Top two Chinese train makers to merge to prevent in-fighting

World Today

In this photo taken on Saturday December 22, 2007 and distributed by China’s official Xinhua news agency, shown is the locomotive of the first Chinese-designed and manufactured high-speed train CRH2-300 at CSR Sifang Locomotive and Rolling Stock Co. Ltd. in Qingdao, east China. The train, which rolled off the production line Saturday, is the latest model in the country’s China Railway High-speed (CRH) Series and China’s first locomotive capable of traveling at 300 kilometers per hour, according to Xinhua. (AP Photo/Xinhua, Zhu Zheng)

China’s top two bullet train makers, the China CNR Corp. and the CSR Corp. Ltd. will merge into a new company, according to a CSR announcement at the Shanghai Stock Exchange on Tuesday.

The move aims to avoid in-fighting between the two companies in their exploration of the global market, Wang Mengshu, a railway expert at the Chinese Academy of Engineering said.

The two companies split in 2000, and the then Ministry of Railways, which became the China Railway Corporation in 2013, separated the companies’ major sales domains using the Yellow River as the boundary. It also tried to set international boundaries to reduce their competition.

The impending merger aims to improve their competitive edge against global peers, said Sun Zhang, a railway expert at Tongji University.

The two companies have China’s entire high-speed railway market. They have also produced about 80 percent of the total cargo trains in China and the majority of subway trains. Both have the ability to produce high-speed trains of the CRH380 series, which can run at 380 kilometers, or 236 miles, per hour.

The companies are listed in both Shanghai and Hong Kong, with a combined market value of about $30 billion based on the closing prices before trading ended on Tuesday.

CNR’s net profits jumped 65.1 percent year on year to 3.96 billion yuan ($645 million) for the first nine months, according to its latest quarterly results filed with the Shanghai and Hong Kong stock exchanges on Tuesday. In the January-September period, the CNR’s operating revenues climbed 9.84 percent from a year ago to 64.2 billion yuan ($10.36 billion).

CSR, China’s largest train maker by market value, has yet to disclose its latest quarterly financial statement.

China is the largest market for high-speed rail, while 16 countries and regions now have high-speed railways in operation. China had 11,028 kilometers (6,852 miles) of high-speed rail by the end of 2013, almost as much as all other countries combined. The country also had 12,000 kilometers (7,456 miles) of high-speed railway under construction at the end of 2013.

By the end of 2013, China had approved 36 cities to plan or build railway networks, including subways and light rail, totaling 5,790 kilometers (3,598 miles.)

Story was compiled with information from Xinhua News and China Daily.