Update | China CNR and CSR Corp said forming joint venture for international projects - report
Mainland's biggest train makers expected to form venture to compete for projects abroad
China CNR Corp and CSR Corp, the country's two biggest train makers currently discussing a merger, are likely to combine their overseas assets and projects into a joint venture to focus on global expansion, the reported.
The newspaper report, citing unnamed sources, said the merger between the rolling stocks makers would set a benchmark for consolidation in other sectors such as nuclear power.
CNR and CSR, which have fiercely undercut each other when bidding for overseas projects, will unite into one company to participate in future bids, especially high-speed train projects.
Jonathan Sun, a spokesman for SunGroup USA and CNR's partner in the California High-Speed Rail Authority project, said he was not aware of a CNR-CSR overseas joint venture.
"We do not have a contract with CSR. We have a contract with CNR. We will follow the rules," Sun told the , meaning that CSR and CNR are still participating in the project separately.
A list of received expressions of interest from California High-Speed Rail Authority showed 10 companies or groups were interested in manufacturing train sets for the high-speed project last month. CNR subsidiary Tangshan Railway Vehicle and SunGroup submitted the expression of interest as a group while CSR submitted a separate expression on its own.
Other companies that had expressed interest include Bombardier of Canada, Siemens of Germany, Hyundai Rotem of South Korea, and Kawasaki Rail Car of Japan.
California High-Speed Rail Authority said it planned to issue a request proposal early next year and to award the contract by the end of next year or 2016.
Gary Wong, an analyst at Guotai Junan Securities, said if CNR and CSR united in overseas biddings, their bidding price could be higher than current levels but still lower than their international competitors.
"In the past, CNR and CSR's bids were 50 to 60 per cent lower than their international counterparts. After the merger, they could submit a bid that is 20 to 30 per cent lower than other bidders and still win the bidding," Wong said.
Last week, Mexico revoked a US$3.75 billion high-speed rail contract awarded to a consortium led by CSR and China Railway Construction Corp.
CSR and CNR are listed in Hong Kong and Shanghai. Their shares were suspended from trading last month.
The two companies were split in 2000 from what was the now-defunct China National Railway Locomotive & Rolling Stock Industry Corp.
