Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in millions USD)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 Rate of Change (%) Factors
Sales 336.01 329.85 1.87 -Increased sales of newly developed products for North America;
-Continuing growth of automotive market demand in China
Operating Income 27.80 31.10 (10.61) -Fluctuations in currency exchange
rates had a negative impact.
Ordinary Income 27.06 49.84 (45.71) -
Net Income 25.49 47.90 (46.78) -


-The Company announced that its wholly owned subsidiary, Great Genesis Holdings Limited, entered into a definitive agreement to sell all of its equity interest in Zhejiang Henglong & Vie Pump-Manu Co., Ltd. (Zhejiang), to the Zhejiang Vie Group. The Zhejiang Vie Group is Great Genesis' joint venture partner in Zhejiang. Founded in 2002, Zhejiang is located in Zhuji City, Zhejiang Province and designs, manufactures and markets power steering pumps. According to the agreement, Great Genesis will sell its 51% stake in Zhejiang to the Vie Group for RMB 52 million. (From a press release, May 23, 2012)

New Company

-The Company announced that its Board of Directors approved the formation of a joint venture with SAIC-IVECO Hongyan Company ("SAIC-IVECO") to create a new manufacturing facility with the capacity to produce 200,000 power steering units a year for commercial vehicles in China. The new joint venture, named Chongqing Henglong Hongyan Power Steering Systems Co. Ltd., has registered capital of RMB 60 million and will be 70% owned by the Company. SAIC-IVECO will own the remaining 30% of the joint venture. The new company will be located in Chongqing City. (From a press release, January 5, 2012)

-On January 24, 2010, the Company invested USD 3.1 million to establish a joint venture company called Beijing Hainachuan Henglong Automotive Steering System Co., Ltd. The Company owns 50% equity in Beijing Hainachuan Henglong Automotive Steering System.

Major Contracts

-The Company's subsidiary, Jingzhou Henglong Automotive Parts Co., Ltd., entered into a multi-year agreement to supply the SAIC-GM-Wuling ("SGMW") joint venture with its high-quality rack and pinion power steering systems. The Company has commenced shipments, with the steering units intended to be installed primarily in SGMW's Wuling Hongguang brand, the best selling multi-purpose vehicle in China. Based on the rate of orders, the Company could supply approximately 350,000 steering systems to SGMW in 2013. (From a press release, May 2, 2013)


-On June 5, 2013, the Company won the Chrysler 2013 Supplier of the Year award in the Metallic category at the 2013 Annual Strategy Meeting and Supplier Awards Ceremony held at the Palace of Auburn Hills. It was the sole winner in the Metallic category. (From a press release, June 19, 2013)

-The Company won the 2012 Annual Chrysler China Regional Excellent Supplier Award at the Chrysler Excellent Supplier Award Conference in Xiamen, China. The Company also received Chrysler's second place award in the Global Metal Product Supplier category. (From a press release, January 30, 2013)


R&D Expenditure

-The Company's R&D spending in 2012 was USD 14.9 million, a 65.5% increase from the previous year's figure of USD 9.0 million. This increase in spending was mainly due to the development and trial production of electric power steering (EPS). Expenses for mold improvement increased by USD 2.8 million, external technical support fees decreased by USD 0.8 million, salary and wage expenses of research and development related staff increased by USD 2.5 million, and other developmental expenses increased by USD 0.2 million.

R&D Structure

-The Company owns a Hubei Provincial-Level technical center, called the Jingzhou Henglong Automotive Technology (Testing) Center, which has been approved by the Hubei Economic Commission. The center has a staff of about 345 employees that primarily focus on steering system R&D, testing, improvements in production processes, and new applications for various materials and production methodologies.

-The Company has partnered with Tsinghua University to establish a steering system research center, called Tsinghua Henglong Automobile Steering Research Institute, for the purposes of R&D and electric power steering experimentation.

-On January 28, 2013, the Company announced that its subsidiary Jingzhou Henglong Automotive Technology (Testing) Center Laboratory recently received national accreditation from the China National Accreditation Service (CNAS), making it the only such approved lab among power steering companies. (From a press release, January 28, 2013)

Technological Alliance

-The Company had or currently has the following technological agreements:
  • Bishop Steering: From 2006 to 2012, the Company had a licensing agreement with Bishop Steering Technology Limited, a leader in automotive steering gear technology innovation which offers advanced technology for steering valves. The agreement was not renewed in 2013 as the Company had the capabilities to develop its own steering valves.
  • Nanyang Ind. Co. Ltd.: The Company signed a technology transfer agreement with Nanyang Ind. Co. Ltd., a leading steering column maker, for the technology necessary to develop electronic power steering systems.
  • Korea Delphi Automotive: The Company signed a technology licensing agreement with Korea Delphi Automotive Systems Co., Ltd.


-The Company has over 85 Chinese patents.

Investment Activities

Capital Expenditure

(in millions USD)
Company Name FY ended Dec. 31, 2012 FY ended Dec. 31, 2011
Jingzhou Henglong Automotive Parts 14.47 8.46
Shashi Jiulong Power Steering Gears 3.12 6.97
Shenyang Jinbei Henglong Automotive Steering System 0.58 1.87
Wuhu Henglong Automotive Steering Systems 0.40 1.12
Hubei Henglong Automotive System Group (Formerly Jingzhou Hengsheng Automotive System) 2.07 0.60
Other Sectors (1) 1.07 1.01
Total Segments 21.71 20.03
Zhejiang Henglong & Vie Pump-Manu (2) 0.57 0.95
Eliminations (3.20) (5.80)
Total 19.08 15.18

(1) The companies in the Other Sectors category include Wuhan Jielong Electric Power Steering Co., Ltd.; Universal Sensor Application, Inc.; Chongqing Henglong Hongyan Automotive Systems Co. Ltd.; Beijing Hainachuan Henglong Automotive Steering System Co., Ltd.; Henglong USA Corporation; and CAAS Brazil's Imports & Trade in Automotive Parts Ltd.

(2) The Company sold all its equity interest in Zhejiang Henglong & Vie Pump-Manu Co., Ltd. to the Zhejiang Vie Group on May 23, 2012. The capital expenditure invested into Zhejiang Henglong & Vie Pump-Manu Co., Ltd. is still included in the Company's total capital expenditure for 2012.