JR East Want to Go Global

East Japan Railway, the biggest member of the Japan Railway group, will open an office in London and send more employees abroad for training to speed its entry into foreign markets.

With Japan’s population in decline, overseas expansion is pivotal to JR East’s growth strategy. It is seeking leads on foreign rail projects and is hoping to build a corps of globally competitive talent.

Opening next spring, the company’s London office will gather such information, in addition to handling market research and public relations. Among the projects it is likely watching is HS2, a proposed high-speed railway stretching northwest from London.

JR East opened its first overseas post last fall in Brussels, followed by one in Singapore this spring. The JR group has offices in New York and Paris.

“A thorough knowledge of local conditions and business practices is essential for taking part in foreign projects,” President Tetsuro Tomita said.

The global market for railway infrastructure is forecast to grow to 22 trillion yen ($218 billion) in 2020, an increase of 20%, with Western Europe and the Asia-Pacific region each accounting for more than 6 trillion yen of the total.

To give its employees global experience, JR East will send 600 abroad each year, up from 100-200 now. Some will go for education, while others will work on loan at rail car manufacturers or other firms. The company had only around 40 employees stationed overseas as of this summer.

This month, JR East, trading house Marubeni and conglomerate Toshiba took an order for an urban rail system in Bangkok. This marked the first time that a Japanese consortium has won a major foreign railway project, including rail cars and maintenance. Japan has exported mostly pieces of rail systems. JR East is setting its sights on deals that combine equipment and operation, which would allow it to showcase its celebrated punctuality and safety.

In Japan, the firm is expanding in-station retail and other side business but has scant opportunities for growth in its core, given the lack of space for significant amounts of new rail in its service area.