The Japanese industrial giant Toyota announced here yesterday that its new forklift factory is set to start operating.

The move is expected to strongly bolster the company's ambition to secure its niche on the tempting Chinese market.

Despite a relatively small initial investment, about US$1.2 million, the factory is regarded as a key manufacturing base in China for Toyota. Prior to the establishment of the new production facility, Toyota had to rely on imports to weather cut-throat competition on the domestic market.

"The major reason for us to set up such a facility here is... the forklift industry's fast growth and big potential,'' said Tadashi Ishikawa, president of Toyota Industries Corporation (TIC).

Located inside the Toyota Industry (Kunshan) Co Ltd, set up in 1994 by TIC and two other partners, the "much-anticipated'' factory started trial operations in April and is expected to churn out 300 units by the end of this year.

Starting with the production of one- to three-ton engine forklifts, the factory will see its annual output volume raised to over 1,500 units within the next two years, according to Tatsuo Matsuura, senior managing director of TIC.

The forklift products produced at the factory will primarily supply the Chinese market through the dealership network set up by Toyota Material Handling (Shanghai) Co Ltd, established earlier this year. The network also distributes Toyota's imported forklifts.

Toyota said it will further expand the investment in the factory as well as its output and product portfolio, if the market response is encouraging.

~ "Our target is to take a 10 per cent market share in China by 2008,'' said Matsuura.

Statistics show China's annual demand for forklifts has grown from 23,500 units in 2001 to around 40,000 units.

Analysts have forecast the demand will keep rising to at least 60,000 units in the coming three to five years.

Followed by Germany's Linde and NACCO, Toyota is currently the No 1 global forklift seller with about 25 per cent of the market.

However, Toyota controls only a marginal market share in China, where three domestic manufacturers -- located in Anhui, Liaoning and Zhejiang provinces -- and Linde' joint venture in Fujian Province account for over 70 per cent of the total national forklift.

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