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Auto Parts Exporter Looks to Domestic Market
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Mainland auto-parts exporter Norstar Founders Group said it hoped that domestic sales would contribute 20 percent to its total turnover in the next two to three years, as the mainland's auto market shows bigger potential.


Hong Kong-listed Norstar has generated almost all of its auto parts sales from exporting mainly to the United States, Canada and Europe in the last few years.


However, "the mainland's huge potential in the auto market provides a golden opportunity for us to further boost our sales at home," said Norstar's Chief Executive Officer Zhou Tianbao.


The move came as the mainland becomes the world's second-largest and fastest-growing auto market, outshining lacklustre European and US markets.


In April, Norstar signed a supply agreement with Beijing Benz-Daimler Chrysler Automotive to provide the latter with suspension systems and axle modules, a strategic move for the company to step into the mainland's automotive equipment market supply chain.


In the same month, Norstar raised a net profit of HK$597 million (US$76.5 million) from a share sale to further expand its production capacity of suspension systems and axle modules on the mainland and to purchase land in Beijing to house its new production capacity.


"With the current production platform that we have, we are able to provide suspension systems and axle modules to not only Beijing Benz-Daimler Chrysler but many other car producers in China," Zhou said, who expected Norstar to provide axle modules soon to more than 10 types of cars produced by other auto manufacturers on the mainland.


With production of axle modules expected to reach 120,000 sets in 2006, which is expected to grow to 200,000 sets and 400,000 sets in 2007 and 2008 respectively, the company hoped to generate a turnover of about HK$400 million (US$51 million) in 2006 just from the sale of axle modules.


"We are aiming to become the global leading car chassis system provider in the next three years," said Zhou.


The company saw its turnover climb to HK$2.08 billion (US$266 million) at the end of the 2005-06 financial year, an increase of 28.9 percent year-on-year.


(China Daily May 25, 2006)


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