Now the yen has climbed to a 15-year high and to maintain their competitivness with their European counterparts especially in the China market, Japanese machine tool builders are forced to start producing high-end products in China, according to China's International Mould & Metal Plastic Suppliers Association.

The association's secretary general, Luo Baihui, said that Japan, in order to protect its technology, has insisted on producing high performance machine tools within its territory and exporting completed machines to overseas markets. However, the appreciating yen is putting Japanese companies in a disadvantageous position in their competition with their European counterparts in China. In order to maintain their position in the China market, Japanese companies have made the decision to localize their high performance machine tool manufacture.

China, with a market size of 2,000 billion yen, three times bigger than the market in Japan, has become an important market for Japanese machine tool manufacturers. Due to the soaring labor costs, China is having a greater and greater demand for high performance machine tools.

As revealed by the association, Mazak will begin producing horizontal machining centers in Ningxia within this year with a planned monthly output of several dozen units, and Okuma has decided to invest 2 billion yen to expand its horizontal machining center production in Beijing. Amada has begun producing laser machines in Shanghai from July, with a planned monthly output of three units in the beginning to 10-15 units by 2013. Mitsubishi Electric has started producing laser machines in Dalian from this January, with the monthly output doubling from five to 10 units by this fall.