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China Businesses Government Transportation

China To Merge High-Speed Train Makers To Cut Competition 88

hackingbear writes China has two high-speed train makers, the China Northern Railcar Corp. (CNR) and China Southern Railcar Corp. (CSR). Despite both being state-owned companies, the two are really competing with each other in the international high-speed train market, undercutting prices. Now, the Chinese government is set to fix that by asking the two to merge. [More details in a paywalled article at the Wall Street Journal.] Such a deal also would raise questions about China's determination to enforce monopoly laws that have been under a microscope in recent months as foreign companies including dairy makers, car makers including Volkswagen AG 's Audi, and technology companies Microsoft Corp. and Qualcomm Corp. have been investigated by antitrust authorities. However, as we haven't been complaining about China's low prices hurting our business, shouldn't China raising the price be good for other train makers?
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China To Merge High-Speed Train Makers To Cut Competition

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  • What if we could get Bombardier en Siemens to work together on building trains? Within ten years, nobody would want to travel by car again!
    • Both Bombardier and Siemens are products of Capitalism, and both are free to choose any business partner they want

      If, like you say, combining Bombardier and Siemens are such a DREAM TEAM they would have done it a long long time ago already

      After all, which shareholder doesn't want the company that they invested in become part of a DREAM TEAM?

      • Re: (Score:2, Funny)

        by Anonymous Coward

        Damn right. If history teaches us anything it's that there is no waste or mismanagement in private industry. This is why no new products are ever invented because, if the market was there, the products will have been there since the need emerged.

      • Bombardier is French. And of all the things the French despise, the Germans are very high on the list. Siemens is German and of all the things the Germans hate, the French are very high on the list. And many customers, among which the Dutch railway company Prorail for which I have worked, prefers to buy material from as many different vendors as possible, to prevent vendor lock-in. So the company that made the TGV and holds the world speed record for rail with it, and the company that made the ICE, the mo
        • by Anonymous Coward

          Bombardier is from Quebec, Canada, so it's French-Canadian.
          We don't have any problems with the germans.

        • by makapuf ( 412290 )

          Yeah, sure, impossible for German and French to work together. Tell that to Airbus, ESA and its Rosetta and Ariane programs which are co-ruled by those two (and other countries, including UK, which French "hates" too, if you go that way). Besides, Bombardier is not French, Alstom (which is the TGV builder) is.

          The Dutch railway company surely prefers to buy from as many different vendors as possible (who doesn't), but I fail to see how they would get a say in a hypothetical Siemens/Alstom merger. Just divers

      • Well, they may have decided it's worth merging, but found legal barriers preventing them from doing so.

  • Bullshit. (Score:4, Interesting)

    by Etherwalk ( 681268 ) on Monday November 03, 2014 @03:29AM (#48299195)

    China's "antitrust" push is a very easy way to steal trade secrets. Antitrust investigations let you seize corporate hard drives, which means you can share them with competitors whom you happen to like--i.e. your companies.

    • Except both these companies are already state owned so if they are looking for trade secrets they can just ask.
      • The summary notes that the merger would raise questions about China's commitment to its recent wave of antitrust investigations. It does not say China is investigating the two train companies it owns already.

    • It's much more sporting to have your NSA or equivalent do it.
      • It's much more sporting to have your NSA or equivalent do it.

        The NSA does espionage for the state; my understanding is it generally does not do espionage for private companies. Why *that* is the line they chose not to cross, who knows, but there it is.

  • by Fallen Kell ( 165468 ) on Monday November 03, 2014 @03:31AM (#48299201)

    However, as we haven't been complaining about China's low prices hurting our business, shouldn't China raising the price be good for other train makers?

    I don't see how this is good for any other train makers other than China. China's train maker will still undercut the price, and now will simply have one less company that it is betting against when doing so, ensuring that it undercuts the price by the least amount needed to win the contracts. The only one that wins in China in the long run when it forces all the other train manufacturers out of business and then wins the contracts by fiat as the only entity.

    • If China's prices undercut our own train makers, that is great news for our *consumers* - companies that run trains or use trains for transport and individuals who use trains for transport. Contrariwise if China raises the price of trains that almost certainly hurts more Americans than it helps, just like most other price increases.

      • Based upon your Americans comment, I'm assuming "our consumers" means American consumers. I say this not to be an ass, but to point something out: Almost all US passenger train buying is subject to "Buy America" rules. Even All Aboard Florida, the private operator in Florida, feels they have to go with that rule lest they be prevented from taking advantage of numerous government programs that attempt to correct the balance between "The government can borrow money on the cheap to build roads" and "Private r

        • Almost all US passenger train buying is subject to "Buy America" rules.

          Strange that we've got Bombardier and Alstom locomotives and Bombardier passenger cars in NJ, then. Also Kawasaki MUs. None of those companies is American.

          • by Skater ( 41976 )
            Often, they build an assembly plant in the US to get around this issue. Then, this happens. []
          • Yep. All of these companies (and Germany's Siemens who are supplying AAF and a lot of State commuter systems) have US manufacturing plants specifically to be compliant with this requirement.

      • I would have thought that the cost of the physical train is likely a small fraction of the fare price consumers pay. It probably wouldn't help consumers that much, if any.
      • Until it crashes.

        Do the train companies also make bulldozers? []

      • by AK Marc ( 707885 )
        But bad news for two billionaires is bad news for the country. And bad news for 300,000,000 consumers is not bad news for the country.
    • by AK Marc ( 707885 )
      Yes, China is dumping rare metals, batteries, trains, solar panels, and still making record profits selling at a loss. Something doesn't add up.
  • Please replace 'cut competition' with 'increase harmony' wherever it appears. Thank you in advance for your cooperation.
  • Same old, same old (Score:5, Insightful)

    by BBF_BBF ( 812493 ) on Monday November 03, 2014 @05:20AM (#48299497)
    It doesn't matter what internal "rules" a country or its homegrown companies break, all may be forgiven. However, if any foreign companies break those rules, hellfire shall rain down on them.

    It's not just China. The US does the same thing, as do many, many other countries just not with the same methods.
  • China To Merge High-Speed Train Makers To Cut Competition

    Plutocrats throughout Europe and the USA would have a spontaneous orgasm if they read headline like that.... "US and EU agree on transatlantic effort to merge all internet service providers and media outlets to solve the problem of competition..."

  • by PopeRatzo ( 965947 ) on Monday November 03, 2014 @08:05AM (#48299925) Journal

    What is a "high-speed train"? I live in the US and am not familiar with the term.

    • Wikipedia claims "Minimum 200km/h as normal speed, for European Union Directive 96/48/EC, Annex 1".
      So that is what the term means. As a Norwegian, I do know that we would not be familiar with the term either, since most Norwegian trains operate with a speed limit of 80-90km/h due track speed limit.

    • It is an artifact of communism. Real Americans would not be interested, especially considering that the French like them.

      • It is an artifact of communism.

        You joke, but many commentators on the Right say exactly that. "Trains are socialist/Cars are capitalist", despite the fact that auto travel has been subsidized by the government to a greater extent than any other form of transportation.

  • by tomhath ( 637240 ) on Monday November 03, 2014 @08:05AM (#48299927)

    Now, the Chinese government is set to fix that by asking the two to merge

    Obviously by "fix that" they mean price fixing. Competition is not allowed there.

  • Clearly China is looking to enforce the monopoly law, that there shall be one and only one state controlled supplier of any good.

  • Xi Jinping has been rolling on an anti-corruption campaign.

    Is there any chance that while this may have some kind of economic benefits for China that it might be some kind of backdoor move against corruption or have some kind of anti-corruption benefit at least equal to its economic benefits?

    IIRC, the rail industry has been tied to corruption in the past and merging two big players is a convenient and public way to sideline bad apples without some of that unpleasant scrutiny the Chinese don't like.

  • how make dairy? Dairy Queen?
  • by Anonymous Coward

    RTFA - the two company were original one and the same - China National Railway Locomotive & Rolling Stock Industry Corporation (LORIC), which was founded in 1986 (as a commercial enterprise and successor of the govermental Industry Administration of the Railway Ministry) and then split up into two in 2000 at the order of the central government.

    The reason for the split-up was to break up monopoly and encourage competition, which it did. However, it also created new problems: waste of resources (duplicate