China rolls ahead with train makers' merger

Ray

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China rolls ahead with train makers' merger: media

China is moving forward with the merger of its two top train makers, state media said Wednesday, with a plan to create a massive group to export high-speed railway technology.

State media have previously said the merger of state-owned China CNR Corp. and CSR Corp. will help prevent "cut-throat" competition between the two when seeking business overseas.

The merger could also put the combined entity in a stronger position to take on the likes of Germany's Siemens and Bombardier of Canada.

A draft plan for the merger has been submitted to China's cabinet, the State Council, for discussion and approval, the official Xinhua News Agency reported.

It quoted a source from the State-owned Assets Supervision and Administration Commission, which manages state firms.

The new entity's Chinese name will be "China Railway Rolling Stock Group," the 21st Century Business Herald reported, citing an unnamed source.

CSR will take the lead, taking over CNR in an all-share deal and absorbing its business and employees as well as assets and debts, the newspaper said.

Neither company has commented on the proposed merger, which came to light in October through media reports.

The two companies, both dual-listed on the Shanghai and Hong Kong stock exchanges, have suspended their shares from trading pending "important" announcements, exchange filings show.

CSR was embroiled in a 2011 scandal after a high-speed train crash near Wenzhou city killed 40 people and sparked an investigation that found evidence of bribery in railway construction.

It was also part of a consortium that won a US$3.75 billion high-speed railway contract from Mexico in early November. The contract was cancelled shortly afterwards amid questions over the legality of the bidding process.

CSR's net profit rose 58.29 percent year-on-year to 3.97 billion yuan (US$651 million) in the January-September period, according to the company.

CNR secured a deal in October to supply metro trains to the U.S. city of Boston. Its net profit jumped 65.1 percent year-on-year to 3.96 billion yuan in the first three quarters of this year, the company said.

The firms share the same origin, a rail vehicle manufacturer spun off from the former railway ministry in 2000 and split into two.

The railway ministry itself was merged into another state agency in March last year and its commercial functions turned over to a new company, China Railway Corp.
China rolls ahead with train makers' merger: media - The China Post
China's economy is not showing the bullishness that was evident in the past.

This is not good news and so China requires to ensure new avenues to scupper up money from the world.

Its hispeed railway has been well touted and so China finds it a lucrative path to boosting the finances and hence the economy.

There is a large market in the developing countries for hispeed trains.

India has indicated that intent and Mexico was on the way to acquiring Chinese trains, but shady Chinese practices baulked the deal.

Thailand is another country that is keen on the hispeed trains.

And where China has an edge over other countries which produce hispeed trains, is that Chinese trains come cheap. Real cheap.
 

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