US-based power company Cummins and China’s XiangFan Kanghao M&E Engineering (Kanghao) have formed a joint venture to develop, assemble and distribute G-Drive engines to Chinese generator manufacturers.

The partnership will be based in Xiangyang city in central China’s Hubei province, and is set to begin operations in April, annually producing up to 40,000 units. It will also be the exclusive channel partner for Dongfeng Cummins Engine Company (DCEC) and Xi’an Cummins Engine Company (XCEC) G-Drive engines in China.

Cummins says the strategic partnership will be critical to improving its market presence in China as well as global leadership in the power generation industry. China produces a third of the global diesel and natural gas generator sets, while consuming almost 10% of those manufactured worldwide.

The joint venture brings together two companies with strong complementary businesses to offer a compelling value proposition to Chinese generator manufacturers: Cummins boasts legendary customer focus, technological leadership and product portfolio while Kanghao has a strong components business and Chinese presence.

Cummins’ general manager Leo Zhao says the partnership will also benefit the company’s Chinese joint-venture partners – DCEC and XCEC – by expanding the market reach and channel for their G-Drive engines globally. “The joint venture aims at integrating the strong power generation business of Cummins and the unique channel resources and key component supply of Kanghao.

“By providing the best products, service and brand recognition to China’s power generation equipment manufacturers, the new joint venture will achieve joint success with partners and customers.”

Kanghao’s executive vice president Fan Xiao says the company is thrilled to have the opportunity to significantly expand its cooperation with Cummins. “Kanghao is a strong player in China’s power generation market, while Cummins is a global power leader. Our long-term partnership with Cummins has already laid a solid foundation for this new joint venture. We are confident that the enhanced cooperation between the two powerhouses will further leverage our complementary strength to winning the market over.”

Kanghao is a subsidiary of the Xiangyang-based CYDG-Kanghao Corporation, a leading manufacturer of electronic governor controls, actuators and cooling systems. CYDG-Kanghao’s 2011 revenue exceeded RMB8 billion ($1.2 billion) and it is also the largest component supplier for joint ventures DCEC and Chongqing Cummins Engine Company (CCEC).

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