Tong Yang, Hafei Auto set Up Plastic Auto Parts Venture In Mainland China

Taiwan's Tong Yang Industrial Co., Ltd. Recently signed a cooperation agreement with mainland China's Harbin Hafei Auto Manufacturing Co., Ltd. To set up a plastic auto body parts venture plant in Harbin, Heilongjiang Province, mainland China, according to industry sources.

Tong Yang is the largest plastic auto body parts maker in Taiwan, while Hafei Auto is an affiliate of the Hafei Group, headquartered in Harbin and a gigantic industry conglomerate with aerospace manufacturing as a start-up business. Hafei Auto's mini passenger car models are widely welcomed in mainland China and have a very high share of the huge mainland Chinese market. Hafei Auto and SAIC-Chery Automobile Co., Ltd. Are listed by mainland China's central government as the top two emerging automakers enjoying the fastest development.

The sources said that a group of ranking Hafei officials arrived in Taiwan to participate the signing ceremony. Tong Yang executives estimated that the investment amount of the new venture would not be less than US$20 million. Tong Yang refused to make further comments on the new venture due to high sensitivity.

Tong Yang is the second Taiwanese company to set up cooperation ties with Hafei Auto, following TYC Brothers Industrial Co., Ltd., a leading auto lamp maker in Taiwan.

Tong Yang also signed a cooperation agreement with Chang-Chun FAW-Sihuan Automobile Co., Ltd. Of mainland China, which produces Audi car models, late in 2002, to jointly set up a plastic body parts venture, the Changchun FAWER Tong Yang Plastic Co. Ltd. In Jilin Province, mainland China. The production facility of the venture, Tong Yang's second plant in northern China, is under construction.

TYC is also scheduled to sign an agreement with FAW-Sihuan to set up an auto lamp production plant in Jilin, also the local firm's second such plant in northern China following a previous one with Hafei Auto.

Industry sources said that Hafei Auto originally planned to independently set up a plastic body parts plant in Jilin but decided to team up with the more technology-advanced Tong Yang during its plant-construction period. The Hafei-Tong Yang venture would be a 50-50 venture, the sources said, and would be responsible for supplying needed plastic parts to Hafei Auto's auto production plants.

Tong Yang, in fact, began its mainland Chinese business deployment in 1994. In the past years, the Taiwan auto parts conglomerate has continuously invested a total of about NT$950 million (US$27.94 million at US$1: NT$34) to set up eight subsidiaries or ventures across the Taiwan Strait, including four plastic auto parts plants (excluding the latest with Hafei Auto), three coating plants, and one belt manufacturing plant. Currently, the Taiwan group is the largest supplier of plastic auto body parts in mainland China.

Tong Yang president Raymond Wu recently claimed that his group would continue to expand the production capacity at most of its mainland Chinese affiliates and set up another three plastic parts plants there by the end of 2005.

According to Wu, seven of Tong Yang's eight affiliates in mainland China together generated combined profit of 46.17 million renminbi in the first eight months of 2003, up 135.37% from the same period of 2002. Tong Yang said that its mainland business has been growing into major source of the company's profits.