Wanxiang Qianchao Co. (China, the main operating division of Wanxiang Group, China) and Sojitz Holdings Corp. (Japan) have agreed to set up a joint venture manufacturing operation at Wanxiang's home operation in Hangzhou, Zhejiang Province, China. Wanxiang directors gave final approval to the venture yesterday. The new business was formed by Wanxiang contributing plant and equipment totaling USD $9.5 million, while Sojitz contributed $3.2 million in cash. The operation will manufacture precision parts and bearings, leveraging Sojitz' participation in the Asian automotive and aerospace industries. Wanxiang, China's second-largest private business operation, is one of China's largest manufacturers of u-joints, CV joints, bearings and other automotive components. Sojitz, created by the mid-2004 merger of Japan's Nissho Iwai Corp. and Nichimen Corp., is one of the world's largest international trading companies, with operations on six continents. Widely diversified, Sojitz has also been in financial trouble. In September, the company announced it will book 2004 losses of at least ¥400 billion, up from the previously announced ¥250 billion. In mid-September, Sojitz landed an infusion of ¥370 million from its lenders. Sojitz already has several bearing-related ventures in China. The Kunshan plant, a 15%-owned joint venture operation with NSK Co., Ltd., is NSK's flagship production base in China. In Zhejiang, Sojitz has two: Zhejiang Asahi Bearing Co. Ltd. (60% owned), and Shaoxing Asahi Bearing Co. Ltd. (20% owned), producing lathing rings used to manufacture bearings. In late 2004, Sojitz announced a renewed focus on its bearing operations: "We are pursuing global development of our bearing business, a key component of the machine industry. We are pursuing worldwide sales of high-precision bearings manufactured in Japan and China, and have established joint-venture companies with Japanese components manufacturers, and are supplying bearing components to all parts of the globe. Focusing further on the components sector, we are strengthening collaboration with local Chinese manufacturers." When formally approved by regulators, Wanxiang will own 75% of the business and Sojitz will hold the remaining 25%. In a statement, Wanxiang said its involvement in the joint venture is to expand its market experience and engineering knowledge of the aerospace and automotive markets.