The JV company will be equally owned by Shanghai Tat Hong and Zhenghe, with an initial paid-up capital of RMB70m ($9m). Under the terms of the agreement, Zhenghe will contribute 33 tower cranes from its rental fleet, worth RMB35m. Shanghai Tat Hong will inject four tower cranes from its own fleet, plus cash, to take its total contribution to a matching RMB35m. Over the next two years, both parties plan to increase the total size of the JV company’s rental fleet from 37 to 100 tower cranes. This is expected to be achieved through a mixture of direct purchases and mergers and acquisitions.

“China is the world’s largest manufacturer and user of tower cranes and we foresee strong growth potential for the tower crane rental market in future,” said Roland Ng, Tat Hong president and chief executive officer.

Equipment rental is still a relatively new concept in China, according to Tat Hong. Unlike Europe and the US, the vast majority of construction equipment is still being purchased directly by contractors.

“The construction equipment rental industry in China is still very much in its infancy and presents considerable opportunities for a company with the right skills, contacts and resources,” said Shi Hong Quan, Zhenghe managing director.

Born out of the equipment section of Beijing No. 4 Construction Company of the Beijing Construction Bureau No. 1, Zhenghe became a private company in 2002. With a fleet of 106 tower cranes and 525 staff, it claims to be China’s largest tower crane rental company. The company has two subsidiaries which provide tower crane and passenger hoist operators, and erection and dismantling services. Its operations are based in Beijing and Shanghai, though it is expanding into new markets in 16 other key cities. The company reported a gross revenue of RMB51m in 2005.

• Tat Hong has announced it has acquired a 21% share in Kian Ho Bearings for S$10.6m (US$6.89m). KH is a distributor of bearings and seal products in Asia to wholesalers, replacement markets and OEMs. The company said that KH’s business is complementary to selling and leasing heavy equipment.