China’s Top Two Train Makers Merge to End In-Fighting

Two of china’s top train makers, State-owned firms China CNR Corp. and CSR Corp have merged in an attempt to compete with foreign players and also to prevent in-fighting as China vies for lucrative rail contracts overseas against industry giants such as Germany’s Siemens and Bombardier of Canada.

The merger will create a single huge conglomerate to build jointly a brand-new, multinational world-leading supplier of high-end equipment and systems solutions with rolling stock at its core.

The merger is also expected to improve efficiency in the use of resources, effectively reduce operating costs and realize the internationalization strategy, thereby promoting competition globally.

The merger still requires approval by shareholders and government agencies, the statement said. In the all-share deal, CSR will issue new stock to existing CNR shareholders to absorb the other company.

The newly-merged entity will be called CRRC Corp., it said. The firms actually share the same origin; a rail vehicle manufacturer spun off from the former railway ministry in 2000 and split into two.

Analysts said the new company could potentially undercut rivals on prices by becoming more efficient, while avoiding the original firms being rivals for the same deals as in the past.

The two firms control the market for high-speed rail in China, each producing trains capable of travelling up to 380 kilometers (236 miles) per hour, the official Xinhua news agency said. Together they also account for 80 percent of goods trains and the majority of subway trains.

China's high-speed rail network is the largest in the world with more than 11,000 kilometres (6,820 miles) of track in service during 2013, with the total expected to reach 16,000 kilometres (9,920 miles) by 2020, according to official media.