Siemens, Shanghai Electric to found new JV

Shanghai Electric Group and Siemens plans to found a new joint venture, namely Shanghai Electric Power Generation Equipment Co Ltd, in a bid to expand their strategic partnership in the Chinese power plant market.

The two companies inked the agreement on Aug.1 at the official opening of a new manufacturing plant in Lingang, a newly-established industrial area in Shanghai.

The new joint venture, in fact, represents a restructuring of existing businesses by combining the three existing joint ventures of Siemens and Shanghai Electric, according to Shanghai Daily.

The three companies, Shanghai Turbine Co Ltd, Shanghai Turbine Generator Co Ltd and Shanghai Power Equipment Co Ltd, were established in 1996, with combined output of more than 100 million kilowatts, which is mostly used by Chinese power plants and accounting for about one-sixth of China's total installed capacity.

The new joint venture will with the immediate effect produce major components for fossil-fuel power plants, Siemens stated.

"With the new manufacturing capacity we will work together with our partner Shanghai Electric in the future to even better meet China's increasing demand for advanced steam power plants in the capacity class above 1,000 megawatts," said Klaus Voges, President of Siemens Power Generation.

Combined sales of the three plants last year was RMB 13 billion (US$167 million). The new company, controlled by Shanghai Electric, is expected to reach sales of RMB14 billion this year.