US tire maker to raise capacity and expand in growing Chinese market
Goodyear Tire and Rubber Co plans to expand its manufacturing capacity and increase the number of its retail outlets in China this year. [Photo / Bloomberg]
SHANGHAI - The United States-based Goodyear Tire and Rubber Co said on Tuesday that it plans to open more stores in China this year.The new outlets are part of a strategy to further tap into the Chinese market, at a time when tire makers are under scrutiny after malpractices surfaced earlier this month.
The opening of the new stores will raise the company's total number to 1,000 in China, where the company says an efficient retail and distribution network is "essential" for achieving success.
Goodyear's expansion comes after doubt was cast on working practices at some tire makers. Kumho Tire Co Ltd, a leading producer in China, was found to have used excessive amounts of recycled rubber as raw materials in a plant in Tianjin.
The excessive use of recycled material has the potential to cause accidents as it can lead to bulges in the tires, or even result in them splitting.
When asked if the Kumho scandal had provided an incentive for Goodyear to accelerate expansion in a bid to gain market share, Huang Yuan, managing director of Goodyear China, said that the expansion plan has been formulated according to the company's own strategy and that "China's tire market is so big and growing so quickly that we don't need to take advantage of others' misfortunes to register growth".
He also said that the amount of recycled rubber used in the company's tires is well within standards, and promised "world-class quality" for the products made by its factories in China.
"Actually we export our Chinese-made products to Japan and Germany, which means we have to meet the world's most demanding engineering and quality standards," he said.
The expansion plan comes after Goodyear registered a strong year in China. "2010 was a good year and this is an exciting time for Goodyear in China," said Pierre Cohade, president of the company's Asia-Pacific region.
Sales, profit and revenue all jumped to record highs in 2010, said Cohade, who declined to provide specific numbers, citing corporate policies.
"In fact, we have been back-ordered in China over the past two years, with our capacity falling short of rising demand," Cohade said. "We have both short- and long-term plans to expand our manufacturing capacity here in China."
A $700 million plant is currently under construction in Pulandian, Liaoning province.
The facility has been designed to produce as many as 5 million tires a year, raising Goodyear's total annual capacity in the country to 11.5 million tires.
The new factory, which is expected to be operational by May, will serve the company's target of doubling sales in China by 2013, the company said.
