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Kubota Sets Up Water Treatment Engineering subsidiaries and Regional HQs in China
~ Full-scale entry into Water Treatment Market and Strengthening Regional Strategic Function for China Business Expansion ~

March 7, 2011

Kubota Corporation ( hereinafter, "Kubota" ) announced today that it will establish two water treatment engineering subsidiaries to make a full- scale entry into the water treatment market and expand its business in China. One is a JV company with, "Anhui GuoZhen Environmental Protection Sci.&Tech.Co.,Ltd. ( hereinafter, "GZEP" ), one of the China's largest water engineering companies. The other is a wholly-owned company. Kubota also announced that it will establish the first wholly-owned regional headquarters ( hereinafter, "HQs company" ) in China, which reinforces planning and executing a regional strategy and supports the management of local subsidiaries.

  1. Recent Kubota's China Business

    • In the late 1990s, Kubota established "Kubota Agricultural Machinery (SUZHOU) Co.,Ltd" ( hereinafter, "KAMS" ) for manufacturing and sales of combine harvesters and rice transplanters because of the growing demand for mechanization of agriculture by the shortage of workers in farming villages due to China's rapid economic growth and urbanization.
    • In the 2000s, Kubota established "Kubota Construction Machinery (SHANGHAI) Co.,Ltd" ( hereinafter, "KCS" ) for sales of construction machinery and "Kubota Engine (SHANGHAI) Co.,Ltd" ( hereinafter, "KESCO" ) for sales of engines in Shanghai. This year, Kubota sets up a manufacturing subsidiary, "Kubota Construction Machinery ( Wuxi ) Co.,Ltd" ( hereinafter, "KCW" ) and it will start the commercial production in 2012.
    • As for Water & Environment System business, Kubota also established a manufacturing and sales subsidiary ( Anhui Kubota Sanlian Pump Co.,Ltd ) in 2010 aiming to get orders of pumps for industrial use or those for water and sewage.
  2. Regarding establishment of water engineering subsidiaries

    1. Background and purpose

      • Ever since our establishment in 1890, Kubota has been engaged in water-related businesses. And it is now developing businesses related to safe water supply, water resource recycling and improving water environments in an aim at solving the worldwide water problems.
        In recent years, in China, "water shortages" by increase of "water usage" and "water pollution" by domestic and industrial wastewater are becoming serious problems. In the Chinese twelfth five-year plan which starts this year, efficient use of water resources or improvement of effluent water quality are key pillars in its environmental measures. By establishing two water engineering subsidiaries, Kubota will develop the locally-based business and contribute to solving water-related issues in China.
      • The JV company aims at the early launch of water treatment business in China by producing of membrane units which are core products of Kubota's MBR (*) technology and making use of GZEP's sales network including 10 branches in China and engineering know-how relating to the design, procurement and construction of sewage treatment plant.
      • The wholly-owned company carries out plant engineering business and sells membrane units or Johkasou (wastewater treatment tank). Those two subsidiaries help and complement each other and aim to expand the entire Kubota group's business in water treatment market in China.
      • MBR : Membrane Bio-Reactor. A kind of purifying method of sewage or factory effluent.
    2. Outline of new subsidiaries

      • JV company
        Company name(tentative) Kubota Guozhen Environmental Engineering(ANHUI) Co.,Ltd
        Establishment (expected) April, 2011
        Head Office Hefei, Anhui
        Capital Approx. JPY 440 million
        Ownership Kubota ( 50.5 % ), GZEP( 49.5 % )
        Main business Plant engineering of MBR for water treatment market in China manufacturing ,and sales of membrane units
        No. of employees (expected) 55 ( in 2014 )
      • Wholly-owned company
        Company name (tentative) Kubota Environmental Engineering ( SHANGHAI ) Co.,Ltd
        Establishment (expected) April, 2011
        Head Office Shanghai, China
        Capital Approx. JPY 800 million
        Main business Plant engineering for water treatment market in China(industrial wastewater recycling and rural environmental measures ),sales of related equipment
        No. of employees (expected) 40 ( in 2014 )
        [Submerged membrane unit using MBR technology]
        [Outline of JV partner ( GZEP ) ]
        Company name Anhui Guozhen Environmental Protection Sci.&Tech.Co.,Ltd.
        Establishment 1997
        Head Office Hefei High and New Technology Industrial ,Development Zone, Anhui
        Capital Approx. JPY 830 million ,( Anhui Guozhen Group 58.8%, Marubeni Group 30.0%, others 11.2% )
        President & CEO Mr. Li Wei Chairman
        Consolidated net sales Approx. JPY 4.5 billion ( as of 2010 )
        Main business Operation and construction of a sewage treatment plant, manufacturing and sales of sewage treatment equipment
        Employees consolidated Approx. 1,000 ( as of 2010 )
  3. Regarding establishment of HQs company

    1. Background and purpose

      • The fastest growing China is the key area in Kubota's global strategy as mentioned above. From now on, Kubota promotes expansion of tractor's sales in KAMS, local production of construction machinery in KCW, response to emission regulations of engines and a full-scale entry into water treatment market just released today for expansion business in China.
      • To drive the deployment of those global strategies, planning and executing strategies rooted in the local field become important issue. Kubota has considered the setting up of regional headquarters in China to strengthen regional strategic function needed in China market whose changes of social situation and system of law are difficult to be predicted.
      • By setting up of HQs Company, Kubota strengthens strategic functions such as planning and marketing functions as well as functions of recruitment, raising capital, manufacturing and procurement. From now, for its existing business in China, Kubota supports the management for further expansion of business. For Kubota's start-up business in China like water-related one, it brings forward sharing know-how of existing business. Kubota aims to grow annual sales to over 100 billion yen in China at an early date.
    2. Outline of HQs company

      Company name (tentative) Kubota China Holdings Co.,Ltd
      Establishment (expected) March, 2011
      Head Office Shanghai, China
      Capital USD 73 million ( Approx. JPY 6 billion )
    3. Affiliate subsidiaries of HQs company

      After establishment of HQs company, the following companies will be subsidiaries of HQs.
      Company name Head Office Establishment Main business
      Kubota Agricultural Machinery (SUZHOU) Co.,Ltd Suzhou city, Jiangsu April, 1998 Manufacturing and sales of combine harvesters and rice transplanters, etc
      Kubota Construction Machinery (SHANGHAI) Co.,Ltd Shanghai city December, 2003 Sales of construction machinery
      Kubota Engine (SHANGHAI) Co.,Ltd Shanghai city January, 2008 Sales of engines
      Kubota Construction Machinery(WUXI) Co.,Ltd Wuxi city, Jiangsu March, 2011(expected) Manufacturing of construction machinery
      Anhui Kubota Sanlian Pump Co.,Ltd Anhui April, 2010(expected) Manufacturing and sales of pumps
      Kubota Guozhen Environmental Engineering (ANHUI) Co.,Ltd
      [New company]
      Hefei city, Anhui April, 2011(expected) Plant engineering of MBR for water treatment market in China, manufacturing, sales of membrane units
      Kubota Environmental Engineering(SHANGHAI) Co.,Ltd
      [New company]
      Shanghai city April, 2011(expected) Plant engineering for water treatment market in China, sales of related equipment
Kubota Corporation
Corporate Communication Department, Public Relations Office
TEL : +81-6-6648-2389

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