MHI to Establish Sales JV in China with Shenyang Pump - Preparatory Step to Future Establishment of Manufacturing JV -

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March 23, 2006 No.1103

MHI to Establish Sales JV in China with Shenyang Pump
- Preparatory Step to Future Establishment of Manufacturing JV -

Tokyo, March 23, 2006 - Mitsubishi Heavy Industries, Ltd. (MHI) and Shenyang Pump Co., Ltd. (SPC) have agreed to establish a joint venture company (JV) in Shenyang, Liaoning Province, China to conduct sales and engineering relating to pumps. The agreement was signed on March 23 in Shenyang. With establishment of the JV, MHI aims to make a full-scale entrance into the Chinese pump market, where demand for pumps of all kinds is expected to increase vigorously. The focus will be on pumps for thermal power plants. Creation of the new JV will enable MHI and SPC to build further experience in collaborative activities, as a prelude to possible establishment in the future of a manufacturing JV to serve as a local production base for a variety of pump products.


	Signing Ceremony of JV To the following photograph

The JV will be capitalized at 10 million yuan (approximately 140 million yen), with MHI owning a 60% share and SPC holding the remaining equity. Operation of the JV will commence at the end of April. The JV, to be named “MHI Shenyang Pump Engineering Co., Ltd.,” will handle boiler feed water supply pumps for conventional thermal power plants as well as pumps for other applications including combined-cycle power plants and flow gas desulfurization systems.

SPC is the largest pump manufacturer in China and is especially strong in thermal power plant pumps, enjoying a 35% share of that market. The company is capitalized at roughly 370 million yuan (approximately 5.2 billion yen), employs about 1,800 workers, and generates annual sales of 500 million yuan (approximately 7 billion yen).

MHI and SPC have engaged in cooperative work projects on a case-by-case basis since 2004. While MHI has been pursuing enhancement of cost competitiveness in China as well as the establishment of its own marketing channel in pump operations, SPC has been in need of advanced pump technology, such as boiler feed water pumps for supercritical and ultra-supercritical pressure boilers. As the goals of the two companies meshed well, MHI and SPC decided to take their collaborative relationship to a more advanced level, thus opting to establish the JV.

Demand for pumps is expected to remain stable on a global basis, with vigorous demand projected for China, especially in conjunction with thermal power plants. With the new JV at the core, MHI will now accelerate consideration of the feasibility of establishing a manufacturing base in China, in addition to pursuing development of new customers in that market. Looking further ahead, MHI will also probe the possibility of exporting pumps from China to other countries, in a quest to establish a manufacturing and sales network eventually covering a wide area.

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About Mitsubishi Heavy Industries
Mitsubishi Heavy Industries, Ltd. (MHI), headquartered in Tokyo, Japan, is one of the world's leading heavy machinery manufacturers, with consolidated sales of 2,590 billion yen in fiscal 2004 (year ended March 31, 2005). MHI's diverse lineup of products and services encompasses shipbuilding, steel structures, power plants, chemical plants, environmental equipment, industrial and general machinery, aircraft, space rocketry and air-conditioning systems.
For more information, please visit the MHI website (http://www.mhi.co.jp).

PRESS CONTACT:
Hideo Ikuno: h.ikuno@daiya-pr.co.jp
Tel: +813-6716-5277, Fax: +813-6716-5929
Daiya PR (in charge of public relations for Mitsubishi Heavy Industries, Ltd.)