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German-Chinese Joint Venture Seeks to Increase Chinese Factory Automation

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Xenon Automation Asia Ltd. is both investing in and capitalizing on the trend of greater automation in Chinese factories.

Demand for sophisticated automation equipment from manufacturers in China is increasing, and one German-Chinese automation equipment manufacturing joint venture is both investing in and capitalizing on the trend.

Xenon Automation Asia Ltd., Hong Kong, "has received orders with an aggregate value of approximately $1.1 million during the past few months" preceding December 2012 from five separate companies located in Shanghai and the Great Pearl River Delta regions, according to Roland Kohl, president and chief executive officer of Highway Holdings, one of the joint venture partner companies. These customer companies operate within the automotive, white goods, consumer products and component manufacturing sectors, Kohl said.

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Xenon Automation Asia Ltd., was formed in 2009 in Hong Kong as a joint venture between Highway Holdings, a Chinese contract manufacturer of everything from simple parts to finished products, and Xenon Automatisierungstechnik GmbH, a 22-year old automation equipment company based in Dresden, Germany operating within the automotive, electronic, photovoltaic and medical technology sectors.

The joint venture utilizes Highway Holdings facilities in Hong Kong and Shenzhen for its manufacturing and service operations, and Xenon's operation in Germany for design and development. Highway Holdings is the largest shareholder with a 50 percent ownership position. Xenon Automatisierungstechnik GmbH holds 40 percent and Matrix Systems International Ltd. in Brechin, Scotland holds 10 percent.

Kohl said that Highway Holdings was the joint venture's initial customer, utilizing the automation equipment to upgrade its own manufacturing capabilities and streamline the company's manufacturing cost structure. "This not only enabled Highway Holdings to greatly benefit from the implementation of automation equipment for certain production requirements, but has also allowed the joint venture to showcase the technology and capabilities from a location convenient to end users in China," Kohl said.

According to Kohl, the increasing demand for automation in China is “due to a rise in the amount of high quality, technologically sophisticated manufacturing being conducted in China, as well as the dramatic rise in labor costs and concurrent labor shortages.” 

“We have received extensive interest in our automation equipment during recent trade shows, which bodes well for further product sales opportunities," Kohl added. "As China continues its transition from being a low-cost labor manufacturer to a producer of sophisticated high-end products, the demand for automated machinery should increase."

Renee Robbins Bassett

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