Chin Fong Machine Enters Joint Venture With Japan's IHI

Chin Fong Machine Industrial Co., Taiwan's largest producer of pressing and forging machines, has signed an agreement with Ishikawajima-Harima Heavy Industries Co. (IHI), Japan's biggest producer of heavy machinery, to establish a joint venture-company in the central Taiwan city of Changhua.

The agreement, which was signed on Nov. 5, calls for the partners to invest an initial 100 million Japanese yen to set up the IHI-Chinfong Press Engineering Co. (ICPE), with Chinfong putting up 30% and IHI the rest. The new venture will carry out research and development, design, and marketing operations for the two sides.

The project is to be implemented in three stages. In the first stage, the two partners will work together in vying for international orders and carrying out technology transfer. In the second stage, ICPE's paid-in capital will be boosted to between 400 and 500 million yen to finance a plant for making small and medium-sized pressing machines in Taiwan. In the final stage, paid-in capital will be further upped to one billion yen in order to expand production to include large pressing machines.

Chin Fong officials say that the project will help them acquire manufacturing technology from their Japanese partner, enabling them to turn out 6,000-ton pressing machines, costing NT$300 million (US$8.82 million at NT$34:US$1) each, used in the production of large sheet-metal auto-body parts.

The agreement-signing ceremony was held at Chin Fong's Changhua headquarters, with Chin Fong's chairman C.B. Chi and IHI's CEO and president Mototsuge Ipo jointly presiding. The event was attended by Deputy Economics Minister Shih Yen-shiang, Changhua County Magistrate Weng Chin-chu, Taichung Harbor Bureau Director Hsieh Ming-hui, and Taiwan Association of Machinery Industry (TAMI) chairman Fred P.C. Huang, along with some 100 industry leaders.

At the signing ceremony, Deputy Minister Shih predicted that Taiwan, which is the world's fifth-largest machine-tool maker, would see the value of its machine-tool production grow 15% this year, to NT$70 billion (US$2 million).

The 150-year-old IHI, a manufacturer of engines for jet airplanes and ships, power generators, pressing machines, and air compressors, among others, has annual sales of about US$8.8 billion. It maintains cooperative relations with several state-run enterprises in Taiwan, including Taiwan Power Co., China Steel Corp., and China Shipbuilding Corp.

Chin Fong chairman Chi said that ICPE would be positioned as a global logistics center for the partners, and that the plant for the production of large-sized pressing machines would be built in the Taichung Harbor area.

"Our cooperation will enable each side to complement the other," Chi noted, "because we focus on the production of pressing machines with a capacity of less than 2,400 tons while our Japanese partner concentrates on heavy-duty pressing machines of more than 6,000 tons. In addition, IHI has promised us that it will bring in cutting-edge technology for the production of sophisticated pressing machinery, which will help Taiwan's heavy-machinery industry."

Chi went on to describe his new partner: "IHI is a large firm with a product line that covers many kinds of components and heavy machines for many industrial sectors. Headquartered in Yokohama, it has expanded its production facilities into mainland China and, now, has decided to set up a joint-venture plant in Taiwan.."

Chin Fong itself was established 56 years ago and specializes in the production of mechanical presses, crank presses, knuckle-joint presses, and high-speed pressing machines. It operates two plants in the Changpin Industrial Zone in Changhua County; in recent years it has expanded overseas by setting up a production subsidiary in Ningbo, Zhejiang Province, mainland China; establishing the Stametec Co. in Tennesses, the United States; and acquiring the Smikura Co. of Japan.

Company officials say that Chin Fong's Ningbo plant can turn out many kinds of pressing machines to fill the needs of the booming auto industry in the mainland. They report that the plant racked up sales of RMB200 million (US$24 million) in the first 10 months of this year, and estimate that its sales for the whole year will reach RMB240 million (US$29 million). This is double the figure for 2002.