UE engine Chinese licensees expand their manufacturing capacity ~ J-ENG's medium to long-term licensing business strategy is steady progress ~

Japan Engine Corporation (J-ENG) granted the license for UE engines to Chinese engine manufacturers, and these licensees, Guangzhou Diesel Engine Factory Co., Ltd. (GDF) and Zhejiang Yungpu Diesel Engine Co., Ltd. (YDE), are expanding their UE engine manufacturing capacity in response to the strong engine demand in China's rapidly growing shipbuilding market.

GDF has completed its new Guangzhou factory (Guangdong Province, China) and has been fully operated since October 2025. Furthermore, GDF is planning to expand its facilities at its Jingjiang factory (Jiangsu Province, China), which has been operated since 2022, and is gradually increasing their production capacities through operations at both Guangzhou and Jingjiang factory. GDF is improving production efficiency through continuous production of the same type of engine, and with support from J-ENG, including technical assistance and enhanced supply of key components. Based on these activities, GDF aims to produce approximately 200 sets of UE engines in Year 2028.

Meanwhile, YDE is also expanding and strengthening its production capacity by adding manufacturing lines and upgrading facilities at its existing factory (in Zhejiang Province, China). YDE is shifting to increased production, leveraging its current strong order backlog, which is driven by continuous orders for small engines, primarily 33cm bore class engines suitable for domestic vessels in China. YDE aims to produce approximately 30 sets and more of UE engines in Year 2028.

With the expansion of demand for new shipbuilding in the Chinese market, Chinese licensees are expanding their manufacturing capabilities, dramatically increasing the supply capacity of UE engines in China. As a result, the global market share of UE engines is expected to expand even further.

In anticipation of this movement, J-ENG has established a wholly-owned subsidiary in Shanghai, China, named “Japan Engine Corporation (Shanghai) Co., Ltd.” in September 2025, and is working to strengthen support for our Chinese licensees and after-sales service capabilities. And, with the strong cooperation of its suppliers, J-ENG will further strengthen its supply chain for key components, thereby promoting the further growth of Chinese licensees.

In addition to expanding license revenues and key components supply businesses, J-ENG will ensure even greater medium - long term profit growth by reliably capturing the after-sales service demand accompanying the increase in the number of vessels in service.