I work in rail safety. Two major non-Chinese train companies attempted to merge a few years ago, explicitly to build a company that could compete with China's national company, and provide safer alternatives to state-sponsored cyberhacking of Western rail.

It fell down to an anti-monopoly decision by a single person in the EU ministry, who killed the proposal. Several attempts were made to streamline the merger, but she wouldn't budge.

As a result, CRCC continues to win contracts abroad, largely (it is believed) by undercutting competition. IP theft is known to be one objective of their at-loss or low-profit contracts (I've been involved in fighting that, specifically).

It's hardly a stretch to imagine that having control of the rail in countries that might oppose you militarily is strategically huge.

This article is about busways, but the parallels are obvious.

About a year ago a Polish rail equipment supplier brought a lawsuit over a locomotive because it was serviced by a third-party, and the service was enabled by jailbreaking software in the locomotive.

Surveillance tech in products doesn't necessarily imply grey zone warfare. But that doesn't make it a good thing either.

The European champion would still be ten times smaller than the Chinese but would have factual monopoly in Europe. I don’t think blocking the merger was entirely unreasonable.

The west is too lax on some of these officials. People like this should be thoroughly investigated. China is flagrantly breaking the rules of the WTO that the west has set up, having state backed companies, and these people are either purposefully or unintentionally undermining the west's efforts to fight back.

Why do we even have 'private' train companies again?

Logistics in war is essential so it’s not a stretch. You can easily extend that line of thought to anything from drones to cars.

Did anyone investigate this person to see if she’s being bought by any “Foreign” Gov’t?

China is not a free market and shouldn’t be allowed to compete as if it were.

> Two major non-Chinese train companies attempted to merge

Siemens (Germany) and Alstom (France)

> It fell down to an anti-monopoly decision by a single person in the EU ministry, who killed the proposal

Margrethe Vestager, the European Commissioner for Competition at the time (2019). At the time of the decision, she said "No Chinese supplier has ever participated in a signaling tender in Europe or delivered a single very high speed train outside China. There is no prospect of Chinese entry in the European market in the foreseeable future." This has since been proven to be a bad prognostication, as China Railway Signal & Communication (CRSC) is actively deploying its ETCS Level 2 signaling system on the Budapest–Beograd railway line in Hungary[1]; and China has delivered trains to Serbia, leased trains to Austria's Westbahn, acquired German locomotive manufacturer Vossloh Locomotives, and participated in a public tender in Bulgaria for electric trains.

She is no longer in that position. She has as of 2024 become "tough on China,"[2] acknowledging mistakes made in the past and touting how "China came to dominate the solar panel industry... and is running the same game now, across strategic industries including electric vehicles, wind turbines and microchips."

She now says Biden's IRA was a mistake, that Europe has been de-industrializing and that is not a good thing, and that Europe has been too afraid to impose tariffs on China out of fear of retaliation from China.

It sounds remarkably similar to the MAGA playbook on trade and re-industrialization.

[1]https://www.railwaygazette.com/infrastructure/china-railway-...

[2]https://www.politico.eu/newsletter/brussels-playbook/vestage...

The problem with "oh, but wait, this merger actually improves competition" is that mergers are a contagion. A large competitor's mere existence creates an economic imperative for more mergers. This happens both horizontally (across multiple firms) and vertically (up and down the supply chain). When you get big, you can start stripping your vendors' and customers' of their profit margin, which means they need to get big to compensate. Even if a merger might have positive competitive effects, it still spreads the contagion. Which is a problem, because anyone who doesn't or can't get big will get fucked. That includes individual consumers and workers.

If the problem is that Chinese companies are shipping train firmware with backdoors, then you need to ban those companies. Problem is, given the Newag situation[0], I don't think they can actually do this at the level of individual procurements. So they need specific EU directives banning this behavior and explicitly adding a process by which procurement can ban suppliers for prior noncompliance. What facilitating an illegal merger will do is reduce the EU's bargaining power with industry, ensuring that we get more backdoored trains and more risk.

[0] Short version: they got caught shipping firmware that bricks the train if you take it to a third-party repair shop, even though the contract specifically mandated Newag provide repair manuals. EU agencies and member states do not have the power to disqualify Newag from future tenders for failing to adhere to prior ones, so they keep winning contracts

Is there really not enough room in the global market for two smaller companies to compete (and win) against CRCC?

I think this is especially not that big a deal considering the national security implications. I expect Norway would contract with a non-Chinese company for bus, rail, everything from now on due to that, regardless of whether or not they are smaller than the CRCC.

Is there a strategy where China could remain a supplier of "lobotomized" hardware? Example: China supplies the trains, but all the silicon must be added after import.

If you are a capitalist, you should be pro-acquisition (i.e. of smaller firms) and anti-merger (for larger firms), because mergers are a form of crony capitalism that leads to reduced product quality and market dysfunction.

    First, merging firms reduce the number of products they sell, with the effects materializing one year after the M&A and accelerating over the next several years.
   
    Second, merging firms tend to  drop and add products at the periphery of their joint product portfolio.
   
    Third, the net effect is an increase in the similarity among the products that firms offer following a merger or acquisition.

This finding has been consistently true since people have started measuring merger outcomes, "we find that each merger is associated with a quality decrease (increase) in markets where the merging firms had (had no) pre-merger competition with each other, and the quality change can have a U-shaped relationship with pre-merger competition intensity. Consumer gains/losses associated with quality changes, which we monetize, are substantial " – https://www.sciencedirect.com/science/article/abs/pii/S01677...

It is doubtful that merging two companies would have improved the EU's capability to compete with Chinese state operators. On the other hand, lowering the capital threshold to create a new entrant would definitely improve the EU's competitive position and capabilities, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=cele...

Can you elaborate on the IP theft stuffs by winning contracts? Just curious how it is done.

So put 70% anti dumping duties (tariffs) on CRCC trains like they did with ebikes?

This will probably get fixed with software audits necessary for compliance under the NIS2 directive. The EU fixed the problem with more regulation and bureaucracy, ensuring that only the big boys can comply. Protect us from China by becoming China?

Honestly I couldn't care less considering how scummy our train making companies are, I'm fine with Chinese selling trains on a loss for pieces of paper. It's their problem if they want to build them and ship them for pennies, their loss.

Our companies meanwhile are all turning in John Deere, and I'm glad the merger was blocked.

The security part, obviously I do care but this article says very little about it.

I mean one way to handle that is to just outright exclude Chinese companies from such bids.

Not sure why there are no specifics, but for anyone interested this seems to the merger that was denied, along with the reasons why it was denied.

https://ec.europa.eu/commission/presscorner/detail/es/ip_19_...

You are, of course, referring to Alstom and Siemens.

"A slap in the face is more effective than ten lectures. It makes you understand very quickly." —Leopold van Sacher-Masoch

Siemens received the slap in the form of Stuxnet. Industrial controls and transport are not the same business unit, but enough of the message got around internally.

I firmly believe Alstom would not be making such garbage today, at least not from a cybersecurity perspective, had this merger gone ahead. And, let's say, I know quite well exactly what type of hot garbage they unfortunately continue to make.

It's a shame.