KPM, Kayaba Establish Joint Venture Sales Companies in Japan and China

 Kawasaki Precision Machinery Ltd. (KPM), Kayaba Industry Co., Ltd. and Kawasaki have jointly established sales companies in Japan and China to explore the hydraulic equipment and systems market in China. The new joint ventures are KK Hydraulics Ltd. (Japan; paid in capital: ¥50 million, Equity ownership: Kayaba 50%, KPM 40%, Kawasaki 10%) established in April and KK Hydraulics Sales (Shanghai) Ltd. (China; paid in capital: US$400,000, Equity ownership: KK Hydraulics 100%) established in May 2004.

 KPM, a wholly owned subsidiary of Kawasaki, and Kayaba entered a tie-up agreement in February 2002 that specified extensive cooperation from product design/development to after-sales servicing. They have been conducting cooperative marketing that makes full use of their complementing strengths especially in the overseas marketing of hydraulic equipment and systems. The establishment of the sales companies is certain to further enhance the synergy between the two entities.

 The hydraulic equipment and systems market in China is expected to grow steadily, as the country has been enjoying rapid economic growth and buoyant land and urban development in recent years. Through the new sales company in China, the two partners will integrate their sales forces and after-sales servicing to carry out aggressive marketing for local construction machinery manufacturers. The new company in Japan will support the sales company in China primarily through management of its activities to improve the efficiency of sales activities and by acting as the contact point in integrating exports.

 The establishment of the sales companies will also serve as a basis for Kayaba and KPM to pursue proactive marketing in other hydraulic equipment and systems overseas.