June 30, 2009
The Furukawa Electric Co. Ltd. (“Furukawa Electric”) and its Singapore-based partner in the automotive products sector in China since 1987 GP Industries Limited (“GPI”) have agreed that Chinese investment firm Furukawa GP Auto Parts (HK) Limited (“FGP”), which is currently financed 80% by the Furukawa Electric Group and 20% by GPI, will be incorporated into the Furukawa Electric Group as a 100% subsidiary. Furukawa Electric and GPI have also agreed to the sale and purchase of their shares in the following two companies.
- FGP's 50% share in Shanghai Jinting Automobile Harness Ltd. (“JAH”), a wire harness manufacturing base financed 50% by FGP, will be transferred to GPI affiliated company GP Auto Parts Limited (“GPAP”).
- GPI's 20% share in Changchun Furukawa GP Automobile Harness Co. Ltd. (“CFGH”), a wire harness manufacturing base financed 80% by the Furukawa Electric Group and 20% by GPI, will be bought by 100% Furukawa Electric subsidiary Furukawa Automotive Systems Inc. (“FAS”), making it a 100% subsidiary of the Furukawa Electric Group.
Details of restructuring
In an effort to expand its scope of operations within the Chinese automotive products market and increase sales to Japanese manufacturers, in 2006 Furukawa Electric began to restructure its operations in China by acquiring 30% of GPI's share in FGP, increasing its own share in the company to 80% and taking effective control of FGP. Since then, Furukawa Electric has been instrumental in expanding the company's wire harness business and integrating wire harness and automotive product operations and has pushed ahead with consolidation, reducing FGP's network to five bases in southern, northeastern and northern China (see attached sheet).
The new agreement with GPI is the second phase of restructuring started in 2006.
The incorporation of FGP as a 100% subsidiary, which will involve the acquisition of GPI's 20% share in the company by Furukawa Electric, is intended to speed up management decisions at companies and other manufacturing bases owned by FGP and pave the way for further restructuring.
Furukawa Electric had already decided to pull out of JAH when it began restructuring in 2006. As conditions of the transfer have now been agreed with GPI, Furukawa Electric will withdraw its involvement in JAH through FGP.
The incorporation of CFGH as a 100% subsidiary is aimed at establishing a cooperative relationship with Tianjin Jinhe Electric Engineering Co. Ltd., a manufacturing base in northern China run as a joint venture with an affiliate of Chinese auto manufacturer FAW, in an effort to expand the Furukawa Electric Group's scope of operations in northeastern and northern China.
Furukawa Electric's automotive product bases in China (after restructuring)
Outline of GPI
| Head Office | 1 Temasek Avenue #18-02, Millenia Tower, Singapore 039192 |
| Chairman | Victor Lo Chung Wing |
| Capital | 304 million Singapore dollars (approx. ¥19.7 billion) (as of the end of March 2009) |
| Sales | $189.7 million USD (approx. ¥18 billion) (FY2008) |
| Workforce | 3,500 employees |
| Business activities | Manufacturing and sale of audio products, batteries, wire harnesses and cables, light fitting products, LED screens, electronic components, etc. |
Outline of FGP (prior to acquisition)
| Head Office | Gold Peak Bldg. 7F, 30 Kwai Wing Rd, Kwai Chung, NT, Hong Kong |
| President | Kunio Fukuoka |
| Capital | 118 million Hong Kong dollars (approx. ¥1.45 billion) (as of the end of March 2009) Furukawa Electric (79.05%), FAS (0.95%), GPI (20%) |
| Business activities | Investment firm |
Outline of JAH (prior to sale)
| Head Office | 168 Shan Lian Road, Baoshan District, Shanghai, China |
| President | Wang Zechuan |
| Capital | 61 million yuan (approx. ¥850 million) (as of the end of December 2008) FGP (50%), Shanghai Dongchang Investment Development Co., Ltd. (25%), Shanghai Dongchang Automobile Parts Co., Ltd. (25%) |
| Sales | 807 million yuan (approx. ¥11.3 billion) (FY2008) |
| Workforce | 2,000 employees |
| Business activities | Manufacturing and sale wire harnesses |
Outline of GPAP
| Head Office | Gold Peak Bldg. 7F, 30 Kwai Wing Rd, Kwai Chung, NT, Hong Kong |
| Capital | 10,000 Hong Kong dollars (as of the end of March 2009) |
| Business activities | Investment firm |
Outline of CFGH (prior to acquisition)
| Head Office | No.7, Europe and American Industry Base, No.25 Pudong Road, Changchun, CDTDZ, China |
| President | Junichi Nakano |
| Capital | ¥300 million (as of the end of March 2009) Furukawa Electric (60%), FAS (20%), GPI (20%) |
| Sales | 65 million yuan (approx. ¥910 million) (FY2008) |
| Workforce | 150 employees |
| Business activities | Manufacturing and sale wire harnesses |