Rebounding from its failure in Boston, CSR's participation in the Mexico contract was a much bigger prize. It represented the first overseas export order for high-speed rail technology from China, which has built out the world's largest high-speed train networks in just five years. According to a recent World Bank study, China has laid more than 12,180 km of high-speed track — four times longer than the world's second- and third-largest networks, in Spain and Japan respectively.
But CSR was not able to enjoy its coup for long. Within days the contract was rescinded after objections from Mexican legislators, who said it had been issued too hastily.
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Partly because of the hurried tender process, the Chinese consortium was the only bidder. It also emerged that a Mexican member of the Chinese group had built a mansion for Mexico's first lady, who has vehemently denied any wrongdoing. State-owned China Railway Construction Corp, which led the consortium, has vowed to bid again for the project when it is retendered.
CSR and CNR could participate in the consortium's second bid as either a merged entity or through a new joint venture focused on overseas markets. After denying merger reports in September, both companies' shares have been suspended from trading since October 27 pending an announcement regarding a "significant event".
A full-blown merger of the two would be a victory for China's State-owned Assets Supervision and Administration Commission, which prioritizes the efficiency and returns of national industrial champions over the wishes of the National Development and Reform Commission, a regulator more concerned about domestic competition and prices.
A merger would also set off a scramble for jobs at the combined entity among senior CNR and CSR executives. Sasac and NDRC officials declined to comment.
"Sasac's primary goal is to co-ordinate the two companies' development and establish a good foundation for exports," says Li Jia, an analyst at Huachuang Securities. "CNR and CSR are not happy about it."