Xugong products displayed at a recent machinery expo in Beijing. Xugong and its partner ArvinMeritor plan to invest $10 million more to expand their joint venture. [China Daily]
US automobile parts maker ArvinMeritor has said that it would channel the bulk of its investments to China over the next three years to capitalize on the demand arising from extensive infrastructure construction, said a top company official.
The Troy, Michigan-based company would also make considerable investments to grow its off-highway business in China, said its Asia-Pacific President Tim Bowes.
"Over the next three years, a majority of our investments would be in China, our biggest market in the Asia-Pacific region," said Bowes.
ArvinMeritor and its Chinese partner Xuzhou Construction Machinery Group (Xugong) are investing $10 million in their joint venture Xuzhou Meritor Axles Ltd (XMAL) in Xuzhou, Jiangsu province.
The US firm holds a 60 percent stake in the joint venture, and it is the biggest independent off-highway axle producer in China, with a 20 percent market share. It provides axle products for most of the major original equipment manufacturers.
"The investment reinforces ArvinMeritor's strategy to expand its off-highway business globally as well its long-term commitment to China," said Bowes.
The additional investment would boost XMAL's overall annual production capacity by more than 20 percent.
"The investment we are making in XMAL is the first phase of our strategic development plan that is expected to help us improve our off-highway manufacturing and product capabilities in China as well as support our efforts to grow this business in one of the largest off-highway markets in the world," said Bowes.
ArvinMeritor would decide the details of its second investment between March and April this year, after XMAL achieves its target of 20 percent capacity improvement.
China contributed nearly 58 percent of ArvinMeritor's revenue in the Asia-Pacific region.
"Off-highway and Asia-Pacific, particularly China, are two key areas of our company's overall growth strategy," said Bowes. "Therefore, it's our plan to continue to invest in the off-highway business in China."
China's off-highway market has seen huge demand of late due to the infrastructure construction spree triggered by the 4 trillion yuan stimulus package .
According to Bowes, the off-highway vehicle market is much larger than the passenger vehicle market, especially in emerging economies such as China and India.
The century-old company also plans to launch 50 new axle models and more global technologies in China over the next three years, and reinforce its local research and development capability.
The company has three manufacturing bases in the country, at Shanghai, Shiyan in Hubei province, and Wuxi in Jiangsu province.
