SWEDEN'S Volvo Construction Equipment will double its investment in a Chinese joint venture to almost US$90 million over the next three to four year, the world's leading construction product maker said in eastern China's Shandong Province today.
The company pledged to double the registered capital of its Chinese joint venture in Linyi City, Shandong, from the current US$48 million to boost the firm's overall production capacity.
Part of the added investment will help Shandong Lingong Construction Machinery Co, which sold 70 percent of its stake to Volvo CE on January 20 this year, to double production capacity of wheel loaders by 2010, Volvo CE said on the one year anniversary of the Chinese venture.
The purchase, costing 327.5 million yuan (US$40.9 million) for Volvo CE, was a significant move to fulfill the company's strategy to increase its presence in emerging markets around the world, Keith Ellis, president of Volvo CE (China) Co Ltd, said in previous reports.
Lingong's sales revenue hit two billion yuan last year, giving the company an 11 percent share of China's market, the world's biggest wheel loader market.
Money will also be used to expand the venture's product portfolio, including production of backhoe loaders and road machines, which now make up only five percent of Lingong's overall production, over the next four years.
Lingong, a company of 1,800 employees, now enjoys a total annual production capacity of 15,000 pieces of equipment and Volvo expects the figure to jump to 30,000 in the assigned period.
Volvo CE, a subsidiary of Volvo Group, sells construction products, spare parts and services in more than 125 markets around the world with over 166 facilities open in North America, Europe and Asia.
In 2003, Volvo CE spent US$24 million to set up a wholly owned subsidiary in Shanghai's Jinqiao area.