June 20, 2011
Furukawa Auto Parts (HK) Limited (hereinafter, "FAHK"), which is an investment company for China and a 100% subsidiary of Furukawa Electric Co., Ltd. and Furukawa Automotive Systems Inc. (Head Office: Koura-cho, Inukami-gun, Shiga Pref.) (hereinafter, the "Furukawa Electric Group"), has bought 15% of the equity interests of Chongqing Chanhua Automobile Harness Co., Ltd. (hereinafter, "Chanhua Automobile Harness"), which is a manufacturing base of wire harnesses and in which FAHK had made a 50% investment, from its joint venture partner, Chongqing Changan Automobile Co., Ltd. (hereinafter "Changan Automobile Electrics"), to raise the equity ratio of FAHK from 50% to 65%, and has acquired the managements right of Chanhua Automobile Harness.
We intend to establish the company's operation basis as soon as possible under the initiative taken by the Furukawa Electric Group, and expand the trade area of the automotive components business in the Huazhong region in China.
Background and purpose of the acquisition of the management rights
Since 2006, the Furukawa Electric Group has sought to expand its share of the Chinese automotive components market and increase its sales to Japanese car makers there by taking the initiative of facilitating the selection and concentration of bases in China by promoting the growth of the wire harness business and the integration of the wire harness business and the components business.
Chanhua Automobile Harness was established in 1996 for the purpose of the manufacture and sale of wire harnesses in the Huazhong region in China, in which the Furukawa Electric Group made equity participation via FAHK in 1997. We decided to obtain the management rights in order to take the lead in improving the QCDDM (note 1) of car makers (Changan Automobile Electrics Gr etc.) and to expand the trade area in the Huazhong and Southwest regions, where further growth is anticipated in future.
With the details agreed with Changan Automobile Electrics this time, our enhancement of the manufacturing base in each region, which has been underway since 2006, has almost been completed. We are now planning to bolster the cooperation between Furukawa Automotive Systems Design & Management Co., Ltd. (hereinafter "FACD"), which is the design and marketing company we established last year, and the manufacturing bases, thereby increasing sales to Chinese car makers as well as conventional sales to Japanese makers.
(Note 1) Acronym for Quality, Cost, Delivery, Development and Management. This is what car makers require from suppliers.
Outline of Chanhua Automobile Harness (before the acquisition)
| Head office | 58 Jianguo Jiangbei Chongqing |
| General Manager | Zhang Yong |
| Capital | 16 million yuan (approx. 200 million yen as of December 31, 2010) |
| Equity ratio | FAHK 50%, Changan Automobile Electrics 50% |
| Sales | Approx. 65 million yuan (approx. 810 million yen in fiscal 2010) |
| Number of employees | 342 (as of December 31, 2010) |
| Business description | Manufacture and sale of wire harnesses |
Outline of FAHK (former FGP)
| Head office | Units 1302-3 13/F PARK BUILDING, 476 Castle Peak Road, Hong Kong |
| Chairman | Fukuoka Kunio |
| Capital | 118 million HKD (approx. 1,290 million yen) |
| Equity ratio | Furukawa Electric Co., Ltd. 99.05%, Furukawa Automotive Systems Inc. 0.95% |
| Business description | Investment company |
Outline of Changan Automobile Electrics
| Head office | 58 Jianguo Jiangbei Chongqing |
| General Manager | Lu Tao |
| Capital | 24.4 million yuan (approx. 300 million yen as of December 31, 2010) |
| Equity ratio | Lu Tao 19.07%, Dai Hualiang 19.07%, Total of other individual shareholders 57.21%, Changan Automobile Electrics Labor Union 4.65% |
| Consolidated sales | Approx. 600 million yuan (approx. 7,500 million yen) |
| Business description | Manufacture and sale of car audio and other automotive components |
Outline of FACD
| Head office | Room MN 21F TEDA Building, No.256 Jiefang South Rd, Hexi District, Tianjin |
| General Manager | Sakamoto Kazuki |
| Capital | 90 million yen |
| Equity ratio | Furukawa Electric Co., Ltd. 60%, Furukawa Automotive Systems Inc. 40% |
| Number of employees | 8 (as of December 31, 2010) |
| Business description | Design, development and marketing of wire harnesses |
Furukawa Electric's automotive product bases in China (after restructuring)
