PARIS—For decades, France’s Valdunes SAS charged premium prices for the wheels it made for high-speed trains and other rail systems around the world. That strategy changed after a Chinese state-owned industrial conglomerate bought the company in 2014.
The new owner, Maanshan Iron & Steel Co., or MA Steel, slashed prices in a bid to dominate the market.
“We were told that we shouldn’t miss a single order. That was explicit,” recalled Jérôme Duchange, Valdunes’s former top executive in France. “They have an appetite for economic conquest.”
The French firm was now in the service of the steel company’s larger strategic goals—to give it the know-how to make wheels for high-speed trains in Chinese factories, and to gain access to Europe’s highly regulated rail sector and other markets world-wide. For that, Valdunes received low-cost credit from Chinese government banks and 150 million euros, equivalent to $181 million, from MA Steel to stay afloat.
Over the past decade, China has provided billions of dollars of subsidies to state-owned companies to acquire Western manufacturing rivals and to build factories beyond its own borders. Now, these overseas factories are roiling global markets with low-price goods in sectors ranging from automotive tires and rail equipment to fiberglass and steel.
