Japanese suppliers in China (Part 1): East/North/Northeast regions

Suppliers set up new companies, launch new products, and enhance development capacities

2015/11/16

Summary

 In the January to October 2015 period, the Chinese automotive industry remained stagnant with a production volume of 19.28 million units, down 0.04% year-over-year (y/y), and a sales volume of 19.27 million units, up 1.5% y/y. A large decrease was observed in the commercial vehicle sector, while passenger cars showed a slight increase. By brands, those other than Chinese and Japanese resulted in a y/y decrease. Despite of such conditions, not only Japanese but also European, American, and Korean automakers have not revised their plans to expand their production capacities yet. However, Volkswagen is reviewing all of its investment plans to prepare for the influence of the diesel engine emissions scandal, which broke in September 2015. Most of the contents of this report are based on the assumption that Chinese automobile production continues to grow and thus may not be applicable in the future, depending on the subsequent sales and production conditions.

 To satisfy growing demands from European, American, and Chinese automakers as well as from Japanese OEMs, Japanese parts suppliers are also expanding their production capacities and development functions in China to enhance their supply networks and attract new customers. Many of these suppliers are expanding their facilities or establishing new companies to launch high-value products, such as those related to electric vehicles (EVs), hybrid vehicles, weight reduction, environmental regulation compliance, safety, and in-vehicle information devices.

 Some are also transferring their production to India or Japan, following rising labor costs in China and a higher Chinese yuan.

 This report summarizes activities of Japanese suppliers in the east, north, and northeast regions as well as nationwide during the ten months from December 2014 to early October 2015.

East China
East China
North/Northeast China
North/Northeast China
Boost production capacity
(* Also produce new product)
Add production line and equipment Jiangsu Province: Asahi Kasei Chemicals, Sekisui Chemical*, Taiho Kogyo,
  Toray Industries, Hibino Industry, and The Yokohama Rubber
Shanghai City: Exedy Corporation
Zhejiang Province: Aichi Steel
Add plant Jiangsu Province: Mitsuboshi Belting (second plant)
Tianjin City: Tsubakimoto Chain*
Establish new subsidiary/construct new plant/begin production
(* Also produce new product)
Jiangsu Province: Sumitomo Riko (joint venture), Hitachi Metals* (joint venture),
  Musashi Seimitsu Industry (second plant), and JSP (branch in Jilin Province)
Shanghai City: Alpine (joint venture) and Usui Kokusai Sangyo
Zhejiang Province: Usui Kokusai Sangyo and Central Glass* (joint venture)
Tianjin City: Suncall and GS Yuasa
Liaoning Province: Kotobukiya Fronte (plant expansion in Hubei Province)
  and Tachi-S (new company also in Hubei Province)
Region yet to be disclosed: Nissin Kogyo* (joint venture)
Establish/expand technology development center Jiangsu Province: Aisin Seiki (expansion)
  and Ichikoh Industries (division establishment)
Shanghai City: Toyoda Gosei (expansion)
Tianjin City: Stanley Electric (new company establishment)
Certified as contract developer/manufacturer Shanghai City: Pioneer
Transfer production outside China Shanghai City: Showa and JVC Kenwood


Japanese Supplier Reports:
* Thailand (Sep. 2015)
* Europe (Aug. 2015)
* Mexico (Jun. 2015), Mexico and Brazil (Jul. 2015)
* Southeast Asia (May 2015), the U.S. (Mar. 2015)
* China (Part 1): Southern, Central and Southwestern regions (Jan. 2015)
* China (Part 2): East/North/Northeast regions and overview (Feb. 2015)
* India (Nov. 2014)



East China: Aisin, Ichikoh, Toray, Musashi Seimitsu, Toyoda Gosei

Jiangsu Province

Aisin Seiki
To relocate and expand Chinese research & development (R&D) center
In December 2015, Aisin Seiki will complete construction of a new building of Aisin (Nantong) Technical Center of China Co., Ltd. in the Nantong Economic and Technological Development Zone. The new building will be established to relocate and expand its existing R&D center. In addition to the current evaluation facilities for body parts, the new building will also be provided with facilities for design, evaluation, and quality assurance for electronic devices and powertrains. A proving ground will also be built in the premises to cover entire processes from design to evaluation. The capital investments are JPY 1 billion for the new building and JPY 2 billion for the evaluation facilities.
Asahi Kasei Chemicals
Enhances capacity to produce hexamethylene diisocyanate (HDI)-based polyisocyanate used in urethane paints
In May 2015, Asahi Kasei Chemicals started operations of its No. 2 production facility for HDI-based polyisocyanate at Asahi Kasei Performance Chemicals Corp . The material is used for automotive urethane painting and other applications. The No. 2 production facility has an annual production capacity of 10,000 tons. Together with the No. 1 facility of the same capacity, the total capacity has doubled. In November 2014, another new facility also started producing polycarbonatediol (PCD), a general-purpose high-performance polyurethane resin material. The facility can produce 3,000 tons of the material per year. Through these expansions, the company has established a stable supply network in the Asian market.
Ichikoh Industries
Establishing door mirror development center in 2015
In December 2014, Ichikoh Industries converted its door mirror production subsidiary in Wuxi City, Wuxi Koh Sean Technology Co., Ltd., into its wholly-owned subsidiary. In 2015, the company is establishing a development center within this subsidiary. So far, development of door mirrors has been carried out within Japan, and the new center is the company's first development base outside Japan. While the company will continue to develop fundamental technologies in Japan, the new Chinese center will be engaged in application development. In about two years, Ichikoh Industries will establish design and development capacities in China to expand its sales of door mirrors in this country from JPY 7 billion in 2014 to JPY 10 billion by 2018.
Sumitomo Riko
Establishes joint venture (JV) to exclusively produce kneaded rubber
In August 2015, Sumitomo Riko established a JV in Jiangsu Province jointly with a Korean anti-vibration rubber manufacturer, Daeheung R&T. The new JV, named Daeheung SumiRiko Rubber Material (Yancheng) Co., Ltd., was capitalized at USD 8 million. 40% of the JV is owned by Sumitomo Riko and 60% by Daeheung R&T. The new plant is expected to start operations in June 2016. Both companies have many Chinese plants that currently produces kneaded rubber for automotive anti-vibration rubber and hoses. However, business expansion has required the two companies to enhance their production capacities, making them establish a new JV for exclusively producing kneaded rubber. The new JV is expected to ensure a stable supply to their group companies around China.
Sekisui Chemical
Starts producing sound-insulating films for laminated glass at Suzhou plant in April 2015
In April 2015, Sekisui Chemical started producing sound-insulating interlayer films for laminated glass at Sekisui S-Lec (Suzhou) Co., Ltd. The company decided to start local production because sound-insulating glass is being used in an increasing number of vehicles made in China. In addition to windshields, its applications have also been expanded to front-side windows and sunroofs, leading to a larger market scale. One of the two existing interlayer film production lines at the plant was converted to a production line for sound-insulating films. This high-value product will account for a half of the total production, which is for 6 million vehicles per year.
Taiho Kogyo
To enhance capacity at Changzhou plant that produces slide bearings for engines
Taiho Kogyo will gradually increase production of slide bearings for engines at Hengye Bearing Materials Co., Ltd. (Changzhou). By the fiscal year ending in March 2018 (FY 2017), an integrated automatic production line will be established to increase its monthly production capacity from 500 tons in 2015 to 700 tons. JPY 500 million will be invested in this expansion. Currently, the plant mainly produces bearings for diesel engine trucks and agricultural/construction machines made by Chinese manufacturers. In the future, the plant will be operated at a fuller scale to also produce products for Japanese automakers.
Toray Industries
Increasing production of airbag ground fabric at plant in Nantong, Jiangsu Province in 2015
In 2015, Toray Industries is increasing production of airbag ground fabric at Toray Polytech (Nantong) Co., Ltd. The average monthly production is being increased from 800,000 meters in 2014 to 1.2 million meters. The investment is expected to reach several hundred millions of Japanese yen. (Source: a press release in April 2015)
Hitachi Metals
To establish JV for neodymium-iron-boron magnets in Nantong, Jiangsu Province in December 2015
In December 2015, Hitachi Metals will establish a JV for neodymium-iron-boron magnets, Hitachi Metals San Huan Magnetic Materials (Nantong) Co., Ltd. It will be capitalized at CNY 450 million. 51% of the JV will be owned by Hitachi Metals and 49% by Beijing Zhong Ke San Huan Hi-Tech Co., Ltd., the largest producer of neodymium magnets in China. To expand its neodymium magnet business globally in the mid- to long-term, Hitachi Metals decided it necessary to establish a production capacity within China. The company will develop a complete production system with an annual production capacity of 2,000 tons to range from material procurement to manufacturing and sales. Initially, production is expected to start with an annual production capacity of 1,000 tons in December 2016. Products will be supplied for hybrid vehicles and industrial motors. The company plans to achieve sales of JPY 10 billion in FY 2017.
Hibino Industry
To increase production capacity at die-casting plant in Changshu, Jiangsu Province
By 2017, Hibino Industry plans to double the die-casting capacity at Hibino Casting (ChangShu) Co., Ltd. The company will gradually introduce die-cast and other machines to meet growing orders for steering and other parts from Toyota-affiliated parts suppliers, such as JTEKT. The investment will amount to JPY 500 million. Hibino Industry expects its 2017 sales in China to be doubled to JPY 4.3 billion from the 2014 level.
Mitsuboshi Belting
Constructing second plant at existing Suzhou plant
Mitsuboshi Belting is constructing a second plant within the premises of Suzhou Mitsuboshi Belting Co., Ltd. It will start operations in July 2016. The new plant will have a floor area of 7,290 square meters (that of the first plant is 10,575 square meters). JPY 500 million will be invested in this project, excluding facility investment. The company decided on the expansion to meet growing demands for various driving belts in the automotive and general industries. (Source: a press release in August 2015)
Musashi Seimitsu Industry
Second Chinese plant starts operations in Nantong, Jiangsu Province in September 2015
In September 2015, Musashi Seimitsu Industry started operations at Musashi Auto Parts (Nantong) Co., Ltd. The new plant was established to expand its supplies of differentials and suspension ball joints to European and American companies operating in the Shanghai economic area. As the production capacity has increased, the first plant, Musashi Auto Parts (Zhongshan) Co., Ltd., has substantially expanded exports of cast components used in differentials. This move is to meet rapidly increasing orders from European and U.S. manufacturers operating in North America. The company also intends to construct a third plant in inland China within five years.
The Yokohama Rubber
Expanding tire plant in Suzhou, Jiangsu Province
Yokohama Rubber plans to invest JPY 120 billion in the three years from 2015 through 2017 to expand its tire production capacity. The annual capacity will be increased from 68 million units at the end of 2014 to 74 million units by the end of 2017, and further to 89 million units by the end of 2020. In China, as part of this plan, an expansion is under way at Suzhou Yokohama Tire Co., Ltd. to increase its capacity. Yokohama Rubber is also considering to establish a new plant or expand another existing plant.

 

Shanghai City

Alpine
Establishes JV to develop and sell onboard technologies for EVs
In August 2015, Alpine established a JV, Neusoft Reach Automotive Technology (Shanghai) Co., Ltd. It was capitalized at CNY 384.6 million. 41% is owned by Neusoft, 39% by Alpine's local subsidiary, and 20% by Shenyang FullRich Enterprise Management Center. The new JV is engaged in development and sales of the following fields: important technologies of battery package management and intelligent charging for electric and other vehicles, important technologies of advanced driver assistance systems and autonomous driving, and telematics and other technologies.
Usui Kokusai Sangyo
To construct third tube plant in Shanghai and tube material plant in Zhejiang Province
Usui Kokusai Sangyo will enhance its tube production capacity in China by 2017. As part of this plan, the company will establish its third plant in Shanghai and transfer the production of high-pressure fuel tubes for gasoline direct injection engines from its existing plant in Shanghai to this new plant. Construction will start within 2015 and production will start in 2017 or later. JPY 2.2 billion will be invested in this plant. Construction of another new plant will also be completed in Jiaxing, Zhejiang Province in 2016 to produce tube materials for high-pressure fuel tubes for direct injection engines. Production increase is also being planned for plants in Guangdong Province. By FY 2018, the company aims to double its total sales in China from the FY 2014 level.
Exedy Corporation
To expand production capacity for torque converters for automatic transmissions (ATs)
Within 2015, Exedy Corporation will start expanding production facilities at Exedy Dynax Shanghai Co., Ltd. The expansion will increase its annual production capacity for AT torque converters by 1 million units to 2 million units. The company decided on the expansion to satisfy orders from multiple non-Japanese manufacturers that are trying to comply with a tighter environmental regulation in China.
Showa
Considering shifting production of rear shock absorbers to India
Following a higher Chinese yuan, Showa is considering to transfer production of rear shock absorbers from Shanghai Showa Auto Parts Co., Ltd. to Showa India Pvt. Ltd. in Haryana, India. The company plans to construct a new plant that will start operations in 2017. India was selected due to a weaker currency and the fact that materials can be procured locally. As for the existing plant in Shanghai, the new plant will export products worldwide.
JVC Kenwood
Shifting production of high-end car navigation products from Shanghai plant to Japan
Among car navigation systems produced at Shanghai Kenwood Electronics Co., Ltd. and its Indonesian subsidiary, JVC Kenwood is transferring the production of high-end products to its plant in Nagano, Japan. The Japanese plant will start producing these products as early as October 2015. The company decided on the transfer because the yen-dollar exchange rate has been stabilized at around JPY 120. Initially, the plant will produce 3,000 to 10,000 units of commercially supplied car navigation systems per month. Within several years, the company plans to develop a capacity in Japan to produce a half of the car navigation systems to be sold in the general market and as dealer options (450,000 units per year). This shift also allows JVC Kenwood to reduce disaster risks related to concentrated production. (Source: a press release in October 2015)
Toyoda Gosei
Opens technology development center in Shanghai in 2015
In January 2015, Toyoda Gosei relocated and expanded its regional headquarters, Toyoda Gosei (Shanghai) Co., Ltd., to reinforce its technology development functions in China. The total floor area is four times as large as the previous office. The center was provided with space for experiments and test equipment to complete evaluation of products (such as airbags and interior/exterior parts) and materials (such as rubber and plastic) locally in China. The investment is worth JPY 300 million. The company also plans to increase the number of technical staff by 50% to 50 in FY 2017 from the 2014 level.
Pioneer
Forms telematics alliance with Baidu to start supplying on-board equipment in November 2015
Pioneer China Holding Co., Ltd. in Shanghai has been certified as the first contract developer and manufacturer of on-board equipment supporting a telematics service provided by Baidu, the largest internet-related company in China. The service is called Baidu CarLife and provides traffic information and other content for car navigation and billing systems. In November 2015, Pioneer China will start shipping compatible on-board equipment to automakers in China. The company will also continue to study the possibility of partnership in various fields, ranging from connected cars to autonomous vehicles.

 

Zhejiang Province

Aichi Steel
To shift production of magnets for small motors from Japan
Aichi Steel is establishing a production line at its Chinese subsidiary, Aichi Magfine Technology (Pinghu) Co., Ltd., which produces magnets for small automotive motors. Production of magnets for the Chinese market will completely be shifted to this subsidiary by the end of 2015. Required facilities will be transferred from its Higashiura plant in Japan to this plant. The amount of investment is yet to be disclosed. (Source: a press release in April 2015)
Central Glass
To start producing electrolytes for lithium ion secondary batteries in 2016
In fall 2015, Central Glass will complete construction of a plant for electrolytes for lithium ion secondary batteries at its JV, Zhejiang Central Glass Chemspec Company Ltd. (CGCS). The plant will start production in early 2016 with an annual production capacity of 3,000 tons in the first phase. According to the company, the capacity can later be expanded up to 9,000 tons. Products will be supplied for electric and hybrid vehicles. CGCS was capitalized at JPY 1.59 billion, with 60% owned by Central Glass, 28% by Shanghai Chemspec Corporation, and 12% by Quzhou Chemspec Corporation.

 

 



North China: Suncall, GS Yuasa, Stanley

Tianjin City

Suncall
New ring gear plant in Tianjin starts operations in 2015
In August 2014, Suncall established Suncall (Tianjin) Co., Ltd. with a capital of JPY 340 million. This is the company's second plant in China, following the first one in Guangzhou. The new plant was established to produce ring gears used in transmissions. The plant started production in March 2015 with an annual production capacity of 1.7 million units. JPY 520 million was invested in this plant.
GS Yuasa
To construct large plant in Tianjin to consolidate production from existing plants
In 2016 or later, GS Yuasa will establish a new large plant equipped with state-of-the-art facilities to concentrate production from existing plants. The decision was made as the current facilities are old and space is cramped at its existing two battery plants, TianJin Yuasa Batteries Co., Ltd. and TianJin Tong Yee Battery Industry Co., Ltd. A production line will also be added at its plant in Guangdong Province. This will increase the company's total annual production capacity in China from 5.5 million units in 2014 to 9.5 million units in 2015, and further to 12 million units in 2018.
Stanley Electric
Establishes subsidiary to design and develop automotive lights in Tianjin
In August 2015, Stanley Electric established a wholly-owned subsidiary dedicated to design and development of automotive lights. With a capital of JPY 4 billion, the new subsidiary was established by separating the engineering division of Tianjin Stanley Electric Co., Ltd. (TSE). The subsidiary is in charge of designing and developing automotive lights and selling their data. It also designs, manufactures, and sells dies for lights. At first, the subsidiary supplies products to TSE and will start selling products to other plants in China in the future. Stanley Electric plans to achieve sales of JPY 2.7 billion in FY 2016.
Tsubakimoto Chain
Second Chinese plant in Tianjin starts producing timing chain drive systems in August 2015
In August 2015, Tsubakimoto Chain started production at the second plant of Tsubakimoto Chain (Tianjin) Co., Ltd., which is producing timing chain drive systems for automotive engines. The plant is the company's second plant for the product in China, following the one in Shanghai, and has doubled the company's production capacity in China. JPY 3 billion was invested in this plant. The new plant was established not only to meet increasing orders from Japanese, European, and American automakers but also to win more orders from Chinese OEMs. The plant is positioned as the main production base for timing system parts in the Chinese and Southeast Asian markets.

 

 



Northeast China: Kotobukiya Fronte, JSP, Tachi-S

Liaoning Province and Jilin Province

Kotobukiya Fronte
Starts producing interior parts at Dalian and other plants
Kotobukiya Fronte will expand its interior parts business, including floor carpets, in China to increase sales by 55% to JPY 11 billion in FY 2016 from the FY 2014 level. At Dalian Kotobukiya Automotive Interiors Ltd. (located within the Dalian plant of Dongfeng Nissan), full-scale production started in August 2015. And at a plant in Wuhan, the company plans to expand the existing production line for interior parts and start supplying them to Dongfeng Renault in 2016.
JSP
Local subsidiary in Wuxi establishing plant in Changchun, Jilin Province to produce foamed polypropylene beads
In January 2016, JSP plans to start producing foamed polypropylene beads at a new plant of Changchun Branch (provisional name) of JSP Plastics (Wuxi) Co., Ltd. The plant will have an annual production capacity of 1,200 tons. A total of JPY 100 million is being invested in the plant. Meanwhile, a new plant in Wuhan will start operations in January 2017 and facilities at its Dongguan plant in Guangdong Province will be expanded between 2015 and 2016. These will increase the total annual production capacity for this product to 24,000 tons by 2017.
Tachi-S
New plant in Dalian, Liaoning Province starts operations to expand Chinese business
In October 2014, Tachi-S started producing seats at a new plant of Lear DFM Tachi-S Automotive Seating (Dalian) Co., Ltd. The plant is expected to produce seats for 80,000 vehicles in FY 2016. Around the same time, another new plant also started production in Xiangyang, Hubei Province, which means that the company now has 12 seat-related plants in China.By FY 2017, Tachi-S will invest JPY 7 billion to enhance production facilities and a development center in China to increase its sales in this country from JPY 25 billion in FY 2014 to JPY 60 billion. At present, products are mostly supplied to Japanese OEMs, but the company aims to increase sales to Chinese automakers.

 

 



Throughout China: Nishikawa Rubber, Nissin Kogyo

Nishikawa Rubber
To start producing foamed plastic glass run channels in China and other countries outside Japan
Nishikawa Rubber currently produces foamed glass run channels that seal around door-window glass only in Japan. But in the future, the company will gradually start producing this product, which is lighter than conventional rubber ones, at its plants outside Japan as well. The company decided to start production in other countries because demands are expected from Japanese OEMs' plants outside Japan. Extruders and other equipment have already been installed at its plants in China and Thailand to start production within FY 2015. The company also plans to start production at its plants in Indonesia, India, and Mexico by FY 2017. The total investment is expected to reach JPY 1 billion (Source: a press release in August 2015). In China, Nishikawa Rubber has plants in Shanghai and Guangzhou.
Nissin Kogyo
Agrees with Autoliv to establish JV for automotive brake business
In September 2015, Nissin Kogyo announced that the company will establish a JV with Autoliv for automotive brake control and brake apply systems. The JV will cover the Japanese, U.S., Chinese, and Thai markets and 51% will be owned by Autoliv and 49% by Nissin Kogyo. Nissin Kogyo will utilize Autoliv's technologies for electronic control units and radar sensing to promote its development of advanced safety technologies. Also in the area of sales, the company will take advantage of the partner's customer network for global OEMs to expand its automotive brake business.

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