Renewal of Joint Venture Agreement for Shanghai Mitsubishi Elevator Co., Ltd.

Photo (from left): Mr. Wan Zhongpei, President of Shanghai Mitsubishi Elevator; Kei Urukuma, Executive Officer and President of Mitsubishi Electric; Mr. Wu Lei, Chairman of Shanghai Electric Group; Iwao Oda, Head of Building Systems Business Division, Mitsubishi Electric / President and CEO, Mitsubishi Electric Building Solutions.

Mitsubishi Electric Corporation (hereinafter, Mitsubishi Electric) and Mitsubishi Electric Building Solutions Corporation (hereinafter, MEBS) have agreed to extend the joint venture agreement for Shanghai Mitsubishi Elevator Co., Ltd. (Shanghai Mitsubishi Elevator Co., Ltd., Headquarters: Shanghai, People's Republic of China, hereinafter, SMEC), a joint venture between Mitsubishi Electric and Shanghai Electric Group Co., Ltd. (Headquarters: Shanghai, People's Republic of China, hereinafter, Shanghai Electric Group), which is set to expire in December 2026, for another 20 years, thereby renewing the third-term joint venture agreement.

Mitsubishi Electric and MEBS will continue to provide products and services that meet the needs of the Chinese elevator market together with SMEC, and aim for further global business expansion through the collaboration of the three companies in the future.

Background and Aim of Joint Venture Agreement Renewal

Mitsubishi Electric established SMEC in Shanghai in December 1986 in a joint venture with Shanghai Electric (Group) Corporation, becoming the first Japanese elevator manufacturer in China to commence a total elevator business encompassing manufacturing, sales, installation, and maintenance. Since then, it has led the Chinese elevator market with a two-brand strategy centered on the Mitsubishi brand's flagship "MAXIEZ" series, developed by Mitsubishi Electric Shanghai Electric Elevator Co., Ltd. (Headquarters: Shanghai, People's Republic of China), and SMEC brand products.

In recent years, the demand for elevators in China has undergone a structural change, with the expansion of new installation demand slowing down, while the number of operating elevators has increased. A significant increase in maintenance and renovation demand is expected in the future. Globally, demand in the volume segment of the new installation market, primarily for residential and public infrastructure, is rapidly increasing in regions such as the Middle East, ASEAN, India, and Africa.

Mitsubishi Electric, which positions the Building Systems business as one of its key growth businesses, is promoting its business growth strategy together with MEBS, a consolidated subsidiary that operates the elevator business globally. This time, seizing the opportunity presented by the change in demand structure in the Chinese market and the increase in new installation demand globally, Mitsubishi Electric and MEBS have agreed to further strengthen their collaborative relationship with Shanghai Electric Group and aim for further business expansion of SMEC, in order for the Building Systems business to continue growing in the Chinese and global markets.

In the next joint venture period agreed upon, they will accelerate the expansion of maintenance and renovation menus and the deployment of multi-brand maintenance and renovation, thereby building a foundation for changing demand.

For the vast existing market in China, in addition to promoting energy efficiency and extending the lifespan of buildings by expanding elevator renovation menus, they will accelerate the introduction of SMEC's independently developed IoT platform. This aims to improve operational stability and efficiency through advanced remote monitoring and control.

Furthermore, by leveraging SMEC's excellent ability to respond to customer requirements and its price competitiveness, they aim to acquire new demand in growth markets such as the Middle East, ASEAN, and India. By expanding the export of SMEC products through MEBS's global sales network, they will strengthen global sales.

Through this collaboration, which leverages the strengths of both companies, they will strengthen a stable business foundation in China and promote a strategy for expanding the global elevator business.

Comments from Stakeholders

Mr. Wu Lei, Chairman of Shanghai Electric Group Co., Ltd.

"We are delighted to have reached an agreement on the renewal of the third-term joint venture agreement for Shanghai Mitsubishi Elevator Co., Ltd. with Mitsubishi Electric and Mitsubishi Electric Building Solutions Corporation. Based on the mutual trust and collaborative achievements built over many years, we will further strengthen our response to the Chinese market and promote sustainable growth in the global market together with our partners."

Kei Urukuma, Executive Officer and President of Mitsubishi Electric Corporation

"We are very pleased to have concluded the renewal of the third-term joint venture agreement with Shanghai Electric Group. We will use this contract renewal as an opportunity to support the transformation of our business structure to capture environmental changes in the Chinese market, such as increased renovation demand and advanced maintenance needs, and to contribute to enhancing brand power in the global market."

Iwao Oda, Head of Building Systems Business Division, Mitsubishi Electric / President and CEO, Mitsubishi Electric Building Solutions Corporation

"We are pleased to have reconfirmed our strong partnership with our partners during this contract renewal. We will continue to deepen the ties between our two companies and aim for business expansion not only in China but also globally."