Taiwan Vehicle-frame Maker Kian Shen Sees Big Market in China

Taiwan's Kian Shen Corp., a domestic manufacturer of chassis frames for automobiles and a major supplier of rear bodies for commercial vehicles in Taiwan, recently signed an agreement with Xiamen Golden Dragon Van Co. Ltd. To set up a 50-50 vehicle-frame joint venture in mainland China.

With a promised annual procurement volume of more than 7, 500 truck and bus frames from Golden Dragon, the new venture could become the top frame producer in the huge Chinese automobile market.

Kian Shen invested 20 million renminbi (RMB, or Chinese yuan) in the new joint venture through an overseas holding subsidiary. Construction of the new company's plant is scheduled to begin soon, and will be completed by the end of this year. The targeted first-stage annual capacity is 10, 000 vehicle frames.

Kian Shen says that Golden Dragon currently delivers about 10, 000 trucks and buses per year, and that in the future, about 75% of the frames Golden Dragon uses will be supplied by the new joint venture. In addition, the new company is also expected to win orders from vehicle makers affiliated with Golden Dragon, such as Xiamen King Long United Automotive Industry Co., Ltd. And King Long United Automotive Industry (Suzhou) Co. (Suzhou King Long).

Industry sources say that the Xiamen municipal government is seeking to establish an automobile production zone in the city, and has set up the Xiamen State Owned Assets Investment Corp. (SOAI) to welcome foreign investment and joint ventures in the zone. SOAI is also the major shareholder of Golden Dragon.

Mainland China's bus market is dominated by three companies, including Golden Dragon, Xiamen King Long, and Suzhou King Long. The latter two companies have been merged into Golden Dragon through government efforts.

Golden Dragon maintains a close relationship with Taiwan. Taiwan's Yulon Group (the largest automobile-manufacturing conglomerate in Taiwan and the parent group of Kian Shen) currently holds a 5.23% stake in Golden Dragon, while local Sanyang Industry Co., Ltd. (both a passenger car and motorcycle maker) acquired a 25% shareholding in Golden Dragon last year. Kian Shen is currently Taiwan's largest truck/bus frame maker with an annual capacity of about 10, 000 frames.

Kian Shen has cooperated with NTN Corp. of Japan-the world's second-largest drive-shaft maker-in setting up two constant-velocity joint (CVJ) production ventures in mainland China, including the Guangzhou NTN-Yulon Drivetrain Co. in Guangdong Province, and Beijing NTN-Seohan Driveshaft Co., Ltd. In Beijing. The two ventures currently supply CVJs to automakers in southern and northern China, respectively.

Golden Dragon was founded in 1992 as a joint venture between Xiamen Automobile Co. Ltd. And foreign investors. The company now employs about 1, 600 people. Golden Dragon currently produces eight series of vans and coaches, ranging from four to 12 meters in length and seating from five to 55 people.

Kian Shen's Profile
Establishment	1963
TSE-listed Date	1999
Plant Location	Yangmei, Taoyuan County (Northern Taiwan)
Capitalization	NT$553 million
Business Scope	Chassis, forging parts, vehicle frames, main beams, rear bodies, jigs and fixtures etc.
Major Shareholder	Yulon Motor, China Motor (Taiwan), Kuozui Motor etc.
Source: The company.