A tire factory in Jining, Shandong province. China's automobile industry has boomed in the past two years, making the country the largest vehicle market in the world with 18 million units total sales last year. The country has also been on the radar of multinational tire manufacturers as a future business engine. [Photo / Agencies]
French tiremaker hopes to further develop business, research in emerging markets
BERLIN - China will be the major investment destination for French tiremaker Michelin SA in the next three years, with plans of expanding production and enhancing research and development (R&D) capabilities, said the company's top executive.
"We are planning a 1.6-billion-euro ($2.26 billion) investment in emerging markets in the next few years, including China, Brazil and India, as we see huge potential there to further drive our future development," said Michel Rollier, general managing partner of Michelin Group.
"And we have already decided to use $1.3 to 1.4 billion of the investment for production facilities in Shenyang, Liaoning province," he added.
According to Rollier, as their business develops in China and the city of Shenyang expands, "we need to relocate and build a new factory in the city".
The new facility, which is expected to be finished in the next three years, will be used to produce truck and passenger vehicle tires to meet the rising demand from the Chinese market.
"We are also in talks with Shanghai Huayi (Group) Co and its subsidiary Double Coin Holdings Ltd about establishing a new joint venture to produce tires," said Rollier.
However, he told China Daily that the project is still in the initial phase and declined to disclose further details.
China's automobile industry has boomed in the past two years, making the country the largest vehicle market in the world with 18 million units in total sales last year. The country has also been on the radar of multinational tire manufacturers as a future business engine. The world's top 10 tiremakers have all established manufacturing bases in China.
Last week, the German tiremaker Continental AG opened its first Chinese plant in Hefei, Anhui province, with a total investment of 185 million euros ($262 million), to produce tires for passenger cars. It will launch another factory in Jinan, Shandong province this week.
To maintain Michelin's leadership amid fierce competition, Rollier also said that the company is considering setting up regional R&D facilities in China in the near future.
"Obviously we need it in China, as we see the importance of the Chinese market and its consumers. We need to be close to them, and provide products to meet their specific requirements," said Rollier.
Michelin also plans to expand its retail network for passenger vehicle tires in China. It currently has more than 3,000 dealerships across the country.
"The next challenge is to expand our distribution and service network into smaller cities and inland cities," said Rollier.
When compared with the United States in terms of the number of tires produced for passenger vehicles, China is a relatively small market, accounting for about one-third of the US market.
However, "China is one of our fastest growing markets, and that's why we need to heavily invest here," said Rollier.
