Leoni AG, the leading European provider of cables and wiring systems to the automotive and other industries, Monday inaugurated its fourth factory in China.
The plant is part of the German firm's plan to double local wiring systems turnover to 400 million euros ($552 million), a company executive said.
Located in Langfang, Hebei province, the plant will supply wiring harnesses for Beijing Benz Automotive Co Ltd, the joint venture between Daimler AG and Chinese partner BAIC Group, which has a planned capacity of 200,000 cars per year.
"We are happy to open this modern plant in Langfang, delivering high-quality products to BBAC," said Andreas Brand, who oversees the Wiring Systems Division for Leoni.
"We are pleased to extend our business in China together with our successful customers."
The company's expansion into China is a primary driver in its globalization, which itself is key to long-term growth, Brand said.
Leoni will invest 30 million euros in buildings and equipment for the new production site. It has started the ramp-up phase for Mercedes C-Class and later will produce wiring systems for its GLA SUVs and GLK-Class crossovers.
Taking into account the complexity of electrical distribution systems for premium passenger cars, the new plant will process about 3 million meters of automotive cables, 1.5 million connectors and thousands of components per day, and combine them to create complete wiring systems.
Besides the Langfang plant, Leoni has facilities in Shanghai, Jining and Penglai in Shandong province. All the plants produce harnesses and wiring systems for the automotive and commercial vehicle industry, mainly supplying customers in Europe and America.
The Leoni Group also has six other production plants in China making wiring products for medical and household sectors, among others. It anticipates local consolidated sales of about 450 million euros this year. Since 2012, China has been Leoni's biggest market in terms of sales volume after the company's home country.
As China's automobile sales continue their healthy double-digit growth, opportunities for the parts suppliers to further invest in China also have grown.
"Following the automakers' capacity expansion and establishment of new plants, we will see heavy investments in the parts industry in the near future," said Jia Xinguang, an independent auto analyst based in Beijing.
Earlier this month, Italian auto parts supplier Magneti Marelli SpA signed a 50-50 joint venture agreement with China South Industries Group to produce headlights and taillights for vehicles in China, with a total investment of 40 million euros.
The venture, Hubei Huazhong Magneti Marelli Automotive Lighting Co Ltd, which will be located near Wuhan, will feature a production facility capable of turning out 5 million pieces a year, starting in 2015.
"Magneti Marelli has been operating in China since 1996 and is currently investing huge amounts of resources to bring all of its key technologies to its Chinese customers and to the various joint ventures set up in that country," said Eugenio Razelli, Magneti Marelli's CEO.
"The joint venture's strategic position on the market offers us the chance to come in contact with some of the best-selling Chinese automotive brands, with whom we can share solutions for the technical evolution of lighting products," Razelli said.