Japanese suppliers in China (Part 1): Eastern and Central China

Increased demand leads to enhanced production network

2014/03/10

Summary

 In 2013, China produced 22.11 million vehicles, marking an increase of 14.8% year-over-year (y/y) and the ninth consecutive year of positive growth. The country also marked a record high sales volume of 21.69 million units. Sales in 2014 are estimated to grow by 8 to 10% y/y, leading to 23.74 to 24.18 million units (announced by the China Association of Automobile Manufacturers (CAAM) in late January 2014).
 Japanese automakers also intend to expand their sales. In 2014, Toyota, Nissan, and Honda aim, respectively, at an y/y increase of 20% to 1.1 million units, 11% to 1.4 million units, and 18% to over 0.9 million units. To cope with this increasing demand, Japanese auto parts suppliers have also been expanding their businesses and production capacities in China.
 This report summarizes activities of Japanese parts suppliers in eastern and central China between July 2013 and late February 2014. Japanese suppliers in China (part 2) will focus on southern, northern and northeastern regions.
 

Related Japanese Suppliers Reports:
Latin America (part 1): New plants in Mexico (Mar 2014)
Latin America (Part 2): Trends in Brazil and Mexico (Mar 2014)
Thailand (1) (Jan. 2014)

Thailand (2) (Jan. 2014)
ASEAN (Nov. 2013)

Russia and Eastern Europe (Oct. 2013)
India (Sep. 2013)
Northern/Northeastern/Southwestern China (Aug. 2013)
Southern and Central China (Aug. 2013)
Eastern China (Jul. 2013)
the US (Jul. 2013)

eastern china
Eastern China
central china
Central China

 



Eastern China: Jiangsu province

Company Activities
Asahi Glass

To convert solar cell glass production base into automotive glass base

In October 2013, Asahi Glass announced its plan to newly construct its third automotive glass plant at AGC Flat Glass(Suzhou) Co., Ltd. in Suzhou, Jiangsu province. The existing plants have produced cover glass for solar cells, but its selling prices are dropping rapidly. Meanwhile, demand from Japanese automakers is increasing. As a result, the company has decided to convert the plant into an automotive glass base. The third plant is expected to start operations in the first quarter of 2015, with an investment of JPY 4.5 billion. The plant will have an annual capacity for 1.2 million vehicles, leading to the total capacity for 3.6 million vehicles combined with the existing plants.
Keihin

Establishes global production network including China

Keihin has established a global network for producing low-cost components for the Honda Fit. The company will produce ten production items, including automotive air conditioning units, at plants with the lowest cost for each item (Source: Press release in October 2013). Labor/assembly-intensive items like EGR valves will be produced at its subsidiary in Nanjing, Jiangsu province, Nanjing Keihin Carburetor Co. Ltd., due to its low labor cost. At this plant, a production line capable of producing 1.1 million units per year was established in spring 2013. In February 2014, it was reported that Honda Civic will use a similar parts supply chain in the future.
GMB

To establish production base in Nantong, Jiangsu province

In October 2013, GMB's Korean subsidiary, GMB KOREA, announced its plan to establish its third production base in China, Suzhou GMB Automotive Co.,Ltd, in Nantong, Jiangsu province in January 2014. It will be capitalized at USD 5 million fully invested by GMB KOREA. This plant will produce steering joints and ball bearings, which will be supplied mainly to Korean automakers operating in China.
In addition, JPY 5.1 billion will be invested to enhance the production of alternators upon receiving orders from Toyota, Ford and Chrysler. The production is planned to start in Oct 2014.
Daido Metal

To construct third plant in Suzhou, Jiangsu province

Daido Metal is considering constructing its third plant at Daido Precision Metal (Suzhou) Co., Ltd. in Suzhou. The final decision will be made within 2014. The aim is to acquire sufficient production and supply capacity for engine bearings (Source: Press release in January 2014).
Toyo Tire & Rubber

To produce premium tires at its Jiangsu plant

Toyo Tire & Rubber is considering starting production of premium tires at Toyo Tire (Zhangjiagang) Co. Ltd. in Zhangjiagang, Jiangsu province, to cope with increasing demand in China. Meanwhile, in response to increasing production of sports utility vehicle (SUV) tires at its North American plant, the supplier plans to export passenger car tires for the North American market from Japan, Malaysia, and China (Source: Press release in November 2013).
Toyota Industries

To establish new compressor plant in Jiangsu province

In November 2013, Toyota Industries announced that it will start production of automotive air conditioning compressors at its new plant in the Kunshan Economic and Technological Development Zone in Jiangsu province by October 2014. The supplier will transfer facilities from the current plant to this new plant gradually by 2016. The annual production capacity will increase from the current 0.5 million units to 1.5 million units. A total of CNY 357 million is expected to be invested in the new plant. The plant will be constructed as a base for TD Automotive Compression Kunshan Co., Ltd. (TACK). TACK supplies compressors for Toyota, Nissan, Shanghai GM, Changan Ford, among others.
Nisshinbo Brake

To invest JPY 25 billion in its plants outside Japan including China

Nisshinbo Brake will invest a total of JPY 25 billion in its plants outside Japan including China, Brazil, and Thailand between the fiscal year ending in March 2015 (FY 2014) and FY 2015. This is to increase their capacities to produce automotive braking parts and renew aging facilities (Source: Press release in February 2014). In China, the supplier has produced disc pads and other parts at Nisshinbo Saeron Changshu Automotive Corporation in Changshu, Jiangsu province for Shanghai GM and Japanese automakers since 2013.
Nisshinbo Holdings

To establish joint venture with German Continental AG

In November 2013, Nisshinbo Holdings agreed with German Continental AG's Chinese subsidiary, Continental Automotive Holding Co., Ltd., to establish a joint venture in Yangzhou, Jiangsu province. The new venture will be named as Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd. (provisional name) and manufacture/sell main components of electronically controlled braking systems such as valve blocks. It will be capitalized at CNY 2 million, with 70% owned by Nisshinbo HD and 30% by Continental Automotive Holding. The plant is scheduled to start operations in January 2015. The supplier plans gradual expansion by 2020 with a total investment of JPY 6.4 billion. Its revenues are expected to be at JPY 4 to 5 billion level in 2020.
Nippon Piston Ring (NPR)

Converts its wholly owned subsidiary into joint venture

In December 2013, Nippon Piston Ring (NPR) converted its wholly owned valve seat manufacturing subsidiary in Yizheng, Jiangsu province, NPR Auto Parts Manufacturing (YiZheng) Co. ,Ltd. (NAMY), into a fifty-fifty joint venture with a Chinese piston ring manufacturer in Yizheng, Jiangsu province, Asimco Shuanghuan Piston Ring (Yizheng) Co.Ltd. NPR aims to expand its distribution channel for valve seats by utilizing the sales network of this local company. The joint venture was named as Yizheng NPR ASIMCO Powder Metallurgical Manufacturing Co., Ltd. With a total investment of USD 22 million, NPR aims to increase the number of employees to 300 and attain a monthly production capacity of 9 million units and revenues of CNY 300 million by 2016.
Hikari Seiko

To enhance engine components production capacity at Danyang plant

Hikari Seiko started production of engine components such as universal joints for Toyota-affiliated suppliers at Danyang Hikari Seiko Precision Co., Ltd. in Danyang, Jiangsu province (Source: Press release in July 2013). The company plans to invest a total of JPY 1 billion between 2013 and 2015 in its plants outside Japan including the U.S., China, and the Philippines. This investment aims to double its revenues outside Japan from JPY 4 billion in FY 2012 by 2017.
Primearth EV Energy

To start production of hybrid vehicle (HV) batteries in China

In November 2013, Toyota and Primearth EV Energy (PEVE) announced that they have established a joint venture for producing HV batteries, Sinogy Toyota Automotive Energy System Co.,Ltd. In 2015, an assembly plant for nickel metal hydride batteries is scheduled to be established with an annual production capacity for 110,000 HVs in the Changshu New and Hi-Tech Industrial Development Zone in Jiangsu province. The total investment will amount to USD 24.37 million. The new venture will be capitalized at USD 9.75 million, with 35% contribution by Toyota, 10% by PEVE, 5% by Toyota's Chinese holding company, and 50% by a Chinese investment company, Changshu Xinzhongyuan Business Investment.
Bridgestone

To enhance production capacity at its plant in Wuxi, Jiangsu province

In October 2013, Bridgestone announced its plan to enhance the daily production capacity by 5,300 units at its radial tire plant in Wuxi, Jiangsu province, Bridgestone (Wuxi) Tire Co., Ltd. The enhancement is expected to be completed in the lower half of 2016, resulting in a daily production of 22,600 units. The supplier plans to invest CNY 852 million in total.
Mitsubishi Electric

Aims at worldwide sales volume of 12 million electric power steering (EPS) motors

Mitsubishi Electric aims to increase its worldwide sales volume of EPS motors by 7% from 2013 to 12 million units in 2014. To achieve this goal, the company plans to promote production enhancement and investment in China, India, Europe, and North/South America (Source: Press release in October 2013). As part of its global strategy, the company established Mitsubishi Electric Automotive (China) Co., Ltd. in Changshu, Jiangsu province and started manufacturing EPS equipment and automotive multimedia products in May 2012. This plant is located on a 50,000-square-meter plot and capitalized at JPY 2.45 billion.
Yokohama Rubber

Production of passenger car tires enhanced for China and export demands

In January 2014, Yokohama Rubber announced its plan to establish an additional passenger car tire plant at SUZHOU YOKOHAMA TIRE CO., LTD in Suzhou, Jiangsu province. The plant is expected to start operations in April 2014 and produce 1 million tires in the first year. The supplier plans to expand this annual production capacity to 6 million units by the end of 2017. JPY 26.5 billion will be invested in total. The plant will produce fuel-efficient "BluEarth" tires for automakers and tires tailored for the Chinese market.

Truck&bus tires production line for Japanese market established in Suzhou

In January 2014, it was also reported that Yokohama Rubber will modify a part of the truck and bus tire production line at Suzhou plant from tube-type to tubeless tire production. With this production increase of tubeless tires for trucks and buses, the company aims to enhance its supply capacity within China and support export of tires to the Japanese market. Export to Japan will be supported only on a short-term basis, up to 2015 or 2016. The plant will receive an investment of JPY 100 million to JPY 200 million in its facilities. Currently, it produces about 1,000 tires for the Chinese market per day (with operation at 60% of capacity). Since 2014, 20% of the production volume is likely to be exported to the Japanese market.

 



Eastern China: Shanghai, Shandong and Fujian province

Shandong Province

Company Activities
Taiho Kogyo

To relocate engine bearing processing line from Japan to Yantai, Shanxi province

In 2016, Taiho Kogyo will start production of bearings for Toyota's low-price small engines at Taiho Kogyo Corporation of Yantai in Yantai, Shanxi province. One production line will be relocated to this plant from its Hosoya plant in Japan to reduce cost. The company aims to increase the monthly production volume from 30 million units in 2012 to 40 million units in FY 2015.
Toyota Industries

Starts compressor production in Yantai, Shanxi province

In December 2013, Toyota Industries announced that it has started operations at its joint venture in Yantai, Shanxi province, Yantai Shougang TD Automotive Compressor Co., Ltd. (YST). The venture produces automotive air conditioning compressors. A total of JPY 3.68 billion was invested in YST, with 50.1% contribution by Toyota Industries, 29.9% by Shougang Group, and 20% by Denso's Chinese holding company. In China, the company supplies compressors to automakers like Toyota, Honda, VW, Mercedes-Benz, and Ford. To cope with increasing demand from European and American automakers, the supplier plans to expand its annual production capacity from the initial 2 million units to 2.5 million units by FY 2016.
Nippon Gasket

To establish new production line for gaskets in Yantai, Shanxi province

Nippon Gasket aims to increase its annual sales of gaskets in China tenfold from the current level to over JPY 1.6 billion by FY 2016 (Source: Press release in December 2013). Previously, the supplier had been producing only exhaust manifold gaskets at Yantai Nippon Gasket Co., Ltd. in Yantai, Shanxi province. However, it has started local production of other products such as cylinder head gaskets to achieve cost reduction. The company is also installing a new production line to secure more orders, mainly from Toyota.

Fujian province

Company Activities
Ibara Seiki

To construct new plant in Fuzhou, Fujian province

Ibara Seiki will construct a new plant at Fuzhou Ibara Lioho Machinery Co., Ltd. in Fuzhou, Fujian province (Source: Press release in September 2013). The company will invest JPY 750 million for production of electric power steering components. The products are expected to be supplied mainly to Japanese automakers. A 6,900 square-meter plant will be built on a 12,000-square-meter plot.
Fuji Kiko

Establishes new base in Fuzhou, Fujian province to expand its market share

In September 2013, Fuji Kiko established Fu Chong (Fuzhou) Engineering Co.,Ltd in Fuzhou, Fujian province. The supplier aims to expand its share in China by starting to develop and sell mechanical parts for automotive seats and shifter components at the new local company. Fuji Kiko also intends to enhance its capability to develop products requested by Chinese automakers. The new company is capitalized at USD 500,000, with 70% owned by Fuji Kiko and 30% by Hsin Chong International Investment Co., Ltd. in British Virgin Islands.

Shanghai

Company
Activities
Nippon Steel & Sumitomo Metal

To add new production line to satisfy demands for lighter materials

In September 2013, Nippon Steel & Sumitomo Metal announced its plan to add a new production line for galvanized steel sheet for automotive use at Baosteel-NSC Automotive Steel Sheets Co., Ltd. in Shanghai. The subsidiary is the fifty-fifty joint venture with Baoshan Iron & Steel Co., Ltd. The new fourth line is capable of producing ultra-high-tensile steel materials. The new line will start operations in 2015, with an investment of CNY 1.1 billion. This line will produce 420,000 tons of galvanized steel sheet for automobiles per year. After the line starts operations, the annual production capacity at the whole plant will increase to 1.6 million tons.

 



Eastern China: Anhui and Zhejiang province

Anhui Province

Company
Activities
Ahresty

Starts production of engine blocks for Dongfeng Nissan

Ahresty's subsidiary in Hefei, Anhui province, Hefei Ahresty Casting Co., Ltd., received an order for engine blocks for the first time from the passenger car division of Dongfeng Nissan. The supplier started production and supply of these blocks in August 2013, which are to be mounted on 1,500 cc class vehicles.
Usui Kokusai Sangyo

Holds groundbreaking ceremony for new plant in Hefei

In August 2013, Usui Kokusai Sangyo 's Chinese subsidiary, Usui Pipe Systems (Hefei) Co., Ltd., held a groundbreaking ceremony for a new plant in the Hefei Economic and Technological Development Zone in Anhui province. The plant is scheduled to start production of steel tubes for transportation equipment in 2014.
TPR

To add cylinder liner production line

TPR will add a production line for cylinder liners for aluminum alloy engines at Anqing TP Goetze Liner Co.,Ltd. (ATGL) in Anqing, Anhui province within 2014. The supplier aims to increase the monthly production volume by 30% from the current 1.9 to 2 million units to 2.5 million units. The products will be supplied to Japanese, European, American, and local Chinese automakers.

To establish engineering plastic manufacturing base in Anqing, Anhui province

In January 2014, TPR announced its plan to establish a joint venture in Anqing, Anhui province with Anqing Huanxin Group Co., Ltd. (ARN) for manufacturing and selling industrial engineering plastic products. The new company, called Anqing TPR Engineering Plastic Co., Ltd., will produce plastic components for local automotive parts suppliers and general industrial plastic products as well. It will be capitalized at USD 2 million, with 60% owned by TPR and 40% by ARN. The operations are expected to start in April 2014.

Zhejiang Province

Company
Activities
Ogura Clutch

New cost reduction measures under way at its new plant in Zhejiang province

Ogura Clutch plans to start operations at its new plant, Ogura Clutch (Chang Xing) Co.,Ltd., in the Lincheng industry concentrated area in Changxing, Zhejiang province in April 2014. This will be the supplier's first plant to manufacture different types of clutches, for automotive air conditioners and for general industrial machines, in one location. The supplier intends to reduce operational costs by integrating its administration and logistics divisions for both applications.
San-En Kizai

Continuously variable transmission (CVT) components base to be established

San-En Kizai will establish a production base for CVT components in Zhejiang province jointly with a Japanese precision machining manufacturer. Supply to this manufacturer will start in spring 2015. In autumn of the same year, San-En also plans to establish a sales base in Guangzhou (Source: Press release in July 2013).
Tokai Rubber Industries

To consolidate procurement functions in each area to reduce cost

In September 2013, it was reported that Tokai Rubber Industries will establish general procurement bases outside Japan to reduce procurement cost of anti-vibration rubber and hose raw materials. Currently, each subsidiary outside Japan procures materials independently. To lower cost with scale expansion, the supplier has decided to consolidate procurement and information gathering functions in each area. In China, a procurement base will be set at Tokai(Zhejiang) Accounting & Corporate Management Co., Ltd. in the Jiaxing Economic and Technological Development Zone in Zhejiang province. Following this movement in China, the company will establish bases in ASEAN, American, and European regions globally by 2015, resulting in four bases in total.
Nisshin Steel Holdings

To produce special steel products for automobiles in China

At the end of 2015, Nisshin Steel Holdings will start production of special steel products for automotive parts at its joint venture, Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. This JV was established jointly with Marubeni-Itochu Steel and American Worthington Industries in the Pinghu Economic and Technological Development Zone in Zhejiang province. Gear and seatbelt materials products will be supplied to Japanese, European, and American automakers(announced in October 2013). The JV is capitalized at USD 124 million, with 55% owned by Nissin Steel, 35% by Marubeni-Itochu, and 10% by Worthington Industries. The total investment will amount to USD 248 million. The production capacity will be 120,000 tons per year.

 

Other activities in Eastern China

Company Activities
Pacific Industrial

Plans to build tire pressure monitoring system (TPMS) manufacturing plant

In February 2014, Pacific Industrial announced that it is considering establishing a Chinese subsidiary for manufacturing and selling TPMS in eastern China. The new company is expected to be established in May 2014, with an investment of CNY 87 million.



Central China: Hubei, Hunan, Henan Province

Hubei Province

Company Activities
Kasai Kogyo

Establishes capacity to supply 200,000 sets of door trims for Infinity

In November 2013, Kasai Kogyo established Dongfeng Kasai (Xiangyang) Automotive Trim Systems Co., Ltd. in the Xiangyang National New and Hi-Tech Industrial Development Zone in Hubei province for manufacturing and selling interior parts. This JV was established jointly with Dongfeng Visteon Automotive Trim Systems Co., Ltd. (DFV). It was capitalized at CNY 77 million, with 35% owned by Kasai Kogyo and 65% by DFV. The JV will supply door trims for the Nissan Infinity produced in China. In FY 2016, the supplier aims at an annual production capacity for 200,000 vehicles and revenues of CNY 500 million.
FALTEC

To produce plastic exterior parts and stainless steel moldings in FY 2014

FALTEC is now constructing a plant in an automotive supplier park near Nissan's Xiangyang plant. The plant will start production of plastic exterior parts, stainless steel moldings, and roof rails in FY 2014. The products will be supplied to Nissan, Honda, and other local plants. In 2012, the supplier established HUBEI FALTEC AUTOMOTIVE PARTS Co.,Ltd. in Xiangyang, Hubei province, with its 51% investment and remaining 49% by a Chinese automobile sales company, Guangdong TGPM Automotive Industry Group. FALTEC aims to triple its revenues in China from FY 2012 to JPY 8.6 billion in FY 2015.
Furukawa Electric

Announces to establish its sixth base in China in Wuhan, Hubei province

Furukawa Electric will establish an automotive wiring harness plant in Wuhan, Hubei province. This is its sixth base in China and scheduled to start operations in June 2014 (Source: Press release in December 2013). The supplier plans to invest JPY 1.4 billion in this plant and hire 700 employees. It aims to increase the local procurement ratio in China from the current level of 30% to 40% within 2014.
Yorozu

To enhance suspension parts production capacities within China

By summer 2015, Yorozu aims to enhance suspension parts production capacities at its Guangzhou plant, Guangzhou Yorozu Bao Mit Automotive Co., Ltd., and its Wuhan plant, Wuhan Yorozu Bao Mit Automotive. Co., Ltd, by 50%, respectively. The supplier will invest a total of JPY 3.5 billion in expansion of the buildings and facilities to cope with Nissan's and Honda's plan to increase production. The company aims to cover supply to the Nissan Dalian plant (in Liaoning province), which is scheduled to start operations in 2014, by enhancing the production capacity at its Wuhan plant (Source: Press release in December 2013).

Hunan province

Company
Activities
Pacific Industrial

To enhance processing capacity for ultra-high-tensile steel plates

Pacific Industrial will introduce large press machines of 2,500 to 3,000 tons in Japan, the U.S., and China. In China, this introduction will be made at Changsha Pacific Hanya Auto Parts Co., Ltd. in Changsha, Hunan province. The company will invest JPY 2.4 billion to introduce these facilities for processing ultra-high-tensile steel plates to its plants in the three countries (Source: Press release in November 2013).

Henan Province

Company Activities
UNIPRES

Establishes new base in Zhengzhou, Henan province

In August 2013, Unipres started operations at UNIPRES Zhengzhou Corporation in Zhengzhou, Henan province with an investment of JPY 5 billion. As of September 2013, the plant has 122 employees and is equipped with a 3,000-ton transfer press machine and a 600-ton blanking press machine. It produces body frame parts such as steering members and center pillars for Nissan's plant in China that produces SUVs and the Teana sedan. Unipres aims to gain revenues of CNY 1.5 billion from its Chinese business by 2015.

 

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