Shanghai MHI Engine JV begins operations

11 March 2013

Shanghai MHI Engine Co., Ltd has launched its new operation in the diesel enginemanufacturing sector. The company has been jointly established by Mitsubishi Heavy Industries and Shanghai Diesel Engine Co., Ltd. (SDEC), a notable Chinese diesel engine manufacturer. The joint venture aims to establish a solid position in the rapidly expanding Chinese market for industrial-use diesel engines by building up market share through more competitively priced products.

To celebrate the commencement of operation, Shanghai MHI Engine held an opening ceremony on 11 March at the company's site in the Yangpu District of Shanghai. Shanghai MHI Engine was established this February based on a JV agreement signed in March last year between MHI and SDEC and is capitalised at 200 million yuan (approx. 3 billion yen), with ownership divided equally between the two companies. It manufactures engines with power outputs in the 500 to 1600 kW range under a manufacturing and marketing licence from MHI. Exploiting MHI's proven technology in industrial-use diesel engines and SDEC's large domestic networks in procurement, marketing and after-sale services, the JV targets annual sales of 10 billion yen within several years and intends to boost this figure eventually to 20 billion yen.

MHI has for some time been seeking to build up its share in the rapidly expanding Chinese market, while SDEC has been looking to launch full-scale entry into the market for industrial-use diesel engines with outputs above 500 kW. In China, besides a rapidly growing diesel engine market, distributed power generation using natural gas as fuel is also expected to expand. However, because the Chinese authorities require a high level of local content for participation in this market, local production is indispensable. The new JV intends to enter this market in due course.

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