Komatsu Construction Machinery Corporation will become a wholly-owned subsidiary of Komatsu Ltd. following the dissolution of its joint venture agreements with Sinomach Changlin and Sumitomo Corporation for manufacturing a variety of construction products in China.
Komatsu Ltd. established Komatsu Construction Machinery Corporation in 1995 as a joint-venture manufacturer of wheel loaders with local manufacturers, such as Changlin. Later, Komatsu added hydraulic excavators and other equipment to production and has supplied its products mainly in China.
After considering changes in the business environment over the past few years, Komatsu and Changlin have agreed to promote their respective businesses independently and dissolve Changlin’s equity participation in Komatsu Construction Machinery Corp.
Following the partnership dissolution with Changlin, Komatsu and Sumitomo also agreed to dissolve Sumitomo’s equity in the construction equipment manufacturing company.
Komatsu Ltd. held 85% equity in the joint venture, while Changlin held 8% and Sumitomo 7%.
The move comes just months after Komatsu Ltd. ended its joint venture agreement with Shantui Construction Machinery. In 1995, Komatsu and Shantui established an agreement to manufacture hydraulic excavators under the name Komatsu Shantui, supplying products throughout China.
Komatsu Ltd. held 60% equity in the joint venture, while Shantui held 30% and Sumitomo held 10%.
Together with Changlin, Sumitomo and Shantui, Komatsu will proceed with the process as required until it closes out its 2021 fiscal year ending March 31, 2022. Komatsu believes there will be no adverse effects on customers with respect to product delivery and anticipates that the impact of this termination on its consolidated business results will be minimal.
