Continental Enters China Plant ‘End-Game’

“We are making the final decision of the destination between two Chinese cities for passenger- and light-duty truck-use tyres production,” Continental AG executive board chairman, Manfred Wennemer, told the China Daily Newspaper. He did not give details of exactly which cities were being considered for a new production plant, but put the total proposed investment at 200 million euros and explained that his company plans to open 100 franchised and owned retail stores in the country in 2007.

Informed sources told Tyres & Accessories that the two short listed sites are likely to be selected from three possible cities. These are: Shen Yang, Dalian (Liaoning) where the likes of Michelin, Bridgestone and Goodyear are already producing tyres; and Tianjin, where Bridgestone has another factory.

Back in August Continental AG board member Dr Hans-Joachim Nikolin told Tyres & Accessories the company had narrowed the search for its first Chinese production facility to two possible locations. Both plots are greenfield sites and the selection is expected to come down to which area offers the best economic incentives.

Dr Nikolin told T&A the plant will follow the same model as the company’s recently opened, Camacari, Brazil, factory and will produce 4 to 6 million passenger car tyres and between 400,000 and 600,000 truck tyres using “standard” Continental technology. All of the tyres made at the new Chinese production plant are expected to be sold on the Chinese domestic market.

China Daily reported that since entering the China market in 2002, Continental has had a very slim market share in the tyre market through its dealerships in 10 coastal provinces, but that ContiTech achieved a 20 per cent growth rate last year. In China, “we only provide tyres for replacement for high-end imported vehicles which come from our global OEM (original equipment manufacture) partners like BMW, Mercedes-Benz and Porsche,” Wennemer said.

Since 2002, Continental has invested 25 million euros (US$32 million) in China, establishing 13 facilities in nine provinces and regions.