TOKYO--Mitsubishi Heavy Industries, Ltd. (MHI) will establish MHI Engine System Asia (tentative name), regional headquarters to oversee its overseas engine business in Asia, in Singapore this spring. The new company is aimed at expanding MHI's after-sales servicing operations for medium- and large-sized engines in Asia in response to strong market demand. MHI's existing engine sales and after-sales service bases in the region will be reorganized as subsidiaries of the new regional headquarters.

In line with this move, MHI will expand its production capacity in generator set, a core source of after-sales revenue, by establishing an assembly plant in Vietnam. The company will also situate a new maintenance factory in China through the newly establishing subsidiary in China. The total investment will be approximately 1.1 billion yen. Through these developments, MHI aims to increase annual revenue from its engine after-sales servicing operations in Asia by about 70% within three years, to roughly 15 billion yen.

MHI Engine System Asia will be established by increasing capital and renaming MHI South East Asia Pte Ltd., an existing MHI's subsidiary in Singapore. Through the sales and after-sales service bases in the region under its control, the new company will aim to boost engine business revenue by guiding and controlling each base to provide high-quality and homogeneous after-sales services. The new company will be capitalized at 760 million yen and have 60 employees at the time of its inauguration.

The subsidiaries to come under the new regional headquarters' control are MHI Engine System Vietnam, MHI Engine System Philippines, MHI Engine System Indonesia, MHI Engine System Hong Kong and MHI Engine System Shenzhen (tentative names). All of these companies are to be newly established by either spinning off engine business from existing MHI subsidiaries, merging or acquiring an existing after-sales service company. Among them, MHI Engine System Vietnam will newly establish a generator set assembly plant in the suburbs of Ho Chi Min City, and MHI Engine System Shenzhen will set up an engine maintenance factory in Shenzhen.

The generator set assembly plant will be located in Vietnam Singapore Industrial Park (VSIP), approximately 15 kilometers north of Ho Chi Min City. The plant is aimed at responding to increased demand for generator sets, which is MHI's major source of after-sales service revenue. The 6,000 square-meter Vietnam plant will be built on a 17,600 m2 site. The plant will adopt a cell production system and have annual production capacity of 1,000 units (approximately 1,466,000 kW).

Construction will commence this spring, with the operational launch scheduled for autumn. MHI Engine System Asia will establish the training center to provide training to factory employees as well as after-sales service training to sales staff throughout the Asian region. The 9,000 m2 maintenance factory in China will handle local work for new equipment and equipment conversion, as well as outfitting and maintenance of generator sets.

In tandem with expansion of the medium- and large-sized engine market in Asia, "manufacturer-initiated after-sales service business" such as servicing of generator set, parts supply and maintenance is greatly expanding. With the establishment of its new structure for engine business in Asia, MHI will further strengthen its marketing activities in after-sales service business, as well as boost engine sales, including exports from Japan, in a quest to secure stable revenue growth.