| Shanghai T&E Co., Ltd. is one rapid developed company, directing international markets demands, combining national manufacturing resources and supplying price competitive products to international markets. Realizing the low cost expansion. Shanghai Meihao Electronic Appliance Co., Ltd. as one subsidiary company of Shanghai T&E Co. Ltd., is a producer for pressure washer, all products are exported. Owing to low bulwark of the produced product, the markets are reformed from monopoly to complete competitiveness along with the come forth of other producers. Under this circumstance, the product price is continuously falling down meanwhile the profit is deceased. To improve this business, Shanghai T&E Co. Ltd. decided to develop to the upper industry chain of the pressure washer. Considering pressure washer pump takes not only a main part in the cost, but also influences greatly the capability and reliability of the pressure washer. The Board of Directors approved to set up the project of pressure washer pump.As the leading pressure washer production enterprise in domestic, Shanghai Meihao Electronic Appliance Co. Ltd. increased its annual production and sales from 338,000 sets in 2002 to 705,000 sets in 2003. From Jan. to July only this year, the production and sales have amounted to 700,000 sets, and it is forecasted to accumulate to 1 million sets at the end of year. In one hand, the company has developed rapidly in these two years, however, due to all components in production are out source, high risk is unavoidable facing, mainly in the following points: Purchase cost takes a main part in the sales price, resulting directly the limitation of product profit. Core technique is in control of suppliers.Once the suppliers can not meet the timing requirements, supply just in time will be seriously influenced, conducting the company reputation damage. To improve this disadvantage situation, promote the core competence, and reduce the production cost, increase the company profitability, the strategy to expand towards upper industry chain should be adopted. Pump as the core components in the pressure washer, not only plays an important role on machine quality and reliability but also takes a big percentage on the complete machine cost, therefore it is proper to manufacture self. According investigation, at this point of time, the worldwide demands for pressure washer is about 10 million sets, among Meihao takes 10% thanks to its production and sales forecast of 1 million sets this year. Due to the steadily growth of the worldwide marketing demands and the rapid volume increase of Meihao pressure washer, annually 1.5 million pumps is the right number for defining the annual production scale. All components for pump will be out source, only assembly and testing inside company self. Pump technical specification: Pressure 70～120 bar, Flow volume 300～360 L/h. Total investment for project equipment is 1,191,400.00 RMB. Includingtesting equipment purchase 42,400.00 RMB, production equipment purchase 1,006,000.00 RMB, accessorial production equipment purchase 143,000.00 RMBThe manufacture site needed by the project will utilize one building in Jinshan district which invested and built by Company A. Total ground occupying of 20,239 square meters and 5,847 square meters for building area.The strategy of "pre-protection at first, protection and improvement in parallel and treatment comprehensively" shall be implemented simultaneously. Labor protection measure should be adopted. The fire risk should be classified as grade four to five. Sufficient firefighting measures should be adopted. Firefighting regulation should be set up.Independent Legal Company will be operated. Capital Contribution Scenario. Shanghai T&E Co. Ltd. and Hongkong XXX Company will jointly invest to establish the new company. Registered capital of the new company is 9,400,000RMB, Shanghai T&E will contribute 7,000,000 RMB, 74.5% of the total registered capital, Hongkong XXX Company will contribute 2,4... |
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