Larsen & Toubro Limited (L&T), an India-based international engineering and technology company, announced Tuesday that it plans to set up its first wholly owned foreign enterprise in China, in a move to boost its presence in the nation, Rodney Pereira, chief representative of Larsen Toubro Limited Shanghai Office, said Tuesday.

With a registered capital of US$5.5 million and an initial investment of US$11 million, "the newly-established factory, L&T's first manufacturing project in China, is part of L&T's overall plan to have multiple engagements with China," said Pereira.

Pereira announced that the company is expected to employee 500 staff by the end of 2010, when its sales will reach US$82 million.

"The Chinese market for L&T's products is mature and large, because the skill and workmanship here is of a high standard, and the resources are ample," said Pereira.

With a ground space of 30,000 square metres, the factory will mainly manufacture high-end air circuit breakers, part of L&T's expansive range of electrical and electronic products.

"It (the air circuit breaker) is widely sold in international markets including Europe and Southeast Asia, and has evolved during the last 40 years thanks to L&T's indigenous research and development (R&D)," said Pereira.

"To this end, I am sure that Chinese consumers will look favourably upon our products."

According to Pereira, 90 per cent of the air circuit breakers manufactured in the Wuxi factory will be sold on the domestic market, while the remaining 10 per cent will be exported.

The company, located in the Wuxi New District, a national level High-tech industrial park in East China's Jiangsu Province, is the first Indian venture to set up in the park.

Founded in 1995, the district has built itself into an important, international manufacturing base, with considerable influence in the Yangtze Delta region.

By 2004, the district has approved 1,151 foreign-funded enterprises with a total foreign investment of US$15.3 billion, as well as utilized capital of US$5.3 billion.

A host of renowned companies including Kodak, GE, Sony, and Volvo have a presence at the district. So far, 54 enterprises have established R&D centres here, creating an atmosphere of integrating R&D, manufacturing and sales.

"Because of its optimised investment environment, the district is helpful to L&T's business expansion plans in the local market," said Pereira.

"We will create more a favourable business environment for L&T," claimed Zhou Qian, the district's spokesperson.

L&T is a technology-driven engineering and construction organization, and one of the largest private companies in India.

The company has been in the low voltage switchgear industry since the 1950s, and has been the largest industry manufacturer in India for more than two decades.

"We intend to manufacture a range of products here in China, and hope we can also become the No 1 in the Chinese market," said Pereira.

"The Wuxi factory is L&T's first step in its local business expansion, and if successful, we will add more investment here, and consider expansion in other areas."

L&T has established a presence in China with the supply of high technology equipment for the hydrocarbon sector. The company has also supplied special industrial valves worth US$25 million over the last two years to various petrochemical & power projects in China.

L&T is considering an acquisition of a local valve manufacturing company to increase its presence and address a large share of the global market, according to Pereira. He refused to disclose further details.

So far, the company has set up two local offices in Shanghai and Beijing, in August and May 2004 respectively.

Source: China Daily