700 Billion High-Speed Rail Bid Announcement Confirmed... Korail Gives Opportunity to Foreign Companies

[Asia Economy Reporter Park Sun-mi] Korea Railroad Corporation (KORAIL) has announced a bid for the distributed power high-speed train (EMU 320) to be deployed on the KTX Pyeongtaek~Osong line scheduled to open in 2027. Although the plan was originally to select a contractor by the end of last year, the bidding announcement was delayed, so the contractor selection process is expected to take place in March this year.

According to the EMU-320 bid announcement for 136 cars posted by KORAIL on the 27th, not only Hyundai Rotem, which has monopolized the supply of high-speed trains so far, but also the Spanish high-speed train manufacturer Talgo and a consortium of domestic mid-sized company Woojin Industrial Systems can participate in the bidding. The announcement specifies under the 'Bidder Qualification' section that "bidders must be nationals of countries that have signed the World Trade Organization (WTO) Government Procurement Agreement or Free Trade Agreements and supply goods produced/manufactured in the contracting country." It also states that "joint contracts are possible with up to five companies," allowing consortium-type bidding participation. There are no qualification requirements such as "experience in manufacturing and supplying distributed power high-speed trains with speeds over 300 km/h." In other words, companies without experience in making distributed power high-speed trains can also participate in the bidding.

The scale of this bid is 693 billion KRW. KORAIL will close the bidding on the 7th of next month, evaluate the bids, and select the contractor. The method for selecting the successful bidder will maintain the existing system, where companies scoring 85 points or higher out of 100 in the specification bid evaluation are deemed qualified, and among those qualified, the lowest-priced bidder is finally selected. If the Talgo-Woojin Industrial Systems consortium, which has pursued a low-price strategy by increasing dependence on foreign-made parts to offer lower prices than other companies, surpasses the comprehensive evaluation score threshold of 85 points, they can succeed in the bidding.

Although Hyundai Rotem, with experience in producing distributed power high-speed trains, has a technical advantage, from the evaluation method perspective, the Talgo-Woojin Industrial Systems consortium, which is attempting to manufacture distributed power high-speed trains for the first time, is not at a disadvantage. KORAIL specifies in the evaluation criteria delivery performance for distributed power rail vehicles with a maximum speed of 320 km/h or higher (equivalent or higher products) and concentrated power rail vehicles with a maximum speed of 300 km/h or higher (similar products). Because 'concentrated power' is specified for similar products, which means products that are not exactly the same but have some recognized technology and performance, the Talgo-Woojin Industrial Systems consortium, which has produced concentrated power trains, can also earn points.

The railway industry views this bidding as a potential opportunity for foreign companies to take over the domestic high-speed train market. There are concerns that this will encourage price competition and negatively impact small and medium-sized domestic railway parts companies. If foreign companies fully enter the domestic market, domestic complete vehicle manufacturers producing high-quality high-speed vehicles with purely domestic technology will lose their footing, which could be fatal to the survival of partner parts companies, 96% of which are small-scale businesses.

Earlier, the Emergency Measures Committee for the Railway Vehicle Parts Industry expressed concerns in an 'appeal' stating, "Although Korea has advanced as a railway powerhouse through technological independence, if foreign companies are allowed to enter the market, the domestic parts industry will accelerate its decline," and warned, "There is a high possibility that the domestic parts industry will become dependent on foreign companies, leading to ecosystem collapse."