Furukawa Electric Concludes Phosphor Bronze Strip JV Contract with AX, China

Furukawa Electric announced on Tuesday the firm concluded a joint venture contract with Anhui Xinke New Materials (AX), Chinese copper alloy fabricator. Along the contract, Furukawa Metal Wuxi (FMW), Furukawa Electric’s present 100% subsidiary to produce phosphor bronze strip in China, will become a joint venture company between Furukawa Electric and AX in November-December 2010. Furukawa Electric and AX will increase the new company’s capital fund by 1.25 billion yen at the same time. The new company targets to double the revenue in 2011 compared with 2009 by sales expansion to local users.

The new company, named Xinke Furukawa Metal (Wuxi) or XFMW, will be controlled by AX with 60% equity and Furukawa Electric with the rest 40% equity. XFMW’s capital fund will be 6.25 billion yen, higher than FMW’s 5 billion yen. AX will pay 750 million yen and Furukawa Electric 500 million yen for the capital increase. XFMW will have 200 employees, led by 3 directors from AX and 2 directors from Furukawa Electric.

XFMW aims higher cost competitiveness by enhancement of raw material procurement and utilization of local plant operating know-how. The new company also plans to increase the sales of volume-zone products to local users through AX’s bargaining power. XFMW tries to increase the annual revenue to 670 million yuan (approximately 8.4 billion yen) in 2011 from 320 million yuan (approximately 4 billion yen) in 2009.