Jan 22, 2004
Kobelco Construction Machinery and Toyota Tsusho announce formation of joint venture to make excavators in Hangzhou, China

Kobelco Construction Machinery Co., Ltd. and Toyota Tsusho Corporation announced today that they established a construction machinery company called Hangzhou Kobelco Construction Machinery Co., Ltd. through joint equity participation with a Chinese investment company.

Outline of the New Company

Company name : Hangzhou Kobelco Construction Machinery Co., Ltd.
Location : Hangzhou Economic & Technical Development Zone, Hangzhou, Zhejiang, China
Capital : US$28.7 million (about 3 billion yen)
Equity : Kobelco Construction Machinery 51%, Toyota Tsusho 27%, Chengdu Jialixing Investment Co., Ltd. 22%
Date of establishment : December 30, 2003 (Operations to begin in March 2005)
Chairman : Keiji  Mori  (Kobelco Construction Machinery)
President : Akira  Kinoshita  (Kobelco Construction Machinery)
Business : Manufacture of construction equipment (hydraulic excavators)
Production capacity : 3,500 units per year
Land area : 300,000 square meters
Employees : 320 (in March 2005)

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.