Tong Yang seeks OEM expansion in China

TRENDS::The company plans to invest NT$3.1 billion in capital expenditures to change some plants from oil to more eco-friendly coatings to attract US and European clients

By Kuo Chia-erh  /  Staff reporter

Fri, Mar 09, 2018 - Page 12

Auto parts maker Tong Yang Industry Co (東陽實業) this year plans to ship electric cars parts to its brand clients, hoping to expand its original equipment manufacturing (OEM) business in China, a company official said yesterday.

“We will provide lightweight plastics components for some Chinese brands, such as NextEV (蔚來汽車) and GAC Mitsubishi Motors Co Ltd (廣汽三菱),” an investor relations officer said by telephone.

Those customized components are expected to drive the company’s sales growth in the foreseeable future, as autonomous cars and electric cars are trending in the global automobile industry, Tong Yang said.

Tong Yang, which entered the Chinese market in the 1990s, has 15 OEM plants and one aftermarket parts plant in China operated in collaboration with major Chinese car brands, including Guangzhou Automobile Group (廣汽集團) and FAW Group (一汽集團).

The company said it aims to meet rising demand in China’s OEM market by continuing capacity expansion through an alliance with Changchun Faway Automobile Components Co (一汽富維).

New plants in Shandong Province’s Qingdao and Hebei Province’s Tianjin are set to start mass production in the second quarter, each with an annual production capacity to supply components for 300,000 cars, Tong Yang said.

The Tainan-headquartered firm said it also expects the innovation center in Guangzhou, China, which became operational last year, to develop more products this year.

Tong Yang plans to invest about NT$3.1 billion (US$105.94 million) in capital expenditure this year, down from nearly NT$3.4 billion last year.

However, the company said it would consider raising its capital spending if necessary.

The company plans to change some of its production lines from oil coatings to more eco-friendly waterborne coatings, to attract more customers from the US and Europe.

The company’s sales decreased 7 percent year-on-year to NT$1.75 billion last month, as the Lunar New Year holiday meant fewer working days.

However, its aggregate revenue for the first two months of the year rose 5 percent annually to NT$3.98 billion, company data showed.