Japanese parts manufacturers in China: Increased production capacity at existing plants

Trends of companies including Alpine, Kasai Kogyo, Kobe Steel, Seiren, Jatco, and Toyota Industries

2016/08/30

Summary

Around Huanan
Around Huanan
Huazhong, Xin’an area
Huazhong, Xin’an area

 This report covers trends of Japanese parts manufacturers in China in a roughly seven month period from late October 2015 to July 2016.

 In 2015, 24.5 million automobiles were produced in China (year-over-year (y/y) increase of 3.3%), and automobile sales increased by 24.6 million vehicles (y/y increase of 4.7%). Tax-reduction measures that began in October 2015 reversed a decline and lead to an increase in sales. From January to June 2016, production volume was at 12.87 million vehicles (y/y increase of 6.5%), and sales were at 12.8 million vehicles (y/y increase of 8.1%), indicating stable growth.

 By vehicle, sales of SUVs, MPVs, and luxury cars are continuing to show rapid growth. Furthermore, new energy vehicles (such as EVs and PHVs) have almost doubled in terms of y/y growth partly as a result of government subsidies, with production between January to June 2016 at 177 thousand vehicles, and sales at 170 thousand vehicles. The Chinese government has announced it will extend its subsidization policy until 2020.

 Meanwhile, among Western automakers, GM has indicated it is pursuing an active expansion strategy, and is planning to increase its production capacity by one million or more vehicles by 2018. VW is being cautious with its plans to construct capacity for production of five million vehicles by 2019 due to market weakness in the first half of 2015, but is aggressively pursuing its new vehicle launch plans. Japanese OEMs are also increasing annual production capacity. Dongfeng Nissan has a long-term plan to expand production by 1.75 million vehicles at facilities such as its Dalian Plant. Toyota plans to increase its vehicle production capacity from approximately 1.05 million vehicles in 2015 to 1.13 million vehicles by 2018 through expansion production line expansion at its Tianjin and Guangzhou plants. In 2015, Honda’s third Guangzhou plant, which has an annual production capacity of 120 thousand vehicles, came online, increasing the OEM’s annual production capacity to 1.13 million vehicles. In 2017, there are indications Honda will start investigating the establishment of a third Wuhan plant, which it chose to pass on in 2015. 

 Additionally, Chinese automakers as well as their Japanese and Western counterparts are looking to step up activities related to new energy vehicles.

 Given these trends, Japanese automobile parts manufacturers are expanding their production capacity in order to support increased demand from Japanese, Western, and Chinese OEMs, as well enhancing supply systems and developing new business partners. Moreover, work to augment equipment and open new plants in order to produce new technologies as well as high-value-added products, such as parts for turbo vehicles, EVs, hybrids, weight reduction, environmental regulation support, safety, and onboard information equipment.



Around Huadong
Around Huadong
Around Huabei/Dongbei
Around Huabei/Dongbei

Trends among Japanese parts manufacturers in China

New production items at existing plants [Guangdong province] Jatco (newly developed CVT), Mitsui Mining & Smelting (catalysts for automobiles) 
[Jiangsu province] Calsonic Kansei (newly developed built-in oil coolers/warmers) 
[Shanghai, Jiangsu province] Shinmei Electric (automotive relays) 
[Hebei province] Kyowa Leather (olefin-based synthetic material)
Increased production capacity Expansion of production lines and facilities [Jiangsu province] Kobe Steel (wires for cold-coiled suspension springs), Teijin Frontier (base fabric for air bags) 
[Shanghai] Mitsubishi Heavy Industries (turbocharger cartridges) 
[Guangdong province] H-one (molds), TS Tech (seats: transferred to new plant), Marui Industrial (automatic coating line) 
[Hubei province] H-one (extra-high strength steel products: press machine), TS Tech (seat frames: introduction of new construction method) 
[Hebei province] Kyowa Leather (polyvinyl chloride: expansion of one line) 
[Henan province] Unipres (pressed parts)
Plant expansion, building expansion [Jiangsu province] Toyota Industries (compressors for air conditioners: new plant established and transferred), Mitsuboshi Belting (power transmission belts: second plant), U-Shin (key systems: new plant established and transferred) 
[Shanghai] Mitsubishi Heavy Industries (turbochargers: third plant) 
[Zhejiang province] Ogura Clutch (clutches for automobile air conditioners: exclusive plant established, Fujikura Rubber (plug covers: second plant)
New companies (plants) established, constructed/online [Anhui province] Yaskawa Electric (electric drive system for EVs: joint venture) 
[Jiangsu province] Kotani (high-performance springs), Panasonic Ecology Systems (catalytic filters for diesel exhaust gases), Primearth EV Energy (nickel-hydrogen batteries for HVs: joint venture) 
[Shanghai] Alpine (EV battery management system: joint venture), Pioneer (advanced driver assistance systems: joint venture) 
[Zhejiang province] JFE STEEL (small-diameter electric resistance welded steel pipes, etc.) 
[Hubei province] Kasai Kogyo (new production facility for ceiling interior materials), Keihin (new air conditioner), Koito Manufacturing (illuminators) 
[Hebei province] Seiren (seat materials, airbags) 
[Liaoning province] Panasonic (lithium-ion batteries for HV/EV: joint venture) 
[Region unknown] Yorozu (suspension parts: third facility)
Strengthening of business structure (joint ventures, sales structure, transfer and acquisition of companies, development facilities) [Hubei province] Chuo Spring (springs: joint venture made) 
[Shanghai] Sanden Automotive Components (electric compressors for PHVs and EVs: enhancement of sales expansion structure)
[Liaoning province] GS YUASA (lead-acid storage batteries: acquisition of a Panasonic subsidiary) 
[Beijing] FUJI OOZX (transfer of joint venture) 
[Region unknown] Nidec Elesys (development facility)
Shelving of capital investment [Guangdong province, Anhui province] Ahresty (engine parts: machining center)
Transfer of production to overseas [Nationwide in China] Sumitomo Electric (wire harnesses), TS Tech (trim covers): Chinese plants for both companies now specializing in domestic demand

Japanese Supplier Reports:



Trends in Huanan Guangdong province: H-one, Jatco, TS Tech, etc.

H-one Increasing mold production capacity at its Guangzhou Plant
H-one will increase its annual production capacity for molds at GH Auto Parts Industries Inc. from 81 units in 2015 to 205 units in 2017. H-one invested a considerable amount in 2015 to expand its buildings, and has installed a large pressing machine for test pressing. In the future, the manufacturer plans to introduce three new numerical control machine tools. Through handling machining in-house, which it previously outsourced, the company plans to reduce costs, as well as decrease development and manufacturing time. Furthermore, from 2016, the manufacturer has begun producing molds for creating parts with extra-strength high-tensile steel, and will send the molds to WH Auto Parts Industries Inc.
Jatco Production of newly developed CVT starts at the Guangzhou plant, plans for a second plant by 2020 also under consideration
Jatco began production of its newly developed transmission, the Jatco CVT7 W/R, at JATCO (Guangzhou) Automatic Transmission Ltd. from August 2015, and has supplied it to Dongfeng Nissan for use in the automaker’s new models. For the time being, the plant will strive to stabilize production and quality rather than increase production capacity. As of 2013, the manufacturer’s annual production capacity of CVTs was approximately 900 thousand units. However, while the company is aiming to become the global leader of automatic transmission manufacturers by 2020, it currently lacks the necessary production capacity to fulfill that goal, and is considering the construction of a second plant.
TS Tech Automobile seat plant moved to Guangzhou, production capacity expansion made possible
As part of Guangzhou’s urban development plans, TS Tech has moved the plant operated by Guangzhou TS Automotive Interior Systems Co., Ltd. to Guangzhou, where it went on stream in August 2016. A total of JPY 8 billion has been invested in the project. The initial annual production capacity is approximately 480 thousand units, leaving it unchanged from how it was before the move, but it can be expanded to 800 thousand units in the future. The new plant is located between the manufacturer and its delivery destination, the second Honda passenger car plant, which has increased logistical efficiency.
Marui Industrial Introduction of automated coating lines for radiator grills at the Guangzhou plant
Marui Industrial has installed automated coating lines for radiator grills at Swell Marui (Guangzhou) Automobile parts Co., Ltd., which came online in August 2016. With new orders coming from local OEMs, demand for grills is increasing, and by automating the coating process, the manufacturer plans to increase its production efficiency. While investment totals have not been disclosed, its initial monthly production capacity will range from 10 to 15 thousand units. Depending on future demand, it will further increase its production capacity.
Mitsui Mining & Smelting Automobile catalysts to be produced at Zhuhai motorcycle catalyst plant
According to its mid-term management plan until FY 2018, Mitsui Mining & Smelting will utilize its motorcycle catalyst production facilities located in Japan, the U.S., China, Indonesia, and India, and expand upon these five facilities to produce catalysts for automobiles. The Zhuhai plant, operated by Mitsui Kinzoku Catalyst Zhuhai Co., Ltd., will be expanded in order to acquire new clients.


Trends in Huazhong, Hubei province: Kasai Kogyo, Keihin, Koito Manufacturing, etc.

H-one 3,000 t servo press machines come online in July 2016 at the Wuhan plant
H-one has installed 3000 t servo transfer press machines at the pressing plant operated by WH Auto Parts Industries Inc., which came online in July 2016. Approximately JPY 1.7 billion has been invested in the project. The manufacturer is now capable of mass-producing a wide array of products using extra-high strength steel, and will move to differentiate its products. Additionally, in FY 2015, the manufacturer has also implemented next-generation automated welding robot lines in pursuit of reducing personnel and space.
Kasai Kogyo Establishment of a roof interior parts production company in Wuhan, plant scheduled to come online in July 2017
In June 2016, Kasai Kogyo established Dongfeng Kasai (Wuhan) Roof Trim Systems Co., Ltd. The company has capital of CNY 1500 (approximately JPY 250 million), and is wholly-owned by Dongfeng Kasai Dalian Automotive Trim Systems Co. Ltd., a joint venture with Dongfeng Visteon. The plant has been established due to new orders for roof interior parts from OEMs such as Dongfeng Honda, and is scheduled to come online in June 2017 with an annual production capacity of 200 thousand units. A total of approximately JPY 1 billion has been invested in the plant. Kasai Kogyo aims to have sales of JPY 1.5 billion in FY 2018. The plant has been positioned as a base for the roof business in China.
Keihin New plant in Wuhan for air conditioners goes fully on stream in March 2016
A new plant for Keihin’s subsidiary, Keihin (Wuhan) Automotive Parts Co., Ltd., located in Xiantao, Hubei province, and established in 2014, came fully online in March 2016, and began mass-producing new air conditioner units (HVAC). The new plant was constructed to support increased orders from Dongfeng Honda, and boasts an annual production capacity of 350 thousand units. Keihin’s annual production capacity of HVAC in China, in combination with the plant in Dongguan, Guangdong province that produces 500 thousand units, has increased to 850 thousand units.
Koito Manufacturing New plant in Hubei province begins producing illuminators in June 2016
Koito Manufacturing has completed construction of the new plant operated by Hubei Koito Automotive Lamp Co., Ltd. (Xiaogan, Hubei province), and began producing illuminators from June 2016 to support increased production by OEMs in the inland and Huazhong regions. The plant is expected to produce 350 thousand to 400 thousand units by the end of 2016. The plant space has an annual production capacity of 1 million units, and is capable of increasing production capacity for around the next five years.
Chuo Spring Subsidiary for automobile springs in Hubei province becomes joint venture
In March 2016, Chuo Spring increased its investments in its wholly-owned subsidiary, Xiaogan Zhongxing Automotive Components Co., Ltd. (Xiaogan, Hubei province), which manufactures springs for automobiles, to reinforce the subsidiary's financial structure. The total sum of the increased investments was acquired by Lioho Machine Works (China) Holding Co., Ltd., part of the Lioho Machine Works Group, making it a joint venture. The company now has a capital of CNY 75 million, with Chuo Spring holding an 80% stake, and Lioho Machine Works 20%. The company name has been changed to Xiaogan Chuhatsu Lioho Automotive Components Co., Ltd., and it will utilize Lioho Machine Works Group’s sales network in China to advance its sales promotion activities.
TS Tech Implementation of new collective welding method for seat frames at Wuhan plant
TS Tech developed a new method for welding seat frames, where several parts can be welded at once. Outside of Japan, following the second plant in the U.S. the equipment will be introduced to Wuhan TS-GSK Auto Parts Co., Ltd. in China. This new method will reduce manufacturing costs, as well as cut frame weight. The new frames will be used in Honda’s global vehicles.



Anhui province

Yaskawa Electric

Establishment of a joint venture with Chery Automobile Group for the production of EV electric drive system products
In June 2016, Yaskawa Electric established the joint venture Chery Yaskawa E-Drive System Co., Ltd. (Wuhu). The total registered capital is CNY 100 million. Yaskawa Electric has a stake of 40%, Chery Automobile’s subsidiary, Chery New Energy Automobile Technology Co., Ltd. (Wuhu) 45%, and Wuhu Construction Investment Co., Ltd. 15%. The joint venture will manufacture EV electric drive system products, and supply Chery New Energy Automobile Technology Co., Ltd., which manufactures electric vehicles, as well as develop for and supply the Chinese market with the support of the Wuhu city government.


Trends in the Huadong region: Kobe Steel, Toyota Industries, Alpine, Pioneer, Mitsubishi Heavy Industries, etc.

Jiangsu province

Calsonic Kansei Production of new built-in oil cooler/warmer products begins
In November 2015 Calsonic Kansei announced that Calsonic Kansei Components (Wuxi) Corporation had begun production of its new, thin LP-BOC, a built-in oil cooler/warmer (BOC) for transmission oil that will be supplied to Jatco. Calsonic Kansei’s total BOC production in FY 2014 was roughly 3.5 million units, but in FY 2016, the manufacturer expects to produce approximately 6 million units, including LP-BOC.
Kobe Steel Increased production capacity of wires for cold-coiled suspension springs
Kobe Steel’s secondary processing facility for special steel, Jiang Yin Sugita Fasten Spring Wire (Jiangyin), has added a new heat treatment facility and expanded related equipment. It will increase production capacity of wires for cold-coiled suspension springs from October 2016. The manufacturer will respond to increased demand for materials that are durable yet light on account of stricter environmental regulations. Monthly production capacity will increase from 650 tons in 2015 to 1070 tons in October 2016. Approximately JPY 570 million has been invested in the project.
Kotani Mass production of precision-forged parts to begin at new plant in November 2016
Construction of Kotani’s new plant operated by Kotani (Zhangjiagang) Precision Forging Co., Ltd., which was completed in November 2015, will begin mass production of precision-forged parts such as final gears for front-wheel-drive vehicle transmissions by November 2016. The plant is projected to have monthly production of 300 thousand units. Approximately JPY 3.5 billion has been invested in the project. The manufacturer invited representatives from Ford and Toyota, which it does not have business relations with, to the completion ceremony of its plant. Kotani has also intensified its sales activities to cultivate Western OEMs by utilizing an associated German company that it has a cooperative relationship with, as well as conducting sales with Hirschvogel.
Chita Kogyo Establishment of high-performance springs plant that went online in December 2015
In April 2015, Chita Kogyo established Chita KYB Manufacturing (Zhenjiang) Co., Ltd., a joint venture with KYB. The joint venture was capitalized at CNY 15 million. Chita Kogyo’s stake is 70%, and KYB’s stake is 30%. The joint venture has been manufacturing high-performance thin-leaf springs since December 2015, and supplies local Japanese manufacturers via KYB. Previously, high-performance springs were imported from Japan, but due to concerns that the manufacturer may not be able to respond to sudden increases in demand in China, it has established a new plant, and transferred partial production capacity from the plant in Japan. In the future, it will increase production capacity to meet increased production of high-performance and luxury vehicles in China.
Teijin Frontier Increased production capacity of air bag base fabrics at Nantong plant
Teijin Frontier has increased the number of dedicated looms at N.I. Teijin Airbag Fabric (Nantong) Co., Ltd., and will double its annual production capacity of air bag base fabrics to 7.5 million meters in order to absorb increasing demand from airbag manufacturers. Products will be supplied within China and exported to Thailand.
Toyota Industries Construction of new plant for compressors at Kunshan to increase production capacity
Toyota Industries constructed a new plant for air conditioner-use car compressors at TD Automotive Compressor Kunshan, Co., Ltd. to increase its production capacity, and held an opening ceremony in November 2015. All production equipment from existing plants has been moved to the new plant. Annual production capacity will be increased from 500 thousand units in FY 2015 to 1.5 million in FY 2016. The total investment (as originally planned) was CNY 357 million (approximately JPY 6.9 billion). 
Panasonic Ecology Systems New plant for catalyst-coated diesel particulate filters established in Suzhou
In November 2015 Panasonic Ecology Systems announced the establishment of a new plant, the Suzhou Branch, Panasonic Ecology Systems Guangdong Co., Ltd., which will produce a new type of catalyst-coated diesel particulate filters. Production began in December 2015, and the new filters have been supplied to engine manufacturers in China. In order to swiftly handle increasing demand, the catalyst powder will be produced in Japan, and coated in the DPF base material at the Suzhou plant. The plant will aim for sales of JPY 10 billion in FY 2018, when it will start full fledged business operations.
Hitachi Metals Established a joint venture for neodymium magnets in Nantong in July 2016, mass production scheduled to begin in March 2017
Hitachi Metals’ joint venture, Hitachi Metals San Huan Magnetic Materials (Nantong) Co., Ltd. has had its initially scheduled opening delayed from December 2015 to July 2016 due to a screening by the Chinese government, and the manufacturer announced it would postpone the mass production of neodymium magnets from December 2015 to March 2017. The magnets will be used for hybrid vehicles and industrial motors. The joint venture will maintain an integrated system from materials procurement to production and sales. Annual production capacity in FY 2017 is expected to be 1000 tons, and will double depending on demand. The manufacturer aims to have sales of JPY 10 billion in FY 2018. The total investment, including plant construction costs, was CNY 450 million (approximately JPY 9 billion). Hitachi Metals has a stake of 51%, and Zhong Ke San Huan 49%.
Primearth EV Energy Assembly plant for HV nickel-hydrogen batteries in Changshu comes online in fall 2015
In the fall of 2015 Primearth EV Energy began assembly of nickel-hydrogen batteries at its joint venture in Changshu, Sinogy Toyota Automotive Energy System Co., Ltd., and started supply for Toyota hybrid vehicles. Cell modules have been imported from Japan. The manufacturer has an annual production capacity enough to provide for 110 thousand vehicles. By the end of 2016, the plant operated by Corun PEVE Automotive Battery Co., Ltd. (Changshu) will come on stream, and full-scale local supply of battery modules will begin.
Mitsuboshi Belting Second plant in Suzhou comes on stream ahead of schedule in May 2016
While the second plant constructed by Mitsuboshi Belting on the premises of Suzhou Mitsuboshi Belting Co., Ltd., was scheduled to open in July 2016, it opened early in May of the same year, enabling the manufacturer to swiftly cater to increasing demand. The plant produces various power transmission belts for automobiles and general industrial equipment. The plant building has an area of 7,290 square meters (the first plant building has an area of 10,575 square meters). Approximately JPY 500 million has been invested into the second plant (excluding capital investment).
U-Shin New plant constructed in Wuxi to increase production capacity
Because U-Shin’s plant at U-Shin Access Systems (Wuxi) Co., Ltd. ran out of space, and was reaching the limit of its production capacity, the manufacturer established U-Shin Manufacturing (Wuxi) Co., Ltd. in March 2016, with capital of USD 30 million. The plant is scheduled for completion by 2017, and equipment from the existing plant will be transferred. The plant will support increased orders for door locks and key systems from western OEMs such as VW, GM, and PSA. The current plant’s sales for 2015 exceeded JPY10 billion, and the new plant is expected to have sales of JPY 17 billion yen in 2020.



Shanghai

Alpine

Joint venture commencing delivery of EV batteries within 2016

Alpine is developing an EV battery management system as the first business of Neusoft Reach Automotive Technology (Shanghai), a joint venture founded in November 2015, with plans to build the battery within 2016 and commence delivery to Chinese OEMs. They also plan to develop a system for EV sharing services as the second business. The company also aims to research and develop, and then commercialize fields such as high-tech driving support systems combined with sensors and image recognition, which are key technologies for automatic driving, cloud-platform based telematics, and connected-cars.
Sanden Automotive Components Preparation of sales network for PHV and EV electric compressors
Sanden Automotive Components predicts the spread of PHV and EV in China will increase sales for air conditioner electric compressors that don’t require power from engines. Through methods such as increasing the number of workers in the local company (Shanghai, Huayu Sanden Automotive Air Conditioning Co., Ltd.) the company will ready a sales network.
SHINMEI ELECTRIC CO., LTD. Starting production of automotive relays in 2 Chinese factories
Shinmei Electric Co., Ltd. will start production of power window relays in late 2016 at Shanghai Shinmei Electric Co., Ltd. and Taicang Shinmei Electric Co., Ltd. (Taicang, Jiangsu province). The two facilities are slated to produce a total of 1 million relays. Both facilities had previously mainly produced parts for home electronics, and will be now responding to orders from Japanese automobile parts manufacturers. Out of Shinmei Electric Co., Ltd.’s total JPY 6.7 billion sales for FY 2015, the sales of automotive products comprised JPY 800 million, and the company plans to increase these to JPY 1.2 billion in FY 2017.
Pioneer Cooperation with Chinese venture utilizing advanced driver assistance system technology
In November 2015 Pioneer reached agreement for its subsidiary China Shanghai Pioneer China Holding Co., Ltd. to conduct cooperative business with venture company Suzhou Tsingtech Microvision Electronic Technology Co., Ltd. concerning advanced driver assistance systems(ADAS) related technology. The venture company is affiliated with the Tsinghua University Suzhou Automotive Research Institute. The companies will co-develop a next-generational vehicle-mounted device with preventive safety area ADAS functions, and is aiming for release in 2016 or later. Consideration is being given to cooperative businesses in the field of automatic driving, starting from the 3D-LIDAR driving space sensor 3D-LIDAR Pioneer is developing.
Mitsubishi Heavy Industries Founding a third turbocharger plant in Shanghai expanding production capacity of cartridges in existing factories 
Mitsubishi Heavy Industries will increase the production number of turbochargers in China from 1.95 million in 2015 to 3.5 million in 2017. The company will found a third plant in Shanghai for this purpose. Approximately JPY 3 billion has already been invested in the Shanghai plant, and Mitsubishi will invest another 800 million by 2017. While production has been mainly for European and American OEMs, it is expected that there will be an increase in supply for Chinese OEMs as well.
The company estimates their global annual production capacity for turbocharger cartridges will reach 11 million by fall of FY 2016. Among these, 5.9 million will be consolidated in a Thai plant, and so a 1 million unit production increase in FY 2017 is planned due to factors including country risk, with an increase of 800 thousand units in Japan and 200 thousand in China. As a result of this, the annual production capacity of Shanghai MHI Turbocharger Co., Ltd. will increase from 800 thousand units in 2015 to approximately 1 million units. For the time being, the plant will focus on assembling cartridges, and the more difficult machining processes will be handled in Japan and Thailand.



Zhejiang province

Ogura Clutch Building new plant specifically for automobile air conditioner clutches
Ogura Clutch has constructed a plant specifically for producing automobile air conditioner clutches on the premises of Ogura Clutch (Changxing) Co., Ltd., which primarily produces general industrial clutches. The new plant is scheduled to come online between 2017 and 2018. Its building is the same size as the existing plant, and will have an annual production capacity of 1.5 million units, and will have a combined total of 1.9 million units with the existing facility. The plant will not only support rising demand in China, but also increased exports to Western countries. 
JFE STEEL Plant for small-diameter electric-resistant welded steel pipes and cold-drawn steel pipes comes online in July 2015
The plant owned by JFE STEEL’s joint venture, Jiaxing JFE Precision Steel Pipe Co., Ltd. (Jiaxing, Zhejiang province), which was established in June 2014, came online in July 2015. The plant produces small-diameter electric resistance welded steel pipes for automobile parts and construction equipment as well as cold-drawn steel pipes. It has a monthly production capacity of 2,000 tons, and supports increased demand from many parts manufacturers that have been established in the Huadong area. The joint venture has capital of CNY 96 million. JFE STEEL has a stake of 36%, Kawasaki Steel 15%, Marubeni-Itochu Steel 30%, and Taiwan’s Shuan Hwa 19%.
Fujikura Rubber Second plant constructed for spark plug parts in Anji, Huzhou
Fujikura Rubber has constructed a second plant for Huzhou Anji Fujikura Rubber Ltd. (Anji), and started producing plug covers for direct ignition systems in August 2016 to support demand from parts manufacturers that have advanced into the region. The plant will strengthen business as a dedicated plant for automobile parts. The building for the second plant is the largest of all domestic and overseas Fujikura Rubber plants, and will incorporate different materials and know-how than Japanese production methods in order to increase production efficiency and reduce labor.


Trends in Huabei region: Kyowa Leather, Seiren, Unipres

Hebei province

Kyowa Leather New production of olefin-based synthetic leather materials
Kyowa Leather will newly begin production of thermoplastic polyolefin membrane leather materials (TPO), which are lightweight and have low environmental impact, at Kyowa-GSK Plastics (Langfang) Co., Ltd., a firm that specializes in interior leathers. In response to increasing demand in China, the manufacturer installed specialized equipment in July 2016, and has begun production. This will be the first time the material will be produced overseas. For the time being, semi-finished products will be manufactured at the plant in Japan and sent to China to be completed at the plant there, which will be equipped for post-processes. The company plans to supply the material to Japanese OEMs first, and then to Chinese local OEMs as well. An additional line for polyvinyl chloride production will be installed at the plant, which is scheduled to come online in March 2017, for a total of three lines.
Seiren New plant for seat materials and airbags constructed, scheduled to come on stream in 2017
Seiren handles the cutting and sewing of seat materials at Seiren Hebei Co., Ltd. in Shijiazhuang, which was established in May 2015, and plans to construct a new plant near the existing plant that is scheduled to come on stream in 2017. Initially, the plant will focus on sewing seat materials, which it will take over from the existing plant, in order to meet increasing demand. Following this it will sequentially transfer equipment for airbag production from the plant operated by Seiren Suzhou Co., Ltd., and begin mass production in the following two to three years. The plant will reduce costs by manufacturing its products in the Hebei province, where labor cost increases have been moderate. The Suzhou plant will continue to produce seat materials, and retain its prototype development department. The initial investment in the new plant will be approximately JPY 3 billion. Additional investments will be made after examining demand trends. Products will primarily be supplied to Japanese parts manufacturers.



Henan province

Unipres Increased production capacity of pressed parts at Zhengzhou plant
Unipres will expand the building of its assembly plant next to its press plant at Unipres Zhengzhou (Unipres Zhengzhou Corporation), and install manufacturing equipment for pressed parts. The plant is scheduled for completion in November 2016, and will roughly double the manufacturer’s annual production capacity from 220 thousand units to 410 thousand units. CNY 44 million has been invested in the project. The manufacturer will support new orders from Dongfeng Nissan, as well as support increased production of orders for existing models.


Trends in Dongbei region: GS Yuasa, Nidec, Panasonic

Liaoning province

GS Yuasa Acquisition of Panasonic’s lead-acid storage battery business in Shenyang
In October 2015, GS Yuasa acquired Panasonic’s domestic and overseas lead-acid storage battery business, leading it to also acquire 95% of shares owned by Panasonic Storage Battery (Shenyang) Co., Ltd. (Liaoning province). GS Yuasa will accelerate production and sales of valve-regulated lead-acid storage batteries in China.
Nidec Extra production of automobile motors at Dalian plant
Nidec will make investments to increase production at its overseas plants for the expansion of its onboard equipment business. In FY 2016 Nidec invested approximately JPY 50 billion to enhance its plants in Mexico, Poland, India, and China. In China, Nidec (Dalian) Ltd. will focus on increased production of motors for use in automobiles, now that production of precision small motors has been fully transferred to Vietnam.
Panasonic Joint venture for the production of lithium-ion batteries for use in automobiles established in Dalian, production to begin in 2017
In February 2016, Panasonic announced the establishment of joint venture Panasonic Automotive Energy Dalian Co., Ltd., with Dalian Levear Electric Co., Ltd. to manufacture automotive secondary batteries. The joint venture has capital of CNY 273 million (approximately JPY 4.8 billion), with Panasonic China and Dalian Levear Electric sharing 50% stakes. From 2017, the company will manufacture lithium-ion batteries for use in environmentally friendly models such as hybrid and electric vehicles. Several billion JPY has been invested in the project.


Trends China-wide: Ahresty, JTEKT, Sumitomo Electric, Yorozu, etc.

Ahresty Capital investment planned for FY 2015 in China shelved
Ahresty cancelled its plans in FY 2015 to invest JPY 1.5 billion for a machining center. The reason for this is new vehicle market stagnation has lead to a decrease in demand for engine parts, which has resulted in excess installation capacity. In China, the manufacturer produces, processes, and assembles engine blocks at Guangzhou Ahresty Casting Co., Ltd. (Guangzhou) and Hefei Ahresty Casting Co., Ltd. (Anhui province), which are used by Great Wall Motor and Nissan and Honda group OEMs.
JTEKT Bearing plant in China reorganized by parts sizes
JTEKT will reorganize its three bearing plants in China by parts sizes through September 2016. Extra-small bearings for motors used in home appliances such as air conditioners will be handled at Koyo Bearing Dalian Co., Ltd. in Liaoning, and the production line for extra small bearings at the small bearings plant in Wuxi, Jiangsu province, will be transferred to the Dalian plant. The two plants in Wuxi, Koyo Automotive Parts (Wuxi). Co., Ltd., and Wuxi Koyo Bearing Co., Ltd., will specialize in middle and small bearings for automobiles. The same two plants will feature production lines transferred from the plant in Japan, and will primarily focus on tapered roller bearings used in transmissions. Additionally, the Wuxi plant will also enhance its production of needle bearings.
Sumitomo Electric Production of wire harnesses for Japan transferred to various countries in Asia, China plant to specialize in domestic demand
By the end of 2018, Sumitomo Electric will sequentially transfer wire harnesses produced in China for export to Japan to plants in Vietnam, the Philippines, and Cambodia, as well as Indonesia, which still has excess production capacity. In China the personnel expenditure ratio to production costs is now reaching high levels of 40% due to rising labor costs. The manufacturer will reinforce its price competitiveness by manufacturing its products in various Asian countries. The plant in China will focus on dealing with demand from local OEMs without reducing its capacity utilization.
TS Tech Production of trim covers for export transferred to Bangladesh, reorganization of Chinese plants scheduled
In October 2016, TS Tech will begin production of trim covers at its new facility in Bangladesh, TS Tech Bangladesh Limited. Consequently, trim covers manufactured at the plant in Ningbo, Zhejiang province will be targeted for the Chinese domestic market, and production for the U.S., Japan, and the U.K. will be transferred to the plant in Bangladesh. Ningbo FTZ TS Trimont Automotive Interior Inc. and Ningbo EPZ TS Trimont Automotive Interior Inc. are manufacturing trim covers in Ningbo. 
In China, in addition to seat plants in Guangzhou and Wuhan, TS Tech has several production facilities, and the manufacturer plans to reorganize these plants in FY 2016 to promote increased efficiency for its operations in China.
Nidec Elesys Development facility scheduled to open in China
Nidec Elesys plans to open a development facility in China that will also feature a testing course. Although the region the facility will be built in is currently unknown, its local subsidiary Nidec Elesys (Zhongshan) Corp. is located in Guangdong province, and produces ECUs for electric power steering and ABS.
FUJI OOZX Joint venture for engine valves transferred to a Korean company
In July 2016, FUJI OOZX announced that it would transfer its entire stake in Shinhan (Beijing) Automobile Parts System Co., Ltd., its joint venture with the major Korean telecommunications company Alticast Corporation and TRW Automotive J.V. LLC Group, to Alticast Corporation. FUJI OOZX’s business in China will be consolidated to its subsidiary Fuji Valve (Guangdong) Corporation, which became wholly-owned in 2015, and a structure for expanding sales will be established.
Yorozu Considering establishment of third production facility in China
Yorozu completed expansions of its plants in Guangzhou and Wuhan in 2015, and increased production capacity of suspension parts, allowing it to accommodate market expansion through 2018. However, future expansion may require the manufacturer to establish a third production facility, which will be considered during its mid-term management plan period that lasts until 2017.

<Automotive Industry Portal MarkLines>