Completion of the Shanghai Plant enables further development of car electronics business. Improved earning capacity as a result of doubled production capacity and vertical integration with the plant in Japan.
Kenwood Corporation (President & CEO: Haruo Kawahara, Head Office: Hachioji, Tokyo) announced the construction of the plant of Shanghai Kenwood Electronics Co., Ltd., a subsidiary of Kenwood, has been completed today, August 8, as scheduled. Shanghai Kenwood Electronics has been expanding its plants since January to increase production in response to an increased demand for car electronics OEM related products.
Shanghai Kenwood Electronics, which was established as a joint venture in June 1994 between Kenwood Corporation, SVA Information Industry Co., Ltd. (Shanghai) and SHOWREX Ltd. (Hong Kong), became a wholly-owned subsidiary of Kenwood Corporation in August 2003. As one of Kenwood's core plants, since then Shanghai Kenwood Electronics has striven to enhance various manufacturing functions including procurement of goods, production and quality assurance by implementing the "Production Innovation" initiative.
Following the positioning of the car electronics operation as Kenwood's core business, as a result of the structural reform in the fiscal year ended March 31, 2003, Shanghai Kenwood Electronics shifted its major production items from home electronics to car electronics products. As a core plant of components for car electronics, including DVD mechanisms and visual products such as DVDs, Shanghai Kenwood Electronics has made significant contributions to strengthening the competitive edge and promoting the growth strategy of the car electronics OEM and car multimedia businesses (consumer businesses). In the car electronics OEM business, in particular, it has furthered vertical integration with the Nagano Plant (Kenwood Nagano Corp.) and gradually taken over the production of DVD mechanisms from the Nagano Plant, to produce a stable supply of components for car electronics products (completed products) manufactured in and shipped from the Nagano Plant, while at the same time contributing to substantial growth of the DVD mechanism operation as an independent OEM business. Orders for car electronics products as a whole, including car multimedia and DVD mechanisms, showed a tendency to increase further, which urgently required an enhancement of facilities to accommodate a significant expansion in the scale of production, in order to further develop the car electronics OEM business, and this resulted in the construction of the Shanghai Plant.
The completion of the new building has approximately doubled the previous floor area of Shanghai Kenwood Electronics, and a system for increasing production has been put in place, with a view to having an annual DVD mechanism production scale of 1 million units, which is more than twice the present production capacity. From now on, Shanghai Kenwood Electronics will endeavor to increase the profit-earning capacity of its car electronics business by coping with demand growth, including orders from new customers, and further promoting vertical integration with the Nagano Plant, in order to improve productivity and significantly reduce processing costs.
In addition, Shanghai Kenwood Electronics will increase its presence in China by liaising with the growing Chinese automobile industry to open production and sales bases, in order to expand the business even further.
Overview of the new building
Full view of the Shanghai Plant (the two-story section on the right is the new construction)
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Updated August 15, 2005 (C) 2005 Kenwood Corporation