XCMG and Doosan in engine joint venture

A Doosan and XCMG partnership has set its sights on becoming one of the world's 10 largest engine manufacturers.

Korea's Doosan Infracore, via its Chinese subsidiary DICI, and China's Xuzhou Construction machinery Group (XCMG) have signed a joint venture agreement to produce and market diesel engines for construction equipment, power generators and large trucks in China.

The two companies will invest CNY 680 million (US$ 99 million) over the next four years in the Xuzhou Xugong Doosan Engine Company. A 198000 m² site in the Xuzhou economic development zone in Jiangsu Province, China, has been earmarked for the new production facility.

A Doosan company statement said operations will begin in phases with the first phase scheduled to commence in October this year. A spokesperson confirmed that, "When works begin, the production plant will be able to produce 15000 units per year of 6 and 8 litre diesel engines. By 2011, the facility will be in full production and when phase two commences in 2013, production will increase to 50000 units."

Lee Hwang-ryul of Doosan Infracore's Engine and Material Business Group, said, "The partnership with XCMG is the optimal strategy for Doosan to enter the Chinese diesel engine market. XCMG, which urgently needs to produce engines exclusively for its own heavy construction equipment also benefits from this deal because it can now fulfil its own orders."