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China's construction equipment market is being supported
by strong demand arising from the rapid increase in infrastructure
investments and this market is growing steadily. Demand is
forecast to continue expanding in the medium to long-term
future.
As a proactive response to increasing demand for construction
equipment, Kobelco Construction Machinery and Toyota Tsusho
signed a basic agreement on September 10, 2003 for joint development
of the construction machinery business in China. Following
that decision, the two companies established an investment
company in November 2003 called Kobelco Toyota Tsusho Construction
Machinery Holding Asia Co., Ltd. to make strategic investments.
The two companies, together with the privatized holding company,
Chengdu Kobelco Construction Machinery Group Co., Ltd., began
considering areas of business expansion for the middle to
long-term future.
To strengthen their production capabilities in China, the
companies reached a formal decision to establish a plant,
the second one for Kobelco, in Hangzhou, Zhejiang, where demand
for construction equipment is particularly strong in the coastal
areas.
Plans call for Hangzhou Kobelco to begin operations in March
2005. Meanwhile, Kobelco's first hydraulic excavator joint
venture, Chengdu Kobelco Construction Machinery Co., Ltd.,
is increasing its production capacity. By 2007, the two production
facilities are anticipated to have a total, combined production
capacity of 7,000 excavators per year (or 3,500 units per
plant).
Kobelco Construction Machinery and Toyota Tsusho intend to
further their cooperation by building marketing and service
networks; mutually utilizing logistics and procurement networks;
and sharing business know-how and information. Aiming to move
into the top group of China's excavator market, the two companies
intend to grow the joint-venture's business.
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