Toyota Supplier Considers China Capacity Boost on VW, GM Orders

Tsubakimoto Chain Co., an Osaka-based auto parts supplier, is considering expanding in China to meet a surge in orders from Volkswagen AG and General Motors Co. as a territorial dispute damps demand for Japanese cars.

The about 6 billion yen ($68 million) in bookings from the two automakers will triple the amount of business Tsubakimoto’s auto-components division does in China, according to Toru Fujiwara, the head of the division. China sales will be between 3 billion yen and 3.5 billion yen in the fiscal year ending March, most of that from Japan-based automakers including Toyota Motor Corp., he said.

“While we still have some expectations, we’re not thinking like in the past about growing on the strength of Japanese companies,” Fujiwara said in an interview in Osaka. It has become important for Tsubakimoto to expand its ties in China with non-Japanese companies, he said.

Tsubakimoto is studying building factories near Shanghai or Tianjin, China, to cope with a capacity shortfall expected from 2014, and may announce details in May along with its full-year earnings, Fujiwara said.

Shares of Tsubakimoto, which also manufactures conveyor chains, have gained 10 percent in the past 12 months, compared with a 27 percent increase in the Nikkei 225 Stock Average.

Recovery in China

Chinese production in December recovered to about 65 percent of the levels before demonstrations broke out across the nation in September over a territorial dispute between Asia’s two biggest economies, according to Fujiwara.

Passenger-vehicle sales in China will probably gain as much as 10 percent this year, as a rebound in economic growth gathers strength, according to eight analysts surveyed by Bloomberg News. Chinese leaders assuming power in a once-a-decade handover to be completed in March may introduce economic stimulus to increase domestic demand, according to forecasts by Autoforesight Shanghai Co., LMC Automotive and Synergistics Ltd.

Toyota’s China sales in December dropped 16 percent to 90,800, bringing annual sales to 840,500 vehicles, 4.9 percent less than in the previous year. Nissan Motor Co. sales dropped 24 percent last month in China, while Honda Motor Co.’s fell 19 percent.

It may take some time before Japanese companies regain their previous share of the Chinese market, Fujiwara said.

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