NTN Corp. (Japan) is forming a joint venture with Kian Shen Metal Works Co. Ltd., a division of the Yulon Group (Taiwan), to manufacture and sell automotive constant velocity (CV) joints in China. The two companies already operate a similar venture in Taiwan, where Yulon is that country's largest automotive parts supplier.

This is NTN's third Chinese manufacturing venture announcement in less than a month. Until these announcements, NTN had no plants in China.

The latest move not only helps underscore the inexorable pull of China as a manufacturing base, but also the high expectations for the success of China's budding automotive industry.

In recent months, all of the world's major automakers have revealed initiatives to enter or extend manufacturing in China.

This joint venture, Guangzhou NTN-Yulon Drivetrain Co., Ltd. (China) will be set up by October 2002 in Guangzhou. NTN will contribute USD $6 million and Yulon $4 million, for a 60% - 40% ownership split. NTN will choose the company's Chairman, while Kian Shen will choose the President.

By June 2003, the new factory is expected to be online and employing approximately 70 people. Sales for the first year are forecast to be ¥ 1 billion or less. However, within two years sales should reach ¥ 3.5 billion and employment increase to 150 or more. Target production is 300,000 joints per month. All of the production is targeted to China's in-country automobile manufacturers; none is expected to be exported.

The new company claims to already have a contract in hand to supply Mitsubishi's China-built Pajero SUVs. In addition, the Yulon Group itself is a potential customer for its vehicle assembly plants in China.

NTN and Yulon both indicate this venture is valuable because it combines NTN's CV production expertise with Yulon Group's experience operating in China.