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China To Merge High-Speed Train Makers To Cut Competition
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?
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!
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.
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.
We were all warned a long time ago that MS products sucked, remember the Magic 8 Ball said, "Outlook not so good"
Such a deal also would raise questions about China's determination to enforce monopoly laws
Kind of how it raises questions about the determination of EU and US to enforce monopoly laws in aircraft manufacturing, I presume?
IMHO some markets are simply too small to make an effective free market
You're an idiot. Please don't bother posting any more. Thanks.
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.
But he is sort of right, if you ignore the exaggerations. China is becoming more communist. They were making progress, but the last few years they have been becoming more totalitarian and communist. The Communist party is getting scared of an informed public (especially with the protests in Hong Kong being common knowledge here) and is tightening the reins.
Source: I'm a Chinese American currently in China.
Please replace 'cut competition' with 'increase harmony' wherever it appears. Thank you in advance for your cooperation.
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.
Please remind me how their is no corruption in your country again
Easy, we give the politicians the power to define what is corruption and what isn't
Since we already gave the politicians the power to define what is Liberty what isn't, why not?
Next they can get to define what is wealth, what is poverty; Who we are allowed to mingle with; What we are allowed to think; What kind of life we deserve to have; What is war, what is peace; and before we know it, George Orwell yells from his grave, "I TOLD YOU SO ! I TOLD YOU SO !!!!"
Muchas Gracias, Señor Edward Snowden !
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.
I play Nerd-Folk!
If both companies in China can undercut everyone else anyway, China is going to win the market regardless of whether it merges those two companies or not. However, with the companies merged, the undercutting will be reduced, which means there is more of an opportunity for foreign companies to underbid and stay alive
Sometimes I wonder if you guys are talking about the subject at hand, or not
Guys, this ain't 99cent coffee mug that we are talking about. It's multi-million dollar (sometimes in the BILLIONS) infrastructure investment, and when governments have to spend such an amount of money, price isn't everything !
But of course, China still has a trump card that others may not have ... China can FINANCE the deal with ridiculous no-question-ask and no-string-attached loan
Muchas Gracias, Señor Edward Snowden !
Source: I'm a Chinese American currently in China
I am an American Chinese currently in America, and unlike you, I was born in China, and knew China from inside and out so much so that I ran away from it
The current China is more capitalistic than the United States of America - in China you won't see nonsense like the Obamacare because, according to the Chinese culture everyone is supposed to taking care of one's own life, and health
The government's job is to protect the country and to ensure that the society doesn't falter. It ain't the government's job to cuddle the people (at least Confucius never says so)
Although I ain't a Chinese national anymore I am still a(n ethnic) Chinese through and through and I happen to agree with what the government of China is doing
To say that China is going back to Communism is to lie with both eyes wide open. Xi is no communist, in fact, he is *VERY* afraid of the "deep red" faction within the CCP, that is why there are so much "anti-graft" operations around --- all designed to crush his opponents, the "deep red" faction of the Tai Zhi Dang
Muchas Gracias, Señor Edward Snowden !
If you don't want to operate in China, don't come. Simple as that.
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..."
Only to idiots, are orders laws.
-- Henning von Tresckow
You're just lying. Yeah, it's not doing the capitalistic corporate welfare of Obamacare, but it laughs at the philosophy of pure capitalism as much as any senior medic laughs at an upstart freshman medical student who thinks he has a cure for all disease.
But China is really creeping toward social democracy - not "capitalism" or "communism".
Thank you for this. Same AC here.
First of all, by "communist" I don't mean socialist or progressive. I mean the type of communism practiced by the USSR and its allies during the cold war. I definitely agree that the US is much more socialist (read: progressive) than China. No doubt there.
As for why I'm in china: it's because I can make a much better living here than in America. As a bilingual native, I can make a lot of money as a translator/part time English tutor here. The cost of living is so ridiculously low that I can save 80% of it. Good luck doing that in America without living like someone under the poverty line. I might not be as comfortable here as I would be in America, but I certainly have a much better life here, all things considered. Plus the RMB is strengthening compared to the USD so it's nice to be paid in that too.
from american corporations... although here the state doesn't force them to merge, it just gives them their blessing whenever a megamerger is proposed. it has the same effect.. stifling competition and raising prices.
What is a "high-speed train"? I live in the US and am not familiar with the term.
You are welcome on my lawn.
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?
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 R&D, administration), over-production and cutthroat competition. Especially the excess production capacity is the main drive for a re-merge.
It's also important to note that even after the split, both companies have remained state-own enterprises all this time. So the competition between them was always heavily influenced by politics and policy considerations, never truly market-oriented.
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 rail companies have to borrow at market rates, which are high because they have very little that's seen as collateral by banks, and they don't have the weight of the taxpayer behind them."
So Chinese HSR equipment vendor mergers are unlikely to have much affect n the US environment, in the near or medium future anyway.
You are not alone. This is not normal. None of this is normal.
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?
http://edition.cnn.com/2011/WO...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
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.
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.
You are not alone. This is not normal. None of this is normal.
The current China is more capitalistic than the United States of America
I've been to China. They are quite entrepreneurial, I'll grant you that. I wouldn't go so far as your statement but the impulse is certainly there.
you won't see nonsense like the Obamacare because, according to the Chinese culture everyone is supposed to taking care of one's own life, and health
Even if that were true (which I doubt) that won't fly in the face of economic and political reality. You really think the emerging Chinese middle class will not demand some form of health care program (private or public)? If you have a heart attack and have no health care then you'll either be dead or bankrupt and possibly both. It will be virtually impossible for the government to deny the people some form of health care if they wish to remain in power. I'm sure it will be a uniquely Chinese system but there will have to be something.
Actually, most cities in the eastern half of the US are close enough to support high-speed rail between them.
There are plenty of places where high speed rail is a possibility but there are lots of economic and logistical problems. The problem is that the supporting infrastructure just isn't there. You need to have basically all the amenities of an airport at both ends for it to be viable. (Parking, ground transportation, etc) After all, what good does high speed rail do you if you are stuck at the terminal at the other end of the trip? Passenger rail depots have been mostly neglected and/or dismantled in the US. I used to live in Saint Louis and the train station there is now a mall. Good luck converting it back for high speed rail use.
High-speed rail already exists over much longer distances in countries like France, Spain, and Russia.
France is almost exactly the same size as the state of Texas. Big area but WAY smaller than the US. Russia is far more similar and they have a few high speed lines but not many. I'd love to see some high speed rail lines but I don't really see it happening in a meaningful way in most of the US. Too much cost for the right-of-ways, too little political will, neglected infrastructure at the destinations, etc. I'm sure we'll see one here or there but mostly I think the US will continue to rely on cars and airplanes for better or worse.
Oh China, behaving just like America except with overt government control instead of a pretense of constitution.
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.
Learn to love Alaska
Until it crashes.
Do the train companies also make bulldozers?
http://edition.cnn.com/2011/WO...
You better keep those Japanese and German trains off the shopping lists as well.
Oh, and American ? FAHGETTABOUDIT.
Point me to where it says that the countries *you* mentioned put hiding the wreckage to avoid embarrassing officials ahead of rescuing potential survivors and finding the cause of the crash.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."