Layout of production facilities

-The Company established several production facilities in recent years. Up to now, the Company has already built facilities in Ningbo, Changchun, Chengdu, Tianjin, Foshan and Nanjing. Construction of the Shanghai production facilities already began. At the same time, the Company is implementing its plan to build facilities in Southern and Central China.

New Subsidiaries
Wholly owned subsidiary Established in the Foshan

-The Company announced that it will establish a wholly owned subsidiary at the Foshan Nanhai Economic Development Zone. The new company, Foshan Huaxiang Automobile Products Co., Ltd., will be capitalized at 7 million yuan, and investment in the project is expected to reach 15 million yuan. The company will design, produce and sell components to supply to FAW-VW’s Foshan plant. The new facility is scheduled to be completed and launch operations in 2013. (From an announcement by the company, September 20, 2012)

Establish subsidiary in Shanghai with Helbako GmbH
-The Company announced on September 4 that the company and Helbako GmbH of Germany will jointly establish a joint-venture company in Shanghai to design, manufacture and sell automotive electronic components and electronic systems. The new company (tentative name: Shanghai Huaxiang Helbako Automotive Electronic Co., Ltd.) will be capitalized at 4 million euros, of which 70 percent (2.8 million euros) will be invested by Ningbo Huaxiang Electronic and 30 percent (1.2 million euros) by Helbako. Total investment in this project is expected to reach 8 million euros. Helbako mainly produces electronic components for passenger vehicles. Its major customers are BMW, Mercedes-Benz, VW and Audi. (From an announcement by the company, September 4, 2012)

Wholly owned subsidiary Established in the US
-Ningbo Huaxiang Electronic Co., Ltd. is going to establish a wholly owned subsidiary in the U.S. to enter into the North American market. The company is intending to invest up to 10 million US dollars in the new entity, which will function as a liaison office to handle business acquisition and technological launches in the market. Also, expecting a strong potential for growth at its metal parts business, the Company will raise its shareholding in Huaxiang Car Muffler Changchun Co., Ltd. by acquiring an additional 4.48 percent share from a private shareholder for 76 million yuan. (From an announcement by the company, April 25, 2012)

Share transfer

-The Company and its wholly owned subsidiary, Shanghai Huaxiang Automotive Parts Co., Ltd., announced that the two companies have signed an agreement, under which Ningbo Huaxiang will transfer the following shares of stock to Shanghai Huaxian: a 75 percent share in Ningbo Huaxiang Auto Trim Parts Co., Ltd.; a 100 percent share in Gongzhuling Huaxiang Automobile Products Co., Ltd.; and a 100 percent share in Chengdu Huaxiang Automobile Products Co., Ltd. The transfer prices will be 25.1 million yuan, 50.8 million yuan, and 8.48 million yuan, respectively. Based on this agreement, Shanghai Huaxian is paying 30 percent of the amount within 10 days after the contract date, while paying the remaining 70 percent by December 31, 2012. The stock transfer is intended to establish a pyramidal business structure for the Ningbo Huaxiang facilities operating throughout China to enhance management efficiency. (From an announcement by the company, October 25, 2012)

Acquisitions

Acquiring additional 4.48% shareholding of Huaxiang Car Muffler Changchun Co., Ltd.

-Expecting a strong potential for growth at its metal parts business, the company will raise its shareholding in Huaxiang Car Muffler Changchun Co., Ltd. by acquiring an additional 4.48 percent share from a private shareholder for 76 million yuan. (From an announcement by the company, April 25, 2012)
 

-The Company is going to acquire a 30 percent share in Helbako, a Germany-based supplier of automotive electronic components. The company is investing 4 million euros in the project, of which 1.5 million euros will be spent for purchasing the shares and 2.5 million euros for increasing capital. Shares will be owned by NBHX Automotive System GmbH, a subsidiary of Ningbo Huaxiang Electronic, which will establish a joint-venture in China with Helbako immediately following the acquisition. (From an announcement by the company, June 29, 2012)

Business Expansion Projects

Operations Launch Announced
-Changchun Huaxiang Exhaust System Co., Ltd., a subsidiary of the Company, started operations at its new Chengdu Branch and the Changchun Plant No.2 on January 12, 2012. Approximately 120 million yuan was invested in the Chengdu Branch built on 8,000 square meters of land. The facility will produce mufflers for the New Jetta and other vehicles. About 105 million was spent on the Changchun Plant No. 2 with an area of 12,000 square meters. It will manufacture mufflers for the new Audi. The company is planning to establish an additional branch in Foshan, Guangdong Province. (From a press release, February 26, 2012)

R&D Facilities

-Ningbo City Auto Plastic Mould Provincial Level R&D Center
-Ningbo Huaxiang Auto Research and Design Institute
-Shanghai Huaxiang Auto Parts Design Co., Ltd.
-Ningbo Huaxiang Automotive Parts and Accessory Systems R & D Co., Ltd.

R&D Expense