Korea National Railway gains traction in expanding overseas business

Private companies are facing difficulties expanding business overseas as the trend for global railway markets is shifting in favor of a comprehensive set of investments that combine design, construction, finance and operations.

On behalf of the government, Korea National Railway is acting as a platform to avidly engage in international cooperation and sales activities, helping Korea’s railway industry increase business worldwide.

First, they established a consortium with private companies to make their best efforts to win project management office deals for Peru capital Lima’s Metro Lines 3 and 4. Project management office allows for full authority to select and manage participants in the project. If Korea National Railway wins such a deal, there is a high possibility for Korean companies to participate in engineering, procurement and construction projects worth 10 trillion won ($9 billion).

Moreover, focusing on high-value overseas projects, Korea National Railway is trying to operate domestic companies and lead Team Korea to introduce Korean railway technology worldwide.

Korea National Railway formed Team Korea to complete this year’s anticipated San Jose, Costa Rica’s metropolitan passenger railway project. Ordered from Costa Rica’s Instituto Costarricense de Ferrocarriles, in charge of the country’s railway transport, the railway will extend 84.9 kilometers with a budget of about $15.5 billion.

Korea National Railway has been actively seeking an order to enter the Mongolian market. As a result, it is in the process of negotiating a contract for a communication signal project from Tavantolgoi to Junbayan.

This would be the first project done independently by the Mongolian government and it will design, supply and install signal and communication systems on the 416-km railway connecting the Tavantolgoi and Junbayan regions to ensure safe train operations. The project would take some 11 months and cost around $500 million.

Korea National Railway has been conducting regular consultations since October 2019 at the request of the Mongolian government and has been working with domestic companies for engineering, procurement and construction projects in communication signal projects. In November, it was selected as the top bidder, and is now in negotiations with Mongolia for specifics of the contract.

Although the contract is being delayed due to the ongoing COVID-19 pandemic, Korea National Railway expects the contract to be signed in the first half of this year. 

In the future, it will continue to provide Korean railway techniques to Mongolia through official development assistance projects and will become a foundation for East Asian railway and economic cooperation by acting as a platform for domestic companies to enter the Mongolian market.

Not ending there, Korea National Railway has not let go of its efforts to further penetrate the Chinese market. Since its participation in supervising China’s Sutu Line testing in 2005, Korean railways have officially entered the Chinese market and won orders of 16 high-speed railway projects worth 58.8 billion won.

Since 2016, China has developed its own high-speed railways. Following this, the Korea National Railway was in need of a change in its strategy in the Chinese railway market.

With the trust it has built with Chinese government agencies in the past, Korea National Railway, as the representative of Korea’s railway industry, is acting as a platform to support domestic companies in entering the Chinese railway market. Some of its efforts include holding meetings and consultations to support and promote businesses in both Korea and China.

Amid their competition, Korea National Railway is pushing for joint cooperation with China to enter railway markets in other countries.

By Gha Hee-sun (lizka98@heraldcorp.com)  & Lee Kwon-hyung (kwonhl@heraldcorp.com)