Yokohama Establishes Company to Control its Business in China

The Yokohama Rubber Co, Ltd, has announced that it will establish Yokohama Rubber (China) Co, Ltd, in Shanghai, China, to exercise overall control of business operations at each of its companies in China. Yokohama Rubber (China) will be capitalised at $30 million.

Yokohama Rubber has engaged in businesses in China through three production and sales companies: Hangzhou Yokohama Tire Co, Ltd (established in December 2001), producing and selling tyres for passenger cars; Yokohama Hamatite (Hangzhou) Co, Ltd (established in February 2004), producing and selling sealant for passenger cars; and Yokohama Hoses & Coupling (Hangzhou) Co, Ltd (established in December 2004), assembling and selling high-pressure hoses. As part of its further business expansion in China, Yokohama Rubber says it intends to establish a joint venture company to produce and sell conveyor belts in January 2006, and another joint venture company to sell tyres in April 2006.

Consequently, the company has now decided to manage its businesses with a holding company, which will oversee the entire business in China in the tyre and multiple-business (MB) markets, that is, businesses other than tyres, as well. By establishing a holding company, Yokohama Rubber expects to improve efficiency by integrating duplicate businesses among its companies and strengthening their functions, including sales promotion and marketing efforts.

The holding company will start by financing the new conveyor-belt and tyre joint ventures. Thereafter, it will invest in companies as they are established by Yokohama Rubber in China. At some point in the future, the three existing companies (mentioned above) will also be placed under the umbrella of the holding company.

Yokohama also founded Yamasei Automotive (Foshan) Co, Ltd, to produce automotive parts, including power steering piping, in South China, jointly with Toyoda Machine Works, Ltd, and Yamasei Kogyo Co, Ltd.

The new joint venture company will supply power steering piping to Toyoda-Koki Automotive (Foshan) Co, Ltd, which Toyoda Machine Works established in December 2004 to produce and sell automotive power steering systems. The joint venture will enter production this coming December.

Now that the new joint venture company has been established, it, together with Toyoda Machine Works and Yamasei Kogyo will supply automotive parts to Japanese automobile manufacturers in China starting in April 2006. The new company, in cooperation with Toyoda-Koki Automotive (Foshan), will also be able to meet the increasing demand for automotive parts in South China.

In addition to the more automotive related businesses, Yokohama Rubber (China) Co, Ltd will establish Shandong Yokohama Rubber Industrial Products Co, Ltd, in city of Weifang, Shandong Province, China. Shandong Yokohama Rubber Industrial Products will be capitalised at $9.7 million, 51 per cent of which will be invested by Yokohama Rubber (China), and 49 per cent by the Shandong Yuema Rubber Belt Co, Ltd, a Chinese conveyor-belt manufacturer.

In order to meet brisk overseas demand for conveyor belts, Yokohama Rubber decided to increase production capacity by producing conveyor belts in China. It then chose Shandong Yuema Rubber Belt Co, Ltd – a Chinese conveyor-belt manufacturer ranked sixth in total sales in China – as a joint venture partner in the production of Yokohama-brand conveyor belts in China, so as to increase their sales both in China and internationally. Immediately after the joint venture is established, it will begin capital investments to improve quality. Production of Yokohama-brand steel code conveyor belts will commence in June 2006, and fabric conveyor belts, in the Autumn of the same year.