Showa Denko to start car heat exchanger production in China

November 9, 2004 -- Showa Denko K.K. of Japan said last Friday it will make investment in a Chinese company which makes car heat exchangers for the Volkswagen Group and also provide technology to the Chinese firm. Showa Denko will acquire a 35 pct stake in Dalian-based Grand Ocean Auto Air Conditioning Engineering for an undisclosed amount of money.

Following the deal, Grand Ocean plans to boost its annual production capacity for heat exchangers to 650,000 units in 2007 from the current 250,000 units, and hopes to increase its sales to 5 billion yen in 2007 from 2 billion yen in 2003, Showa Denko said.

The Chinese company will be renamed as Ocean-Showa Auto Air Conditioning (Dalian) Co.

Showa Denko's financial and technological support for the Chinese company was in response to a request by the Volkswagen Group, which wanted to make up for Grand Ocean's inability to make products that meet requirements for use in the latest European models the German automakers plans to introduce in the Chinese market. Showa Denko supplies 2 million exchangers annually to the Volkswagen group in Europe and Mexico.

Showa Denko is also considering supplying heat exchangers to Honda Motor Co.'s Chinese manufacturing unit in Guangdong province, Senior Managing Director Tatsuo Sato said. If Showa Denko clinches such a deal with Honda, it is expected to build another plant.