Cargotec and RHI establish joint venture in China1 August 2011
Cargotec has announced it is planning a joint venture with one of its Chinese suppliers, Jiangsu Rainbow Heavy Industries (RHI), to further establish its products in China’s lifting market.
Under the agreement, the joint venture will produce ship-to-shore cranes, rubber-tyred gantry cranes, rail mounted gantry cranes and marine speciality cranes for global delivery.
The two companies have an existing relationship as RHI supplies Cargotec with a range of products including cargo cranes and hatch covers.
The products will initially be sold globally, however Cargotec expects a strong growth in domestic demand for its products to increase its market share in China.
Cargotec’s equity investment is valued at €30m and it will hold a 49% stake in the joint venture.
Cargotec also intends to strengthen its alliance with RHI by purchasing shares in RHI’s holding company, China Crane Investment Holdings, from an equity fund managed by private equity firm Carlyle Group.
With a €50m investment Cargotec will own 49% of China Crane Investment Holdings, which in turn currently owns 18.75% of RHI’s total shares.
These transactions will be subject to regulatory approval, after which the joint venture will begin operations in early 2012.
Mikael Mäkinen, president and CEO of Cargotec, explained: "This joint venture between Cargotec and RHI would be a strategically important step for Cargotec to expand its presence and offering as well as to improve competitiveness in China. RHI's local presence, knowledge and experience, combined with Cargotec's technology competences, access to global markets and established brand, offer the joint venture an excellent position in the market and enable close cooperation with customers in Asia-Pacific."
RHI chairman Wu Jian added: “A joint venture with Cargotec would provide us access to global markets and remarkable growth. By joining forces we create a company that is expected to be a significant player in the market with a globally competitive product portfolio."