Mitsubishi Heavy Industries (MHI) has signed a joint venture agreement with Qingdao Jieneng Steam Turbine Group of China, a major manufacturer of small steam turbines. The two companies will jointly establish Mitsubishi Heavy Industries Jieneng (Qingdao) Steam Turbine, a marketing and design unit for small and medium-size steam turbines and marine-use steam turbines.
Through establishment of the joint venture, MHI "aims to strengthen its competitiveness in a quest to expand its global market share." The new company is slated to begin operation in March 2013.
The joint venture will be capitalised at 31 million yuan (USD4.9 million), with MHI holding a 51 per cent equity stake and Qingdao Jieneng the remaining 49%. The head office will be located in the city of Qingdao in Eastern China.
The joint venture will handle marketing and design of below-10MW marine steam turbines.
Through the deal, MHI plans to license pertinent turbine technology to Qingdao Jieneng Steam Turbine Group, as well as pursue the sales expansion of the turbine manufactured by Qingdao Jieneng.
MHI has been looking to fortify its global business structure to attract more orders and at the same time evade currency exchange risks. Qingdao Jieneng, meanwhile, has been seeking expansion into markets for medium-size steam turbines and marine-use steam turbines. The intentions of the two companies thus intersected and led to the formation of the deal.
Qingdao Jieneng is a well-established turbine manufacturer founded in 1950. The company manufactures approximately 500 units annually, mostly small steam turbines below 60MW. It has some 2,300 employees, is focused on steam turbines for use in factories and power generation, and enjoys a considerable market share. It also enjoys a healthy presence in Asian markets, especially Indonesia and India.
Going forward, the joint venture will introduce globally competitive products into Asian markets, leveraging the combined capabilities in development and manufacturing of its two parent companies, and conduct aggressive marketing activities.
MHI intends to optimise on its new joint venture as a way of expanding market share. MHI also plans to maintain and further develop its solid collaborative relationship with Qingdao Jieneng while fully supporting the new company's business development.
