Metal parts and equipment maker Nissin Electric Co of Japan will build a plant in Myanmar, relocating some production processes from its factories in Thailand and Vietnam to cut labour costs in its contract manufacturing business.
The company said last week that it will form a joint venture with Hosoda Holdings Co, a Japanese trader acting as Nissin’s sales agent for the Myanmar market, in the Thilawa Special Economic Zone on the outskirts of Yangon in June, with plant operations scheduled to start in March 2020.
The local arm, tentatively named Nissin Electric Myanmar Co, plans to make electrical equipment and take on contract manufacturing of such machines and parts, it said in a statement.
The Kyoto-based firm is undertaking sheet metal welding, cutting and surface treatment for a variety of industrial equipment and parts at its own plants near Bangkok and Hanoi. The Japanese company intends to move to the new plant in Myanmar some metal parts-manufacturing processes such as mounting of device frames and welding that are difficult to automate.
The Nissin group will hold a 95pc stake and Hosoda the remainder in the Myanmar venture. With a registered capital of US$1.5 million, it aims to reach 600 million yen ($5.5 million) in sales in five years after the start of operations, Naoki Taira, spokesman for the Japanese company, said.
Nissin expects the overall sales of its metal parts and equipment business to grow from 8 billion yen in fiscal 2018 ended last March to ¥10 billion in fiscal 2020, according to Taira.
Nissin manufactures all of its products in the sector in Thailand and Vietnam. Its plants in the two countries -- operated by Nissin Electric (Thailand) Co and Nissin Electric Vietnam Co – account for 60pc and 40pc of the total sales, respectively, the spokesman said.