PKC Group has inked a joint venture contract with Anhui Jianghuai Automobile Co (JAC) subsidiary, Hefei Jianghuai Automobile (Hefei JAC).

The Group estimates the JV will increase PKC’s market share in in China in both medium and heavy duty truck segments by five percentage points and expand business to buses, light trucks, vans, pick –up trucks and various other light vehicles.

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The operation will comprise the current wiring harness business of JAC group with the aim to gradually take over also other, currently outsourced, wiring systems business.

JAC’s current wiring harness buy is around EUR140m (US$158m), with the parties’ aim to develop the JV as a primary supplier for all wiring harnesses to JAC group.

The joint venture will deliver full design & development, manufacturing and sequence delivery services to JAC group companies. The 50/50 JV will be undertaken through a new company established by Hefei JAC and PKC in the city of Hefei in Anhui province in China with an equity value of EUR14m.

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“We are extremely proud to team up with JAC, which is a one of the leading Chinese automobile OEMs,” said PKC Group president and CEO, Matti Hyytiäinen.

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“This expansion in China is a major breakthrough for PKC and logical continuity to our strategy published in spring, 2013. PKC’s market position in China will increase significantly.”

Finalisation of the joint venture is subject to conditions including negotiating related agreements and obtaining authority approvals.

The finalisation is targeted for the second half of 2016. The joint venture is estimated to generate around EUR50m revenue and employ around 1,000 people in its first 12 months of operation.

The JV is estimated not to have a significant impact on PKC Group’s 2016 results.