe to challenge Siemens, Alstom, The Japan Times, 2015,
4p, English
■ Japan Railway Construction, Transport and Technology Agency Leaflet, 2015, 34p, English
Railway Technologies & Services - Japan Market Study - Page 138 of 143
■ Central Japan Railway Company Annual Report, 2016, 45p, Japanese
■ Financial Data of the 6 JR Companies, Tokyo Shoko Research, 2016, 3p, Japanese
■ About the Japanese Rolling Stock Industry, JARi, 2014, 14p, Japanese
■ Report of the 16th EU-Japan FTA/EPA negotiating round in Tokyo 11-20 April 2016,
European Commission, 2016, 8p, English
■ EU-Japan Railway Industrial Dialogue, MLIT, Yasunari Oka, 2015, 5p, Japanese
■ The Joban Line Project, CBTC for Japan, Thales EU Affairs, Yves Lagoude, 2014, 10p,
English
■ Worldwide Rolling Stock Manufacturers, Market Insights and Factsheets for top 50
manufacturers and Overview of 180 Companies and 330 Production Sites, SCI Multiclient
Studies, 2016, 22p, English
■ Railway Technology in Japan, Challenges and Strategies, Hiroumi Soejima, 2003, 10p,
English
■ The 2 Reasons Why Overseas Railway Equipment Does Not Increase in Japan, Toyo Keizai
Net, 2015, 2p, Japanese
Railway Technologies & Services - Japan Market Study - Page 139 of 143
■ Government Procurement in Japan, Obstacles and Opportunities for European SMEs,
EU-Japan Centre for Industrial Cooperation, Lyckle Griek, 2014, 98p, English
■ Growth Strategy for Japan’s Airline and Rail Industries: Tokyo Olympics to Trigger a Leap,
Nomura Research Institute, Keisuku SANO et al., 2015, 17 pages, English
■ Railway System’s Business Strategy, Hitachim Alistair Dormer, 2015, 38p, Japanese
■ Japan’s Railway Technology and Overseas Expansion, Ministry of Land, Infrastructure and
Transport, Shunya Shiozaki, 2016, 41p, Japanese
■ Taking away market share from the big 3 railway manufacturers in a 20 trillion global market,
Nikkei Newspaper Online, 2014, 3p, Japanese
■ Within Reach, the EBC Report on the Japanese Business Environment, 2016, 98p, English
■ UNIFE World Rail Market Study 2016, Roland Berger, 21p, 2016, English
■ Railway in Sweden and Japan - a comparative study, Transport analysis, 2014, 80p, English
■ Railways market and procurement trends (railway policy), Ministry of Land, Infrastructure
and Transport, Yasaburo HIKASA, 2014, 27p, English
■ Railways: Issues and Recommendations, European Business Council, 2016, 14p, English
■ The Rolling Stock Manufacturing Industry in Japan, JARi, Masahito Mizoguchi, 2016, 19p,
English
■ The Databook of the Major Private Railways, Mintetsu, 2015, 70p, Japanese
■ About the Japanese Railway Car Industry, JARi, Masahito MIZOGUCHI, 14p, Japanese
■ Railways: Open season on Tendering, Japan Today, Geoff Botting, 3p, 2015, English
Railway Technologies & Services - Japan Market Study - Page 140 of 143
■ Prospective EU-Japan Free Trade Agreement, European Parliament, 11p, 2016, English
■ Trade Sustainability Impact Assessment of the Free Trade Agreement between the
European Union and Japan, Final Report, European Commission, 314p, 2016, English
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