Wipro Infrastructure Engineering, the information technology giant’s hydraulics arm, will in six months launch one of Indian industry’s most ambitious attempts to tap China’s fast-growing motor vehicle market, when the gates open at its sprawling new $ 5.7 million facility in southern China.
The company this week formally announced a deal with the local government in Changzhou to set up a manufacturing plant to make hydraulic cylinders to cater to the domestic truck market, during President Pratibha Patil’s recent visit to Shanghai.
Wipro Infrastructure Engineering has set ambitious targets for its first venture in China, expecting its hydraulics business to reach $100 million in revenues in its first five years of operation. Company officials said they expect the Changzhou plant to open in just six months’ time.
Investment
To begin with, Wipro will invest around 40 million yuan (Rs.27.3 crore or $5.8 million) in the 40,000 square metre plant, which will manufacture high pressure precision hydraulic cylinders and tipping systems. Last year, China became the world’s largest automobile market, overtaking the U.S. China also has the world’s biggest truck market, with an estimated 500,000 heavy vehicles sold every year. The domestic hydraulics market alone is estimated at around $1 billion, with truck hydraulics accounting for between 30 and 40 per cent of the market.
“China is one of the world’s fastest-growing markets, and if you look at GDP growth and infrastructure development, we expect this trend to continue,” said Harish Shah, Senior Vice President at Wipro Infrastructure Engineering who heads its hydraulics division in Asia, in an interview with The Hindu . Mr. Shah said the Changzhou plant, located in the Wujin Hi-tech Industrial Zone, would entirely cater to the domestic market. There are, however, plans to later start production for export — a factor behind the company’s decision to invest in Changzhou, an industrial port along the Yangtze river. Wipro looked at nine high-tech zones across China before eventually settling on Changzhou in southern Jiangsu province, in China’s manufacturing heartland.
Wipro Infrastructure Engineering had been considering setting up a plant in China since 2007. This will be the company’s ninth global manufacturing facility. There are also plans to eventually expand Wipro Infrastructure Engineering’s business in China beyond hydraulics, into construction equipment, metal handling and mining. “In all four areas, China is a booming economy,” Mr. Shah said.
