1. Introduction to the Project
1.1 Project Background
1.1.1 Product Introduction
Aluminium alloy hub installed in automobile has advantages of light weight, and good heat dissipation and damping property, which is the inevitable choice for producing the energy conservation and safe automobiles. Compared with steel hub, aluminium alloy hub is about 2kg lighter on average. When the speed is 60km/h, it can save oil 5%-7%, it is also featured by fast heat dissipation, good damping performance, long service life of tyre, safety and reliability, beautiful appearance, abundant colorful patterns, precise dimension and good balance, which is widely used in the western limousine industry, having huge development potential. With the development of Chinese automobile manufacturing industry, aluminium alloy wheel manufacturing industry is constantly improving. Constant introduction of high and new technology will promote manufacturing and application industry of Chinese aluminium alloy wheel to develop rapidly. Fast development of Chinese automobile market and rapid growth of the purchase quantity of multinational corporations have brought about the wonderful development opportunity for Chinese aluminium alloy wheel industry.
1.1.2 Market Prospects
(1) International Market Analysis:
In the past 12 years, aluminium application rate of automobile hub in North America has risen very swiftly. In 1999, aluminium application rate of car and light truck hubs in North America reached 53%, and the market share of automobile aluminium alloy hubs in North America in 2010 has risen by 70%. In the present world, the annual output of automobile's aluminium alloy hubs is about 100 million, and it is estimated that, the demand for aluminium alloy hubs in 2014 will reach about 250 million. The enormous attractiveness of the international aluminium alloy hub market will stimulate further development of aluminium alloy hub industry. Because the demand of international market for aluminium hub has been optimistic and China's products have advantage in price, at present, domestic main manufacturers have considered the international market as key market for development. America is main export market with annual demand of aluminium alloy hubs over 50 million, followed by Japan and Germany, with annual demand of aluminium alloy hubs over 30 million. Demand for aluminium alloy hubs in South Korea, Australia, Southeast Asia and Europe is relatively big as well.
(2) Domestic Market Analysis:
Domestic aluminium wheel market is mainly concentrated in Shanghai-VW, FAW-VW, Guangzhou Honda and a few mini-automobile plants and Pickup truck plants, and they mainly provide supporting products for the automobile plants. According to the vehicle model, advanced limousines: Audi A6; medium limousine: Accord, Passat; low-grade limousine: ordinary Santana, Jetta, Xiali, Citreon; as well as mini-van, Pickup, medium-van and jeep have been widely equipped with aluminium alloy wheel. At present, China has enough recognition for aluminium wheel as well as its advantages. With the growth of Chinese automobile output, the demand for aluminium alloy wheels will become bigger and bigger. In 2010, China got the output of 9 million limousines, calculating at 70% of utilization rate of aluminium alloy hubs, each vehicle needs 5 hubs, plus spare wheels, the annual demand of aluminium alloy hubs would be 31.5 million. It is predicted that, in the future 5 years, calculating at annual output of 10 million limousines, annual demand for aluminium alloy hubs will be 35 million. In addition, Chinese automobile inventory has substantially increased. Chinese limousine inventory in 2010 was 32 million. Calculating on the basis of Chinese automobile inventory in 2010 and 20% annual maintenance and replacement of aluminium alloy hubs, the annual demand of aluminium alloy hubs would be 32 million. Only for these two items, annual demand of aluminium alloy hubs will be 67 million. At present, China has 80 manufacturers of aluminium alloy hubs, in which 9 manufacturers have production scale of over 2 million hubs, including Dica Hub Manufacturing Co., Ltd., Kunshan Liufeng Machinery Industry Co., Ltd., Nanhai Zhongnan Aluminium Alloy Hub Co., Ltd., Xiamen Minxing Metal Products Co., Ltd., Shanghai Guoxing Metal Product Co., Ltd., Yuanqing Aluminium Alloy Hub Co., Ltd. The production capacity of the remaining 70 enterprises is about 200,000. Annual supply of aluminium alloy hubs in Chinese market is about 3,220 pieces, and annual demand is about 67 million, having the market gap.
In 2012, China’s automobile production and sales volume was kept in the stable growth and it broke 19 million and set a new record in the world, ranking first in the world for consecutive 4 years and it has been more than 18 million for consecutive 3 years. All these show that China’s automobile industry has entered the phase of stable development with the high total quantity. In addition, in January-September, 2013, China’s automobile production and sales volume reach 15.9384 million and 15.8831 million, an year-on-year growth of 12.78% and 12.70%, respectively. According to the current growth rate, it is predicted that China’s automobile production and sales volume will set the record of 20 million in 2013, which has fully shown the development potential of China’s automobile industry; it has also provided the solid foundation for the development of the matching automobile industries. China has become the largest automobile production and consumption country in the world. Automobile part has become a new growth point. Changchun City has more than 10 manufacturers need supporting hubs for complete vehicles, including FAW Automobile, FAW Toyota, FAW Passenger Car, FAW Limousine, FAW Jiefang, FAW Special Vehicle and Zhongxing Automobile. The present situation is that, the countries in West Europe and Japan have developed hub industry, big output and high quality, the market has been occupied by them, and it is very hard for other countries to occupy the market share. Therefore, the countries in North America, Australia as well as Middle East have become main market they are striving for selling hubs. It is estimated that, by 2015, China's supporting demand for automobile hubs will reach 90 million, including 68 million passenger car wheels and 22 million commercial vehicle wheels.
In the aspect of market positioning, key market is Yangtze River Delta, Pearl River Delta as well as Northeast, overseas market is mainly in America, Europe and Asia.
In the aspect of market sales objectives, the main objectives are automobile's main engine plants. FAW expands its production of trucks, and will establish and produce the production line with annual capacity of 2 million automobiles during the Twelfth Five-Year Plan. In this case, by the end of the Twelfth Five-Year Plan, the annual demand for supporting hubs of FAW limousines and light vehicles will be more than 19 million sets. The demand of aluminium hubs will exceed the supply.
1.1.3 Technical Analysis
Tyre is soft. The drum-shape component supports the inner frame of tyre and with its center installed on the axle tyre is called hub. Rapid development of automobile industry has provided enormous development space for the production of automobile hubs. Hubs are divided into two major categories according to the materials: steel hubs and alloy hubs. The main advantages of steel hub are simple manufacturing technology, relatively low cost, and strong metal fatigue resistance. But the disadvantages are very obvious as well, such as heavy weight, big inertial resistance and poor heat dissipation. The advantages of alloy hub are light weight, high manufacturing precision, big strength, small inertial resistance, strong heat dissipation and good visual effect; and the disadvantages are complicated manufacturing technique and high cost. Most of alloy hubs are mainly made from aluminium, added with appropriate manganese, magnesium, chromium, titanium and other metal elements. Compared with steel hub, alloy hub is featured by energy conservation, safety and comfort, so increasingly more automobiles are equipped with alloy hub as standard configuration. Lower hub is one of the most important safety parts in the automobile, which bears the pressure of automobile and load mass action, the action of dynamic torque when the vehicle is starting or braking, as well as the irregular changing stress generated from dynamic load impact at different directions when the automobile runs on the bend or bumped roads. The quality and reliability of hub will relate the safety of vehicle as well as the people and materials on the vehicle, and influence the smoothness, control ability and comfort during running of vehicle, this requesting the hub to have good dynamic balance, high fatigue resistance, good rigidity and flexibility, high dimension and shape precision, and light mass. Based on the excellent comprehensive performance, aluminium hub can meet the above requirements, having outstanding performance in safety, comfort and light weight, achieving market favor, and gradually replacing steel hub and becoming the best choice.
The most leading production flow of automobile aluminium hub is: melting→refining→material inspection→low-pressure casting→X-ray radiographic inspection→hot processing→mechanical processing→dynamic balance inspection→gas tightness inspection→coating. Automobile aluminium hub is developing to be big diameter, light weight, high strength and beautiful appearance. The mainstream market of automobile is dominated by l5-18in (1in=25.4mm) hubs, and 16in hubs occupy the largest market share. Main development tread of aluminium hub's manufacturing technology is automation, intelligent property, conservation, energy conservation and environmental protection. The specific measures include: directly delivering liquid state aluminium alloy to production site, pollution-free aluminium liquid refining, aluminium liquid thermal analysis, X-ray automatic flaw detection, helium automatic leakage test, dry mechanical processing, high-speed static rotary cup spray gun, chromium-free processing, powder injection, water paint and other new techniques. At present, annual production capacity of 65 million hubs enabled China to become the major production country of aluminium hubs in the world. Chinese automobile aluminium hub industry is struggling to become bigger and stronger, and become a strong production country of aluminium hubs in the world.
The patented technology can be purchased.
1.1.4 Advantageous Conditions of Project Construction
 (1) Location advantage
Liaoyuan Economic and Development Zone is located in Liaoyuan City, the traffic is convenient, railways passing through. Near the Zone, there is a expressway passenger station close to the capital city Changchun and other cities in the province. Liaoyuan Economic and Development Zone and Dongliao Industrial Concentration Zone are neighbor in geology, having strong industrial complementarity. According to "Liaoyuan - Baiquan" integration development plan, the municipal government has implemented overall plan for the infrastructure connecting two development zones, and conducted comprehensively construction for road, and water and power supply. The integration and development will speed up the development of Liaoyuan development, and enhance the overall strength. The integrated development zone will be upgraded to the national-level development zone, enabling Liaoyuan in the transition to get more policy support, continue attracting investment, expanding economic aggregate, and accelerating the comprehensive transition of Liaoyuan City. Liaoyuan is 100km from Changchun and 200km from Shenyang, located in the development axle of northeast central cities, which is the important nodal city connecting Jilin Province and Liao Province as well as the important industrial city. Compared with other regions in the province, the land of Liaoyuan City has certain advantage in the aspects of price and supply.
(2) Technical talent advantage
In order to cultivate reserve talents for industrial enterprises, Liaoyuan City Government has established human resource information platform, and constructed business starting incubator for university students in Northeast Socks Industrial Park. In addition, many universities and colleges such as Liaoyuan Vocational Technical College provide over 3,000 professional technical talents for each enterprise. It is near Changchun and Shenyang, and able to attract many talents. The Development Zone has 4 aluminium product processing enterprises, world-class advanced technology and first-class equipment, having excellent brand effect in this industry and many patents. Most of products have become the national and provincial-level brand-name and high-quality products, and sold in all countries around the world. These enterprises have become Grade A supplier for global big companies, representing high-end technology in Chinese aluminium alloy product industry.
1.2 Content and Scale of Project Construction
1.2.1 Product Scheme
2 million sets/year aluminium alloy automobile hubs.
1.2.2 Construction Content
It covers an area of 100,000m2, 4 new plants, 1 comprehensive building and 1 warehouse.
1.3 Total Investment of the Project and Financial Evaluation
1.3.1 Total Investment of the Project (see Table 1)
The estimated total investment of the project is RMB400 million, including RMB300 million construction investment and RMB100 million circulating capital.
Table 1: Summary Table of Total Investment of the Project     Unit: RMB10,000
No.    Expense Name    Amount of Investment    Proportion of Total Investment %    Remarks      
1    Construction investment    30000    75          
2    Interest incurred during construction            Not considered yet      
3    Circulating capital    10000    25          
    Total investment of the project (1+2+3)    40000    100         
Note: "RMB10,000" in the Table shall be RMB.
1.3.2 Main Financial Indexes (see Table 2)
 Table 2:         List of Major Indexes for Forecast of Financial Benefits
No.    Name    Unit    Index    Remarks      
1    Business income    RMB10,000/a    65000    Normal year      
2    Total profit    RMB10,000/a    10500    Normal year      
3    FIRR of all investments    %    17.2    After income tax      
4    Period for recovery of all investments (after tax)    a    5.6    Including 2 years of construction period      
5    ROI    %    19.7    After income tax     
Note: "RMB10,000" in the Table shall be RMB
1.4 Social Evaluation
In the present situation of energy crisis and environmental pollution, as the necessary traffic tool in people's life and economic construction, automobile is also the largest source of energy crisis and environmental pollution. Energy conservation and emission reduction and environment protection will certainly become the pursuit of automobile design and automobile manufacturing. The hubs produced in this project can save materials and have good energy conservation effect, bringing about excellent social benefits for energy conservation and emission reduction and environment protection.
1.5 Cooperative Ways of the Project
Sole proprietorship of the investor.
1.6 What to be Invested by Foreign Party
1.7 Construction Site of the Project
Jilin Liaoyuan Economic and Development Zone
1.8 The On-going Condition of Project
Planning in early stage
2. Introduction to Partner
2.1 Basic Conditions
Name of Project Undertaker: Liaoyuan Economic Development Zone
Legal Address: No. 1633, Caifu Road, Liaoyuan City
2.2 Introduction to Project Undertaker
Liaoyuan Economic Development Zone is a provincial economic development zone established in December, 2001 with the approval of provincial government, which is located in the southwest urban area of Liaoyuan City. Its area is 66.26 kilometers and its comprehensive economic strength ranks fifth among all development zones in Jilin Province. In recent years, the zone has introduced many famous enterprises from home and abroad, including Jilin Liyuan Precision Manufacturing Co.,Ltd., Midas Holdings Limited, Gelita AG, Sinopoly, China Resources Gas, Merro International, Joyson Electronics, IBM Cloud Computing Center, Changchun Ouya (Group) Co.,Ltd. The zone has formed a convenient traffic network, owns complete auxiliary systems of water supply, drainage, power, thermal power, gas, etc. and well-equipped production and life service facilities, and can satisfy the demand the modern industrial, living and public service. Liao Economic Development Zone has built a soft investment environment under the directions of being close to, help and assist commerce, actively solved the problems of enterprise in construction, production and operation, strengthened and promoted its administration capacity and further increased its service quality and efficiency.
Liaoyuan Economic Development Zone will industriously build itself into an active, happy and beautiful development zone by devoting itself in achieving the synchronous development of economy and society and the harmonious development of human and environment, fully implementing scientific outlook on development, tangibly changing its economic growth pattern, insisting on the idea of combining new industrialization and feature urbanization by taking economic construction as central task!
2.3 Contact Method
Investment Promotion Bureau of Liaoyuan Economic Development Zone 
Contact person: Song Yang
Tel: 0437-3292088 
Fax: 0437-3292081

Contact Person of Project City (Prefecture): Cui Shiwei
Tel: 0437-3528822   13766066922
Website of City (Prefecture):


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