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Kobe Steel begins compressor production in China
July 8, 2005

Group company Kobelco Compressors Manufacturing (Shanghai) Corporation (or KCMS) has begun commercial production of compressors in Shanghai. The company is Kobe Steel's first manufacturing operation for standard screw compressors in China. KCMS started production in April and shipped its first Chinese model in June.

To date, Kobe Steel has been supplying standard compressors made at its Harima Plant in Japan mainly to Japanese affiliates in China through marketing group company Kobelco Compressors (Shanghai) Corporation and other companies. But now through KCMS, Kobe Steel will be able to supply locally made compressors of the same quality and performance as those made in Japan at competitive prices. Expanding sales locations in major cities in northern, eastern and southern China also further strengthens Kobe Steel's marketing activities in that country.

KCMS manufactures the Kobelion brand of compressors, which offers high performance and energy-saving features. From procurement and manufacturing to quality control and shipment, KCMS is responsible for the entire production process. About 70% of the parts and materials will eventually be sourced in China.

In the first year of operation, the company plans to produce 700 units, increasing to 1,500 units in one or two years. By offering a wider range of models in several years, KCMS anticipates production will rise to 3,000 units per year.

Sales will continue to be handled by the Kobe Steel Group's current compressor marketing companies in China.

Profile of Kobelco Compressors Manufacturing (Shanghai) Corporation
Location:  Shanghai, China
Equity share: 75% Kobe Steel, Ltd.
25% Kobelco Compressors Corporation (a subsidiary)
Capital: US$5 million
Established: February 2004
Start-up: April 2005
Business: Manufacture of standard screw compressors )
Employees: 30

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