China Kunda Technology Holdings Ltd. has entered into a memorandum of understanding to set up a joint venture to manufacture plastic automobile components in China.
The deal is between Kunda Mould (Shenzhen) Co. Ltd. and Beijing Baiju Electrical Appliance Co. Ltd. The companies plan to set up a $7.3 million joint venture to manufacture interior and exterior parts like glove boxes, wheel arch liners and air filter boxes, China Kunda told the Singapore Exchange, where its shares are traded.
China Kunda will contribute $4.17 million in cash for a 57 percent stake in the venture, which will be named Beijing Baiju Automobile Component Co. Ltd. China Kunda will appoint a chairman.
Beijing Baiju will own the remaining 43 percent and will contribute its existing production equipment and tooling. Beijing Baiju also will invest $3.14 million and appoint the general manager.
China Kunda is currently carrying out due diligence.
“China Kunda's experience in dealing with a host of well-known international automobile brands has given us the confidence to partner with them” in the venture, said Beijing Baiju General Manager Yu Nianfu.
“By injecting its diverse range of advanced plastic injection technology, such as double-shot injection molding, plastic air-intake manifold mold and low-pressure molds, the new [venture] will be able to compete for higher-value and higher-margin products from the existing base of customers,” he said.
Currently, Beijing Baiju supplies Beijing Hyundai Automobile Co. Ltd. through Tier 1 supplier Beijing Mobis Zhong Che Automobile Component Co. Ltd.
Beijing Hyundai is the fourth-largest automaker in China, measured by sales, and it aims to raise production capacity by 50 percent to 900,000 vehicles by end of 2011 when its third plant in Beijing is completed.
“The timing of the [venture] has also come at an opportune time for [China Kunda], as 2009 full-year automobile sales in China surged 46.2 percent to 13.6 million vehicles,” said China Kunda Executive Chairman and CEO Cai Kaoqun. “With the central government extending automobile subsidies by another year, there is renewed optimism that China will continue its lead as the top global automobile market in 2010.”
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