Tsuneishi Corporation to establish a new company in China

March 26, 2004

TSUNEISHI SHIPBUILDING

Tsuneishi Corporation announced that it will establish a new shipbuilding company on Shuzan Island, China, as part of its global strategy to strengthen its international competitiveness in the shipbuilding market.

On March 21, 2003, we filed an application to newly establish a wholly owned subsidiary, "TSUNEISHI GROUP (ZHOUSHAN) MARINE & DEVELOPMENT INC." on Shuzan Island, one of the Zhoushan Islands located at the southern end of the Yangtze Delta, halfway down the China's eastern coast. The Chinese Government's permission is due to be granted on March 28. As soon as we receive permission, we will commence construction of the factory, after receiving the rights to use the land, which is a large plot of 260 hectares.

"TSUNEISHI GROUP (ZHOUSHAN) MARINE & DEVELOPMENT INC." is capitalized at about 6.50 million U.S. dollars, and its total capital investment is about 13.50 million U.S. dollars.
The new company will start production by constructing accomodation blocks for Tsuneishi Corporation's vessels, which it plans to deliver for the first ship in early September 2003.

Within a few years, the company will boost output of accomodation blocks, while expanding its product lineup to reinforced longerons, hatch covers and customized pipes, among other items, with an annual steel use target of 30,000-40,000 t.The location has easy access to both Japan and other Asian countries. The new company plans to expand output with the aim of supplying to other shipbuilders than Tsuneishi Corporation.

Tsuneishi Corporation established Tsuneishi Heavy Industries, Inc., its wholly owned subsidiary in Cebu, the Philippines, in 1997, marking a bold move towards globalization of its shipbuilding business.
The foundation of Tsuneishi in China is a foothold for establishing shipbuilding docks following those in Japan (Tsuneishi and Tadotsu) and the Philippines. We will further reinforce our international competitiveness while continuing to enhance our global business structure.