Mexico to reveal rail bid winner in July

The original eight-company group for the new railway project, planned to connect Mexico City and the central city of Queretaro, was led by China Railway Construction Corp and CSR.

Wang Mengshu, an academic specialized in rail and infrastructure projects at the Chinese Academy of Engineering, said even though there are competitive rivals, the advantage the Chinese companies have is they are able to offer the whole package of services needed to complete the project, including infrastructure construction, rail vehicles, maintenance and professional training for local staff.

Wang, who is also a member of the team that is modifies the original bid document, said CSR is planning to establish "a new manufacturing and maintenance base to serve the needs of Mexico, as well as its neighboring markets if the consortium won the bid next year".

Operating in Mexico can be tricky for foreign heavy industrial companies, faced with high labor, logistics and manufacturing material costs, as well as an imperfect industrial chain.

Queretaro is the center of Mexico's aerospace industry and the new railway will be used to carry some 23,000 daily commuters from the city at speeds of up to 300 kilometers per hour. The original bidding process began in the middle of August.

"High-speed trains with operational speeds of over 300 km/h have been running in China for more than five years in various terrain and climatic conditions, and foreign competitors are fully aware that Chinese rail products have significant price advantages," said Wang.

"It won't take us long to prepare the next bidding document."

Wang said the Mexican government plans to offer compensation based on the initial contract, but no accurate figure has been acceptable so far to the Chinese-led group.

Even though the final cost for the connection is still unclear, the investment package has been estimated at $3.75 billion to $4 billion. The Mexican government previously wanted to start construction in December and the line is expected to be operational in 2017.

The high-speed project is part of the Mexican president's campaign to bring back passenger trains, which all but disappeared more than a decade ago, except for some tourist lines.

Dong Yan, a rail transportation researcher at the National Development and Reform Commission, said the Chinese group should pay attention to the likely rival tender being submitted by Canada's Bombardier, which has years of industrial experience in Mexico.