Harbin Electric, Inc. (“Harbin Electric”), is a holding company incorporated in Nevada with its principal place of business based in the People’s Republic of China (“PRC”). Through our U.S. and China-based subsidiaries, we design, develop, manufacture, supply, and service a wide range of electric motors, with a focus on innovation, creativity, and value-added products. We sell our products principally in China, but also internationally in North America, and to a lesser degree in Southeast Asia and Africa. The terms “Harbin,” “Harbin Electric,” “we,” “Company,” “us” and “our” and similar terms refer to Harbin Electric and its subsidiaries, unless otherwise expressly stated or the context requires otherwise.
We currently operate three manufacturing facilities in China. Our Harbin facility, Harbin Tech Full Electric Co., Ltd., (“Harbin Tech Full”) is located in the government-designated Development Zone in the city of Harbin and occupies approximately 50,000 square meters of land with state-of-the-art production equipment primarily dedicated to our linear motor products. Weihai Hengda Electric Motor (Group) Co., Ltd. (“Hengda”), our newly acquired industrial rotary motor company, is located in the coastal city of Weihai, Shandong Province, and occupies approximately 150,000 square meters of land. The third facility, a newly constructed facility occupying 40,800 square meters of land, is located in the Shanghai Zhuqiao Airport Industrial Zone. This new facility is expected to begin production in March 2009 and will be dedicated to specialty micro-motor products.
Our major product lines include linear motors (“LMs”), automobile specialty micro-motors, and industrial rotary motors. An LM operates on the same physical principles as a traditional motor, but the stator, or non-moving component, is flat, rather than cylindrical, producing linear, rather than rotational, force. LMs can be configured into different sizes and shapes. We believe that, for a variety of applications, our LMs have advantages over traditional electric motors, in terms of design, energy output, energy efficiency, and precision movement. By obviating pneumatic stops, belts, pulleys, and gears that rotary motors require to move and position their loads, LMs can provide higher levels of performance in accuracy, resolution, repeatability, and speed, with less maintenance and down-time. We sell our LMs to a broad range of customers in China and in the United States, including those customers in the oil services, factory automation, food processing, packaging industries, power generation systems, and mass transportation systems.
Automobile specialty micro-motors are used for various automation functions in an automobile. We have developed many innovative products that are used for car seat automation, back seat folding, EPS (electric power steering), automated window, and automated trunk opening. Our automobile specialty micro-motors are purchased by customers who are first-tier suppliers to the automobile industry. We supply these products to domestic customers and also export them to OEM suppliers in North America.
Hengda makes industrial rotary motors such as high/low voltage motors, AC/DC motors, and speed control motors for a wide range of applications such as medical devices, machine tools, ventilation systems, air compressors, and other machinery and equipment used in petrochemical, metallurgical, mining, textile, and agricultural industries. We sell these products in China, Southeast Asia, and Africa.
Our rotary motor products received the “National Inspection-free Product” award from the General Administration of Quality Supervision, Inspection and Quarantine of the PRC. Hengda’s registered trademark, “Wenbao,” was named by the State Administration for Industry & Commerce as one of the "Chinese Most Well-known Trademarks" in 2007.
Our objective is to be a leading global manufacturer offering a broad range of electric motors from linear motors, to specialty micro-motors, to industrial rotary motors with a focus on highly specialized, energy-efficient, customized, and value-added products for domestic and international customers. We expect that our scale and size will grow and our product offerings will be broadened. To achieve this objective, we plan to execute the following key business strategies:
·Strengthen Our Design and Development Capabilities. To meet the changing needs of our customers, we intend to continue to improve and strengthen our in-depth design capabilities to meet the changing needs of our customers, and continue to differentiate ourselves from our competitors in the global marketplace. We intend to capitalize on the significant growth in the end-markets for linear motors and automotive specialty micro-motors in China by continuing to build out our design expertise and production capacity;
·Further Grow Market Share in Linear Motor Market. We are expanding our customer base by developing new products for existing and new customers. We successfully developed a “Tower Type Oil Pump” driven by permanent magnetic linear motors for the oil industry. We also designed the Cylinder Permanent Magnetic Linear Servo Motor which can be applied in many different applications including printers, air compressors and food slicers. Currently, we are in the final phase of jointly developing an urban mass transportation railway system driven by linear motors with the Institute of Electrical Engineering of the Chinese Academy of Sciences (IEECAS) and Changchun Railway Vehicles Co., Ltd. (CCRV);
·Expand Capacity in Micro Motor Market. We are currently building a new plant in Shanghai that will address the market for specialty micro-motors used in automobile applications. The new facility is expected to increase capacity by 10 million units and to begin production in March 2009. This will allow us to supply the fast growing domestic automobile industry and capture the international auto markets that increasingly source auto parts from China. We are also interested in expanding into other industrial applications;
·Leverage Our Strong Customer Relationships into New Opportunities. We will continue to expand our presence in the Chinese market. While developing strategic relationships with established international firms, we will also proactively pursue opportunities in the global markets for linear and other special motors that have higher profit margins. We are currently working with several international companies in North America and Asia; and
·Grow Industrial Rotary Motors Business with Focus on High Efficient Specialized Products. We entered the industrial rotary motors business through an acquisition in July 2008. This acquisition will enable us to expand our product offerings and will position us to be a leading diversified electric motor manufacturer in China that offers a broader range of electric motors from more specialized linear motors, specialty micro-motors, to more standardized industrial rotary motors. Long term wise, we will focus on developing high-end, energy-efficient, and highly specialized products.
PRODUCTS AND SERVICES
We design, develop, manufacture, supply, and service a wide range of electric motors, with a focus on innovation, creativity, and value-added products. We develop products according to our customers’ specifications using our proprietary process technology and expertise. With close customer relationships, in depth understanding of local markets and customer needs, and low development and production costs, we hope to be able to outperform our international and domestic peers.
Presently, we offer three key product lines:
1.Linear motors and their integrated application systems
A linear motor is an electric motor that converts the electric energy through a magnetic field into linear motion without the need for a mechanical linkage. An axis driven by a linear motor requires little or no contact between moving parts. Reduced contact between moving surfaces translates to reduced wear and reduced vibration. As a result, there is no backlash, windup, wear or maintenance that is normally associated with industrial rotary motors. Many applications that require some sort of linear motion can benefit from the use of linear motors.
2.Automobile specialty micro-motors
Automobile specialty micro-motors are used for various automation functions in an automobile. We have developed nine products that are used for car seat automation, back seat folding, EPS (electric power steering), automated window, and automated trunk opening. Several other types of specialty micro-motors are under development including micro-motors used for door lock, gas pedal, ABS, gas pump, and engine gas jet.
3.Industrial rotary motors
We manufacture various industrial rotary motors such as high/low voltage motors, AC/DC motors and speed control motors mainly including small to medium sized.
As of December 31, 2008, the Company had a total of approximately 2,000 employees. We believe that we have good working relationships with our employees, most of whom are located in Harbin, the capital of Heilongjiang Province, Weihai, a coastal city in Shandong Province, and Shanghai. We are not a party to any collective bargaining agreements, and none of our employees are subject to collective bargaining agreements.
We have employment contracts with our employees. Employment contracts are designed to adhere to both State and Provincial employment and social security regulations under applicable Chinese or the U.S. law. We have signed confidentiality agreements with all of our employees.