Toyo Ends China JVs, Announces Construction of New Factory

When building its all-new factory in China, Toyo Tire & Rubber will be going it alone. During a Board of Directors meeting on August 27, the company decided to end its joint venture agreements for tyre production in China. Toyo has operated Cheng Shin-Toyo Tire & Rubber (China) Co., Ltd. together with Taiwan’s Cheng Shin Rubber Ind. Co., Ltd. since the end of 1995, with a focus upon manufacturing car tyres and tubes for the Chinese market. The company also began a partnership, Cheng Shin-Toyo Tire (Xiamen) Co., Ltd., with Maxxis International Co., Ltd. in 2002, producing commercial vehicle radials. Both joint ventures have been terminated as of August 27.

Toyo reports it decided to end the two joint ventures as a means of responding to “increasing tyre demands in accordance with the rapid progress of motorisation in the Chinese market.” In place of the joint venture agreements, Toyo will rely upon consignment manufacturing, as it believes the company has “achieved adequate results regarding the original business target.” The company will also build a wholly owned tyre factory in China.

The new facility will meet, as Toyo says, “robust demand in the developing Chinese market.” The company is currently in the process of selecting a location for the factory, and says the expected site will be somewhere along China’s coastal region, in order to accommodate deliveries to vehicle manufacturers within China. Production is anticipated to commence late in 2001 following an initial 10 billion yen (£65 million) investment phase. Production capacity will initially be two million passenger car and light truck tyres per annum, destined for domestic consumption, however Toyo comments the plant is “expected to gradually ramp up its capacity in accordance with the market expansion.” Approximately 400 people will be employed at the new factory.