NTN Corp. (Japan; TSE:6472) has formed a joint venture to manufacture rail bearings in China.

NTN is joining with Beijing's CSR Nanjing Puzhen Rolling Stock Works; the joint venture company will be named Nanjing Puzhen NTN Railway Bearing Co. Ltd.

Located in Nanjing, the venture will take over an existing 9,000 square meter production and warehouse facility, eventually employing more than 200 workers.

Total capitalization is USD $7 million; NTN will own 60% and CSR Nanjing will own 40%.

NTN said the rail market in China is developing rapidly and the company needs to secure a production base for railroad bearings there. The joint venture company will manufacture and sell cylindrical roller bearings and components, strictly targeting just the Chinese rail market.

CSR Nanjing is critical to the equation because it is part of the CSR Group, which has a "close relationship" with the Chinese Railroad Ministry. CSR was set up in 2000 after China Locomotive & Rolling Stock Industry Corp. was separated and reorganized by the Chinese Ministry of Rail into CSR and CNR. It is a state-owned company directly controlled by China's central government with 27 total subsidiaries.

The new venture with NTN will supply, "high quality bearings to Chinese rail companies, by enhancing quality, cost and delivery incorporating NTN's technologies and CSR Nanjing Puzhen's production and sales capabilities."

First year sales are projected in the area of $6.6 million.