Train maker China CNR Corp. Ltd. (SHSE: 601299) accused domestic archrival CSR Corp. Ltd. (SHSE: 601766) of low-price competition in Argentina.
CSR Corp. announced CNY 7.8 billion worth new contracts on May 27 and among the total, about CNY 2.26 billion one were multiple unit contract inked with Argentine on May 23. Actually, this was not the first order it gained in the South American market this year and in January, it signed a total of CNY 3.5 billion worth subway contracts there. That is to say it gained about CNY 6 billion orders in the market within half a year.
In line with people in the know, it is a low-price strategy that helped it much and the strategy has caused it to be complained by rivals at both home and abroad. Compared to those including Siemens and Bombardier as well as China CNR and CITIC Construction, it is totally a newcomer there. And because of its low-price competition, several contracts that had been initially gained by Chinese firms there were required for quotation revisions and re-negotiations. Under such an environment, together with CITIC Construction, China CNR accused it of low-price competition to the China Chamber of Commerce for Import & Export of Machinery & Electrical Products (CCCME).
The CCCME held a coordination conference for this in Beijing on February 22 this year and those including CITIC Construction, China CNR and CSR Corp. attended the conference. A representative with China CNR stressed that low-price competition of CSR Corp. would deliver a strong impact on other Chinese train makers in not only Argentine but also other markets overseas in the long run. That with CITIC Construction said that it had entered the market for about a decade, but a reasonable price system established on huge investment there would be broken up by low-price competition from CSR Corp. In stead of applying to the CCCME for product price first, CSR Corp. contacted concerned authorities of Argentina privately. Notably, the quotations were much lower than those provided by others. Argentina did not trust on quotations of trail transit equipment made by China currently and due to this, a list of contracts that had been initially signed were laid on the table. CSR Corp. argued that in order to fuel expansion in the market, it carried out a low-price strategy. However, despite of that, it would make money.
CCCME made a decision to punish CSR Corp. at the end of March, requiring the latter to quit the Argentinean market for one year.
