Yamaha Motor Establishes Motorcycle Marketing Company in Shanghai, China Move to integrate motorcycle marketing operations in China

Yamaha Motor Co., Ltd. recently established a new motorcycle marketing company in Shanghai, which is slated to begin operation on May 26, 2004. It will market Yamaha-brand motorcycles, provide after-sales service, and sell spare parts in China. The new company, to be known as Yamaha Jianshe Motor Shanghai Marketing Co.,Ltd. is capitalized at US$4 million (approx. 420 million yen), with 30% ownership by Yamaha Motor; 55% by Chongqing Jianshe-Yamaha Motor Co., Ltd. (“Jianshe-Yamaha”), a joint-venture company for the manufacture and sales of motorcycles in China; and 15% by Jianshe Industries (Group) Co., Ltd. (“Jianshe Industries”), the business partner with whom Yamaha Motor founded Jianshe-Yamaha.

Previously, Yamaha Motor had two joint-venture motorcycle manufacturing and marketing companies in China, Jianshe-Yamaha and Zhuzhou Nanfang Yamaha Motor Co., Ltd. (“Nanfang Yamaha”). Each was manufacturing complete Yamaha-brand motorcycles independently, and using its own sales routes for product sales and after-sales service.
By transferring motorcycle marketing functions from these companies and integrating them into the new company, Yamaha Motor is moving aggressively to implement its marketing strategies, expand the product line-up, further improve customer services, enhance the Yamaha brand image, in order to increase sales in China.
The new company will start with some 200 employees, and plans to sell 260,000 units in the first year, amounting to 1,440 million yuan (approx. 19.4 billion yen) in total sales.

A decision was made ahead of forming the new joint venture, in April, for Jianshe Industries, (Chinese partner of Jianshe-Yamaha), to acquire the entire investment made by the Chinese partner of Nanfang Yamaha. The idea is to integrate the joint-venture partners for manufacturing operations, in tandem with the marketing integration. That capital transfer is now underway, with the process due to be completed in June. When that is accomplished, Nanfang Yamaha will be renamed Zhuzhou Jianshe Yamaha Motor Co., Ltd. Following the consolidation of sales into the new company, the two existing joint-venture companies will specialize in manufacturing operations.
Thanks to favorable results from new model launches and the successful expansion of sales channels, motorcycle sales increased significantly in China last year. Unit sales by Jianshe-Yamaha increased 177% from the previous year, to about 110,000 units, and unit sales by Nanfang Yamaha also rose, by 92%, to some 50,000 units.

Establishing the new marketing company while integrating the joint-venture manufacturing partners represents a key effort to restructure the foundation of the motorcycle business in China. The move will help Yamaha Motor expand sales and develop an optimum production system in China.
Meanwhile, a plan to establish a local R&D company this year is also in progress. The new enterprise will further promote product development that meets local needs. Once this local R&D presence is established, Yamaha Motor will have in place a comprehensive operational system for the development, manufacture and marketing of motorcycles in China. Yamaha Motor will then be capable of flexible response to any change in the Chinese market, and will be well positioned to hone its competitive edge in China.

*Premised on an exchange rate of 13.5 yen to the yuan and 105 yen to the US dollar.