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Highway Holdings Announces Joint Venture

August 12, 2009

The venture includes Xenon and Matrix Systems and will manufacture automation equipment and provide maintenance services for industrial companies in Asia.

HONG KONG /GLOBE NEWSWIRE/ -- Highway Holdings announced it has formed a joint venture with Xenon Automatisierungstechnik GmbH, based in Dresden, Germany, and Matrix Systems International Ltd., a Hong Kong company, to manufacture and provide maintenance services for German-designed automation equipment to be used in the manufacturing process of industrial companies in Asia.

The newly formed joint venture will be named Xenon Automation Asia Ltd. and initially use Highway Holdings' facilities in Hong Kong and China for its operations. Highway Holdings will be the largest shareholder of the joint venture.

"Demand for sophisticated automation equipment for the manufacturing industry in China is expected to increase dramatically as a result of rising labor costs during the past two years. Strongly increasing international competition among emerging countries such as India, Mexico, Indonesia, and other markets is forcing manufacturers in China to improve efficiency and the reliability of their manufacturing process," said Roland Kohl, President and Chief Executive Officer of Highway Holdings.

"We anticipate these factors will generate strong interest among China manufacturers for automation equipment featuring advanced German technology that is produced cost-effectively in China," Kohl added.

He noted that Xenon Automatisierungstechnik GmbH is a 20-year-old highly regarded automation equipment company that designs, develops, and manufactures specialized machinery and equipment for well-recognized international companies. "Xenon GmbH will contribute the design, development, and technical expertise to the joint venture. Matrix Systems will provide additional marketing capabilities, and Highway Holdings will contribute certain facilities and employees to the joint venture," Kohl said. He added that Highway Holdings will also acquire automation equipment from the joint venture for Highway Holdings' core business. "This is a logical extension of Highway Holdings' year-long efforts to upgrade manufacturing capabilities and streamline the company's manufacturing-cost structure by designing and producing automation equipment in-house," Kohl stated. He added that Highway intends to use the products of this new joint venture to further upgrade its facilities and enhance its reputation as a world-class OEM manufacturer, offering high-quality production capabilities at an attractive price structure.

He noted that Highway Holdings intends to introduce the venture to its customers currently operating manufacturing facilities in China. "We believe they will be very interested in this additional service—supporting them to upgrade and maintain their production facilities with local-made, German-designed state-of- the-art manufacturing equipments. This will have the added benefit of strengthening our customer relationships and may lead to more sophisticated business opportunities," Kohl said.

About Highway Holdings
Highway Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers, from simple parts and components to sub-assemblies. It also manufactures finished products, such as light fixtures, LED lights, radio chimes, and other electronic products. Highway Holdings operates three manufacturing facilities in the People's Republic of China.

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