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Johnson Controls forms a joint venture for auto batteries

BAODING, Hebei – Johnson Controls, Inc., the leading global provider of automotive batteries and interior systems, announced plans on July 19 to set up a joint venture in Baoding, North China’s Hebei Province, for the development, manufacture, sales and service of maintenance-free lead acid batteries to cater to the automotive market in China, according to a company news release.
Under a memorandum of understanding from Johnson Controls, the company will form a 50:50 venture with Baoding Fengfan Co., Ltd., the largest Chinese manufacturer of industrial and transportation batteries with a 25 percent market share. The venture will provide products and services to customers in Sichuan, Yunnan, Guizhou, Tibet, and Chongqing.
Milwaukee-based Johnson Controls now operates a wholly-owned lead acid battery plant in Shanghai built in 1997 and supplies its Varta® brand products mainly to the Chinese automotive aftermarket. The company used to be the No. 1 rival of Fengfan, for it once planned to increase its share of the China market to about 30 percent. It was not satisfied with market expansion however due to increased lead prices and furious competition. Establishment of the joint venture reflects Johnso’s commitment to growth and support for its customers in China.
The Shanghai-listed Baoding Jin Fengfan Storage Battery Co. Ltd., founded in 1958, is a traded, state-owned company controlled by China Shipbuilding Industry Corp. (CSIC). With nearly 50 years’ development, the Chinese company consolidated a base domestically, including a sales network all over the country. Now, Fengfan has advantages in technology and brands, winning about 800 top-grade dealers in all large- and medium-size cities nationwide. It has also produced batteries for more than 40 car models, including Chery, Jetta, Passat, etc.
Established in 1885, Johnson Controls has 136,000 employees in over 1000 locations serving customers in 125 countries with an annual capacity of over 80 million auto batteries by now. In 2005 Johnson Controls acquired Delphi’s global automotive battery business in more than 10 countries, for about $212.5 million. The acquisition enabled the company to edge into the growing Asian auto battery markets, particularly in China. Johnson Controls Inc. reported a 17-percent increase in fiscal third-quarter earnings in 2007, the 17th consecutive year of earnings growth.
If this agreement further strengthens the two giants’ influence in China, driving up their profitability, they are likely to establish a long-term strategic partnership for stable development, according to industry insiders.

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