Komatsu to dissolve equipment joint venture in China
By Mike Brezonick01 February 2022
Komatsu Ltd. announced it has agreed to dissolve the equity participation of Sinomach Changlin Co., Ltd., based in Jiangsu, China, and Sumitomo Corp. in the Komatsu (Changzhou) Construction Machinery Corp. joint venture. With the move, Komatsu (Changzhou), based in Jiangsu, China, becomes a wholly owned subsidiary of Komatsu.
In 1995, Komatsu established the joint venture, focused initially on the manufacture of wheel loaders in Changzhou, Jiangsu Province, with local construction equipment manufacturers, such as Changlin. Later, Komatsu (Changzhou) added hydraulic excavators and other equipment to its production, which were mainly supplied in China.
Komatsu held 85% equity in the joint venture, while Changlin held an 8% share and Sumitomo 7%.
After discussing the future directions of the business with Changlin and in light of changes in the business environment over the last few years, Komatsu and Changlin agreed to promote their respective businesses independently and dissolve Changlin’s equity participation in Komatsu (Changzhou). In line with the agreement with Changlin to dissolve its equity participation, Komatsu and Sumitomo have also agreed to dissolve Sumitomo’s equity participation in Komatsu (Changzhou).
In addition, Komatsu and Sumitomo agreed to dissolve Sumitomo’s equity participation in Komatsu Shantui Construction Machinery Co., Ltd.
Together with the partners, Komatsu will proceed with the process as required in fiscal year 2021, ending March 31, 2022, and believes that there will be no adverse effects on customers with respect to product delivery. Komatsu said it anticipates that the impact of this termination on its consolidated business results will be minimal.