China Southern Locomotive and Rolling Stock Industry Group Co Ltd, the country's largest train maker, said it is in contact with a British railway signaling company and several others about possible acquisitions as the European debt crisis causes financing difficulties for its European counterparts.

"The crisis has created good possibilities for mergers and acquisitions in that current prices are attractive," said CSR Chairman Zhao Xiaogang.

"However, the best time has yet to come as the current crisis has not bottomed out," Zhao said, adding that no actual moves have been taken by far.

"We're still not clear about the target value."

The Sunday Times had reported that CSR was considering a takeover bid for British company Invensys Plc, which makes railway signaling systems.

Design flaws in signal equipment were cited as a reason for the high-speed train crash which killed dozens of people in Wenzhou, Zhejiang province last year. The authorities have since made efforts to strengthen railway safety.

Overseas investment is one of the company's most important strategies, according to Zhao.

Like CSR, a number of other Chinese companies are speeding up overseas merger and acquisition activities this year, which, experts said, can help them gain market access and advanced technology.

Sany Heavy Industries Co Ltd completed its acquisition of German concrete machinery maker Putzmeister Holding GmbH in January, followed by Liugong Machinery Corp's acquisition of Polish heavy equipment company HSW SA, and Shandong Heavy Industry's takeover of Italian yacht maker Ferretti Group in the same month.

Zhao predicted that CSR's exports will increase by 50 percent this year, contributing 20 percent of its total revenue. Meanwhile, new orders are likely to skyrocket, doubling from last year, partly because its competitive prices and high quality are gaining increased global recognition.

Emerging markets, including Southeast Asia, Africa and South America, account for more than 90 percent of CSR's overseas sales.

CSR's profits increased 50 percent year-on-year in 2011 to 5 billion yuan ($787 million).

Its competitor, China Northern Locomotive and Rolling Stock Industry Corp, is also speeding up overseas activities, with overseas demand likely to outstrip domestic demand this year.

CNR has supplied freight trains to Australia, New Zealand, France, as well as to countries in Central Asia and South America. Apart from trains, the company recently exported control system technology to Bangladesh.

China plans to spend 400 billion yuan this year on railway projects, down from 469 billion yuan in 2011, and more than 700 billion yuan in 2010.

According to CSR's estimate, China will have 100,000 kilometers of railways by the end of this year.

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