An MOU is signed with the Singapore-Suzhou Industrial Park to purchase land for a plant expansion project.

Doosan Infracore has been accelerating its steady advance into the Chinese market. Increasing demand for its locally-made products has prompted the company to sign an MOU with the Singapore-Suzhou Industrial Park to purchase a 240,000m2 site for a new plant. Doosan Infracore China Co. (Suzhou) was also established to settle the land purchase deal.
  Meanwhile, Doosan Infracore is striving to lead every Chinese market segment in which it is involved. The vision calls for making China the “second home market in the construction sector” and to “lead the infrastructure support business (ISB) in China.” The goal is to average 38% annual growth in China and achieve W3 trillion (over US$3 billion) in sales by 2010.
  The first step in this ambitious quest has been to establish a holding company (Doosan Infracore China Investment Co.) in Beijing. The China business continues to diversify and grow more complex. Therefore, a China-based unit that understands local market conditions intimately is needed to oversee local operations and make key decisions on strategic projects such as new acquisitions.
Doosan Infracore management realizes that the company’s advance in China must be accelerated if the annual sales goal of W3 trillion is to be reached by 2010. Therefore, DICI is tasked with uncovering new business areas within the ISB industry and with seeking out M&A opportunities. Indeed, this business expansion is essential for the China vision to be realized.
  DICI has already hired M&A specialists to pursue acquisitions as well as strategic alliances in both the public and private sectors in China. In-depth analysis is now underway on each market segment of as well as on the major players in the Chinese ISB industry.
  Company officials expect several acquisitions to be concluded during 2007. The main targets for equity acquisition are companies that can create synergy by complementing Doosan Infracore’s existing product lines.
  The first tangible result of the M&A drive was a CNY22 million (US$2.84 million) equity transfer agreement that was concluded with Yantai Yuhua Machinery, a wheel loader manufacturer located in Yantai, in March. Through this arrangement, Doosan Infracore is building a new wheel loader plant with an annual capacity of 5,000 units. The company is also introducing a wheel loader designed specifically for Chinese users as part of an effort to join the ranks of the top three wheel loader makers in the country.
  The equity participation in Yantai Yuhua Machinery is an inexpensive way for Doosan Infracore to penetrate the Chinese wheel loader market, which represents forty percent of the construction equipment sold in China. Doosan Infracore gets instant government permission along with an existing production facility.
  Importantly, buyers of excavators and wheel loaders are frequently the same, and Doosan Infracore already holds the top share of China’s excavator market. The same sales and after-sales service network can be used for both product lines, generating a synergy that can expand the customer base while cutting operation costs.


--Noteworthy Results from Current Business Lines

Doosan’s established excavator, forklift and machine tool businesses are performing very well in China, too. Doosan Infracore China Co. has remained at the top of the customer satisfaction index in China for each of the past four years. The Yantai-based excavator production subsidiary sold 7,582 units in 2006 for the top market share. Monthly excavator sales broke the 2,000-unit mark (2,051) for the first time in March, followed by 2,014 units sold in April. Aggregate sales through the first four months of 2007 stands at 5,216 units, and DICC officials are confident that they can easily reach their 10,000-unit target for the year.
  Doosan Infracore has been very successful in the Chinese forklift market as well and is now one of the leaders. Combined domestic sales and exports are expected to surpass 5,000 units in 2007, double last year’s figure. The company is also going after greater market share by introducing the G-Model forklift, which caters to local customer needs. Some of the forklift models produced by Doosan Infracore for the first time in China last year are also being exported to more than ten countries. Thus, quality and price have proven to be highly competitive globally.
  Doosan Infracore Machine Tools Yantai Co. was established in 2003 and plans to sell 1,800 units (a 65% increase year on year) in China, where the machine tool market is split between the high-end on the one hand and the mid-priced and low-end segments on the other. Doosan Infracore is currently going after both sides of the market, with the high-priced models being supplied from Korea and the less expensive models being produced locally.
  DICI CEO Kang Dae-ryong says, “We are expanding our production capacity in order to build a platform for the steady growth of our China subsidiaries. The holding company is also pursuing more mergers and acquisitions as we cultivate our China operations as the cornerstone of our globalization strategy.”