Sumitomo Electric Industries, Ltd. has agreed with Futong Group Co., Ltd. to set up three optical fiber-related joint ventures including an optical fiber preform manufacturing company in China. Futong Group, headquartered in Hangzhou City of Zhejiang Province and chaired by Mr. Wang JianYi, is a corporate group that is enjoying rapid growth in the Chinese optical fiber and cable market.

The three joint venture companies that Sumitomo Electric and Futong Group agreed to establish are:
(1) Hangzhou SEI-Futong Optical Fiber Co., Ltd.
Optical preform and fiber manufacturing company (Hangzhou City, Zhejiang Province)
(2) Chengdu SEI-Futong Optical Cable Co., Ltd.
Optical cable manufacturing company (Chengdu City, Sichuan Province)
(3) Hong Kong SEI-Futong Holding Limited
Holding company (Hong Kong)

Hangzhou SEI-Futong Optical Fiber (hereinafter referred to as SFF), a manufacturing company of optical preforms and fibers to be establish in Hangzhou City of Zhejiang Province, will be Sumitomo Electric’s first preform manufacturing plant in China.

Chengdu SEI-Futong Optical Cable to be established in Chengdu City of Sichuan Province will manufacture optical cables. The company will be supplied with optical fibers from SFF, and will produce optical cables so as to meet recent demand growth due to the information technology promotion policy being implemented in western China.

Hong Kong SEI-Futong Holding, the holding company of Sumitomo Electric and Futong Group to be set up in Hong Kong, will bring under its umbrella the two companies’ existing South China subsidiaries. The existing companies to be affiliated with this new holding company are Sumitomo Electric Optical Fiber and Cable (Shenzhen) Co., Ltd. (*1), Sumitomo Electric’s wholly-owned optical fiber and cable manufacturing company, and Transtech Optical Communications Co., Ltd., Futong Group’s optical fiber manufacturing subsidiary. Hong Kong SEI-Futong Holding will strengthen support for major customers in Guangdong Province and other parts of South China, and also expand export business by utilizing the locational advantage of being close to Southeast Asia.

Presently there is active demand for optical fibers and cables in China. It is anticipated that the steady growth of demand for these products continues with the ongoing construction and expansion of information infrastructure. Meanwhile, there are more than fifty companies of various sizes that are manufacturing optical fibers and cables in China, and there have been waves of merger and acquisition as larger manufacturers take over smaller businesses.

Under the present situation, there is a meeting of interests between Sumitomo Electric and Futong Group. The former aims to enhance its presence in the optical fiber and cable market in China: the latter wishes to expand into preform manufacturing as well as to strengthen customer support in West and South China and also export activity.

＜Profiles of Joint Venture Companies＞

1. Optical preform and fiber manufacturing company

Company name	Hangzhou SEI-Futong Optical Fiber Co., Ltd.
Location	Hangzhou City, Zhejiang Province, People’s Republic of China
Capital	30 million US dollars
Ownership	51% by Sumitomo Electric, 49% by Futong Group
Board of dirctors	Three members from Sumitomo Electric, two members from Futong Group *Chairman and president to be appointed by Sumitomo Electric.
Business activity	Manufacture of optical fibers and preforms
Date of establishment	November 2008
Commencement of operation	September 2010
Number of employees	140 (end of 2010)
Sales prospect	3.5 billion yen (32 million US dollars)(in 2011)

2. Optical cable manufacturing company

Company name	Chengdu SEI-Futong Optical Cable Co., Ltd.
Location	Chengdu City, Sichuan Province, People’s Republic of China
Capital	20 million US dollars
Ownership	49% by Sumitomo Electric, 51% by Chengdu Futong Optical Communication Technology (Chengdu Futong Optical Communication Technology Co., Ltd. is a wholly-owned subsidiary of Futong Group.)
Board of dirctors	Two members from Sumitomo Electric, three members from Chengdu Futong Optical Communication Technology *Chairman and president to be appointed by Chengdu Futong Optical Communication Technology.
Business activity	Manufacture of optical cables
Date of establishment	November 2008
Commencement of operation	January 2009
Number of employees	250 (end of 2009)
Sales prospect	6.2 billion yen (57 million US dollars) (in 2010)

3. Holding company

Company name	Hong Kong SEI-Futong Holding Limited
Location	New Territories, Hong Kong
Capital	100 US dollars (Authorized capital: 10,000 US dollars ) (There is also capital reserve of about 47 million US dollars.)
Ownership	49% by Sumitomo Electric, 51% by Futong Group (Hong Kong) (Futong Group (Hong Kong) Co., Ltd. is a wholly-owned subsidiary of Futong Group.)
Board of dirctors	Two members from Sumitomo Electric, three members from Futong Group (Hong Kong) *Chairman and president appointed by Futong Group (Hong Kong).
Business activity	Financing to Transtech Optical Communications and SEI Optical Fiber and Cable (Shenzhen)
Date of establishment	October 2008
Commencement of operation	December 2008
Number of employees	Two (end of 2009)

＜Profiles of two existing companies＞

1. Optical fiber and cable manufacturing company in Shenzhen (Presently Sumitomo Electric’s wholly-owned subsidiary)

Company name	SEI Optical Fiber and Cable (Shenzhen) Co., Ltd.
Location	Shenzhen City, Guangdong Province, People’s Republic of China
Business activity	Manufacture of optical fibers and cables
Date of establishment	July 2001
Number of employees	150 (end of 2008)
Sales prospect	3.1 billion yen (29 million US dollars) (in 2009)

2. Optical fiber manufacturing company in Hong Kong (Presently ownership by Futong Group)

Company name	Transtech Optical Communications Co., Ltd.
Location	New Territories, Hong Kong
Business activity	Manufacture of optical fibers
Date of establishment	July 2000
Number of employees	50 (end of 2008)
Sales prospect	1.8 billion yen (17 million US dollars) (in 2009)

＜Profile of Futong Group Co., Ltd.＞

Company name	Futong Group Co., Ltd.
Location	Hangzhou City, Zhejiang Province, People’s Republic of China
Chairman	Wang JianYi
Capital	Registered capital 208 million yuan (About 30 million US dollars)
Ownership	80% by Chairman Wang JianYi, 10 % by each of the two investing companies
Business activity	Manufacture and sales of optical fibers and cables
Year of establishment	1994
Number of employees	About 1,300 (Hangzhou, Zhejiang Province)
Sales	703 million yuan (about 102 million US dollars) (in 2006)