Japanese suppliers in China (Part 2): South/Central/Southwest regions

Suppliers increase production capacities, construct new plants, and enhance R&D functions

2015/11/19

Summary

 This report summarizes activities of Japanese parts suppliers in south, central, southwest regions in China during the nine months from January 2015 to early October 2015.

 In Guangdong Province, Japanese suppliers are expanding their production capacities at existing plants and establishing new companies as well as strengthening technical development centers. In Chongqing, Hubei Province, suppliers are enhancing their production facilities and establishing new companies as demand is expected to grow in the inland. Activities in Guangdong Province also include transfer of production of some products to Japan, following a weaker yen and rising labor costs in China.


South China
South China
Central and Southwest China
Central and Southwest China
Boost production capacity
(* Also produce new product)
Add production line and equipment Guangdong Province: Asahitec, Usui Kokusai Sangyo, H-One, JSP,
  and Nittan Valve
Hubei Province: H-One*, Kotobukiya Fronte (new plant in Dalian City), and Faltec*
Region yet to be disclosed: Nishikawa Rubber*
Expand building Hubei Province: Yorozu*
Establish new company/construct plant/start operations at plant Guangdong Province: Showa Denko (second plant, joint venture)
Hubei Province: NTN (third plant, joint venture), Calsonic Kansei,
  JSP (new plant also in Jilin Province), Tachi-S, and Yusei
Chongqing City: Nifco and Hitachi Automotive Systems
Strengthen technical development center (* Also develop new product) Guangdong Province: Kasai Kogyo* and G-Tekt*
Transfer production outside China Guangdong Province: Clarion


Japanese Supplier Reports:
* Japanese suppliers in China (Part 1): East/North/Northeast (Nov. 2015)
* Thailand (Sep. 2015)
* Europe (Aug. 2015)
* Mexico (Jun. 2015), Mexico and Brazil (Jul. 2015)
* Southeast Asia (May 2015), the U.S. (Mar. 2015)
* India (Nov. 2014)



South China, Guangdong Province: H-One, Kasai Kogyo, G-Tekt, Yorozu

Asahitec
To enhance production capacity for aluminum wheels
Asahitec will increase the production capacity for automotive aluminum wheels at Guangzhou Wheelhorse Asahi Aluminum Co., Ltd., a joint venture (JV) with Guangzhou Dongling Industry Group. The capacity will be enhanced from 4 million units in 2015 to 5 million units by the end of March 2017. Several billions of Japanese yen will be invested in this project. A half of the products will be exported to Japan and the rest will be supplied to local OEMs and Japanese automakers operating in China. In the future, the company also plans to expand its sales channel to Japanese automakers' plants in Europe and the U.S. (Source: a press release in July 2015)
Usui Kokusai Sangyo
To enhance production capacity for automotive tubes; tube materials also to be produced locally
Usui Kokusai Sangyo will increase the production capacity for brake and fuel tube assemblies for automotive bodies at Usui Automotive Part (Foshan) Co., Ltd. In the fiscal year ending in March 2020 (FY 2019), the capacity will be tripled from the FY 2014 level. Within 2015, the company will also start full-scale production of tube materials for the product at its plant in Hefei, Anhui Province to replace exports from Japan. The materials will be supplied to its final processing plants, including the one in Foshan. This will provide the company with a complete production system from material procurement to processing in China. In addition, two satellite plants for the product will be established near OEMs' plants for bending and other processing of tubes. After the establishment, the company will have six such plants in total in China. In FY 2018, Usui Kokusai Sangyo plans to double its total sales in this business in China from the FY 2014 level. (Source: a press release in July 2015)
H-One
Expands stamping capacity at Qingyuan plant
H-One introduced two 1,500-ton stamping machines and one 800-ton stamping machine at QH Auto Parts Industries Inc. and started operations in April 2015. The expansion was made to support the company's major customers' plans to increase production. JPY 2.7 billion was invested in this project. Through the expansion, H-One also aims to level its stamping loads in the Guangzhou region. In this region, the company also produces body frame components at GH Auto Parts Industries Inc.
Kasai Kogyo
Enhancing development center in Guangzhou
Kasai Kogyo is enhancing experiment facilities, such as thermo-hygrostat and aging baths, at its Chinese development center located within Guangzhou S.K. Automotive Interior Co., Ltd. The reinforced center is expected to start operations in fall 2015. The company also plans to increase the number of its development staff from about 30 in the middle of 2015 to 50 in the future. This will enable the Chinese development center to play a leading role in enhancing the design and experiment functions for products to be sold in the Chinese market.
Clarion
Shifts production of some products from Dongguan plant to Japan
Clarion transferred production of car navigation systems, display audio systems, and some cameras from Dongguan Clarion Orient Electronics Co., Ltd. to Japan. Production of these products started at its Japanese plant in May 2015. The shifted production volume, expected to reach hundreds of thousands of units annually, is a countermeasure against a weaker yen and a hike in labor costs in China. If the yen continues to decline further, Clarion will shift production of more items from China. (Source: a press release in July 2015)
G-Tekt
To strengthen development capacity in Guangzhou to develop parts for Chinese exclusive models
G-Tekt will be committed to enhancing its development capacity in Guangzhou, where the company has several plants. In addition to increasing the staff count, G-Tekt will also train local engineers in Japan. This is partly because the company has failed to win orders for Honda's global models. Every time a model is redesigned, it becomes harder for G-Tekt to receive orders as Chinese suppliers can produce parts simply by copying existing components. Under such circumstances, the company will be engaged in development of parts for Chinese exclusive models from zero to gain competitiveness and win more orders. (Source: a press release in February 2015)
JSP
To increase production capacity for foamed polypropylene beads by expanding production equipment at Guangdong plant
Between 2015 and 2016, JSP will expand its capacity to produce foamed polypropylene beads, partly by renewing production equipment at its Dongguan plant in Guangdong Province. To also increase its production capacity nationwide, a new plant of its local subsidiary in Wuxi, Changchun Branch (provisional name), will start operations in January 2016, followed by another new plant in Wuhan in January 2017.
Showa Denko
Sets up second Chinese plant for thermosetting bulk molding compounds (BMCs)
In July 2015, Showa Denko established Showa Eternal (Zhuhai) Co., Ltd. jointly with Eternal Materials Co., Ltd. in Taiwan. It was capitalized at JPY 1.19 billion, of which 70% is owned by Showa Denko and 30% by Eternal Materials. The new JV is expected to start operations in December 2016. Showa Denko decided to expand its supply capacity because of continued full production at its first Chinese plant in Shanghai, with its BMC sales in China showing a two-digit growth at an annual average.
Nittan Valve
To expand production capacity for engine valves at Guangzhou plant; also considering to construct new plant in mid-term
Nittan Valve will increase the number of engine valve production lines at Guangzhou Nittan Valve Co., Ltd. from 13 in mid-2015 to 15 by FY 2017. The company decided on the expansion to suffice increasing orders from its major customers, Honda and Hyundai Motor. Between 2019 and 2020 , Nittan Valve further plans to introduce three more lines and is considering construction of a new plant because the current plant has no additional space. Candidate sites include the area around the existing Guangzhou plant and inland China. (Source: a press release in August 2015)
Faltec
To expand production items at plants in Guangzhou City and Hubei Province to increase sales
Faltec will expand its production items of exterior parts, following new orders for stainless steel window moldings for large sports utility vehicles. The company will install large stamping and other machines at Faltec Canton Co., Ltd. (Foshan Faltec) to establish a new production line. The plant currently produces general window moldings for passenger cars. Its plant in Hubei Province will also start producing new items. With these expansions, the company aims to increase the total sales in China from JPY 7 billion in FY 2014 to JPY 15 billion in FY 2017.
Yorozu
To install large stamping machine at Guangzhou plant; also considering to construct third plant
In 2015, Yorozu is expanding the plant building of Yorozu Bao Mit Automotive Co., Ltd. to install one 3,000-ton stamping machine. The company is increasing the production capacity for ultra-high-tensile materials by 50% because their wider use is also expected for suspension parts. In its new mid-term management plan (from FY 2015 to FY 2017), Yorozu is considering to construct its third plant in China.

 

 



Central China, Hubei Province: NTN, Calsonic Kansei, Tachi-S, Faltec

H-One
To additionally install 3,000-ton servo stamping machine at Wuhan plant
H-One will install a 3,000-ton servo stamping machine at a stamping plant of WH Auto Parts Industries Inc. and will start operations in August 2016. JPY 1.7 billion will be invested in this expansion. This will enable the company to produce a wide variety of products using high-tensile materials. H-One also aims to further diversify its products and to support its major customers' plans to increase production.
NTN
New plant for constant speed joints in Xiangyang, Hubei Province starts production in April 2015
In 2014, NTN established a JV, Xiangyang NTN-Yulon Drivetrain Co., Ltd. It was capitalized at USD 34 million, with 60% owned by NTN and 40% by Yulon Group in Taiwan. The new plant is NTN's third plant for constant speed joints in China and started production in April 2015. NTN established the new plant due to continued full production at its existing plants in Guangzhou and Beijing, with no space left for expansion, under increasing new orders from Japanese, U.S., and European automakers. The company plans to achieve sales of JPY 14 billion in FY 2017.
Calsonic Kansei
To construct assembly plant for exhaust parts within Dongfeng Renault's plant in Wuhan
Calsonic Kansei will construct an assembly plant for exhaust parts within a new plant of Dongfeng Renault Automotive (Wuhan), which will start operations in 2016. The investment is expected to reach JPY 1 billion. Products will be supplied for Renault brand sports utility vehicles that share many components with Nissan cars. Dongfeng Renault Automotive has an annual production capacity of 150,000 vehicles.
Kotobukiya Fronte
To expand plant in Wuhan to increase production capacity for interior parts
Kotobukiya Fronte plans to expand its interior parts business, including floor carpets, in China to increase the sales by 55% to JPY 11 billion in FY 2016 from the FY 2014 level. At Wuhan Kotobukiya Automotive Interior Trim Co., Ltd., the plant building will be doubled in size to expand the production line for interior parts. The plant will start supplying to Dongfeng Renault Automotive in 2016.
JSP
To construct new plant in Wuhan to increase production capacity for foamed polypropylene beads
JSP plans to increase its production capacity for foamed polypropylene beads in China. As part of this plan, a new plant of JSP Plastics (Wuhan) Co., Ltd. will start operations in January 2017, with an annual production capacity of 3,000 tons. In total, JPY 1.2 billion will be invested in this plant. Furthermore, a new plant of its local subsidiary in Wuxi, Changchun Branch (provisional name), will start production in January 2016. And at its Dongguan plant in Guangdong Province, facilities will be renewed to enhance the production capacity. These will increase the company's total production capacity in China to 24,000 tons per year by 2017.
Tachi-S
New plant starts operations in Xiangyang, Hubei Province to expand business in China
In October 2014, Tachi-S started producing seats at a new plant of Tachi-S Lear DFM Automotive Seating (Xiangyang) Co., Ltd. In FY 2016, the plant is expected to produce seats for 110,000 vehicles. Around the same time, another new plant also started production in Dalian, 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 around 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.
Yusei
To start operations at new plant for lamp and airbag parts in Xiaogan, Hubei Province
In September 2014, Yusei established Hubei Yusei Plastic Moulding Co., Ltd. in Xiaogan, Hubei Province to produce lamp and airbag parts. This is the company's ninth plant in China and was established following business expansion into inland China by its customers. The new subsidiary was capitalized at USD 10 million and the plant is expected to start operations in September 2016. This will increase the company's total production capacity in China by 15%. Even after the plant starts operations, Yusei will continue to gradually install facilities to launch full-scale production in 2018.
Faltec
Starting to produce roof rails at plant in Hubei Province; also starting in-house parts processing
In fall 2015, Faltec is starting to produce roof rails at Hubei Faltec Automotive Parts Co., Ltd. in Xiangyang with newly installed production facilities. The company is also starting in-house processing of parts to add more value.
Yorozu
Installing large stamping machine at Wuhan plant; also considering to establish third plant
In 2015, Yorozu is expanding the plant building of Wuhan Yorozu Bao Mit Automotive Co., Ltd. to install one 3,000-ton stamping machine. The company is increasing the production capacity for ultra-high-tensile materials by 50% because their wider use is also expected for suspension parts.

 

 



Southwest China, Chongqing City: Nifco, Hitachi Automotive Systems

Nifco
Korean subsidiary sets up plant in Chongqing
In October 2015, Nifco's Korean subsidiary established Nifco (Chongqing) Co., Ltd. with a capital of CNY 19 million. 75% is owned by Nifco Korea Inc. and 25% by Nifco (HK) Limited. The new plant is expected to start operations in the fourth quarter of 2016 to produce interior/exterior assembly parts and fasteners. Products will be supplied to a new Chongqing plant of its customer, Beijing Hyundai Motor Co., Ltd., and other related parts suppliers. Construction of the customer's plant is expected to be completed in 2017, with an annual production capacity of 300,000 vehicles.
Hitachi Automotive Systems
To establish chassis parts plant in Chongqing in 2016
In 2016, Hitachi Automotive Systems will establish Hitachi Automotive Systems (Chongqing) Ltd. (provisional name) to develop its supply capacity in inland China. It will be capitalized at CNY 300 million (planned for 2017). The new plant is expected to start producing propeller shafts and steering systems in 2018. The amount of capital investment and the scale of business are yet to be disclosed. In the future, the company also aims to produce engine management systems at this plant.

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