Yamaha revs up motorcycle sector
By Gong Zhengzheng (China Daily)
Updated: 2004-04-20 08:59

Japanese motorcycle producer Yamaha hopes an equity transfer deal inked last week will secure its leading role in the world's biggest motorcycle market.

Jianshe Group, which runs a joint venture with Yamaha, has paid 280 million yuan (US$33.8 million) in the deal to take a 50 per cent stake in the Japanese firm's other joint venture from its Chinese side, said Jianshe sources.

The China National South Aero-Engine Co and the China National Aero-Technology Import and Export Beijing Co had previously controlled 44.23 per cent and 5.77 per cent in the firm, which will be renamed Zhuzhou Jianshe Yamaha Motorcycle Co.

The joint venture, set up in 1993 and based in Central China's Hunan Province, has an annual production capacity of 120,000 motorcycles.

The original joint venture between Jianshe and Yamaha was created in 1992 and based in Southwest China's Chongqing Municipality.

Setting its sights on a leading role in the Chinese market, the Japanese firm is aiming to produce 1 million motorcycles in China annually by 2005 and 4 million by 2010.

Japan's two other motorcycle makers, Honda and Suzuki, have also used partnerships with local firms in order to secure a place in the Chinese market.

State-run Jianshe, which is hoping to expand as a result of the deal with Yamaha, is aiming to lift its annual sales to 4 million motorcycles by 2009 from 730,000 units last year.

It plans to produce 1.1 million motorcycles this year, becoming one of the industry's top three players.

Jianshe also has motorcycle plants in Shanghai and in South China's Guangdong Province.

Selling its stake in the joint venture with Yamaha to Jianshe will enable the China National South Aero-Engine Co to enlarge its core business - aero engine production.

"The merger is the result of these companies' strategic adjustments amid mounting competition in the domestic motorcycle market," said China Association of Automobile Manufacturers Deputy Secretary-General Du Fangci.

He explained that the fragmented state of China's motorcycle industry means that it badly needs such market-driven mergers to improve its competitiveness, despite the fact that the nation has been the world's biggest motorcycle maker for many years.

China currently has more than 120 motorcycle producers.

Motorcycle output in China reached 14.75 million units last year, a year-on-year increase of 8 per cent.

China's manufacturers last year exported more than 3 million motorcycles.

Jianshe, which started technical co-operation with Yamaha 22 years ago, exports motorcycles through Yamaha's overseas sales networks.

Jianshe, which is affiliated to the China South Industries Group - a State-owned weaponry firm, also produces auto air conditioning compressors and guns.

It aims to increase its annual sales to 16 billion yuan (US$1.93 billion) by 2009 from 3.1 billion yuan (US$374.39 million) expected this year.

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