Jiangsu General increases Cambodian factory capacty, terminates China plant plans

Jiangsu General has terminated its plan to build a tyre factory in Baotou, China, on the grounds that “[China’s] domestic all-steel tyre market is still in a weak recovery stage and cannot meet the expected development”. At the same time, the tyre manufacturer is preparing to invest 1.495 billion yuan (approximately £165 million; €191 million) in the expansion of its Cambodian factory. The construction period of the expansion project is 18 months. After its completion, the annual output of the Cambodian factory can increase to 3.5 million semi-steel radial tyres (PCR) and 750,000 all-steel radial tyres (TBR).

Putting the termination of the Baotou factory and the expansion of the Cambodian factory together indicates that Chinese tyre manufacturers may invest more in overseas factories in the future.

Jiangsu General’s Cambodia plant has completed the first phase of the project and can produce 5 million semi-steel radial tyres and 900,000 all-steel radial tyres annually. It is estimated from this that the annual PCR and TBR production capacity of the factory will reach 8.5 million and 1.65 million after the expansion is completed.

According to Jiangsu General, the products of the Cambodian factory expansion project are “mainly targeted at international markets such as the United States and Europe, and also consider Cambodia’s surrounding countries and regions”. The tyre manufacturer positioned the product advantages of the Cambodian factory as “good brand effect, advanced technology, excellent quality, reasonable price, strong competitiveness in foreign markets, and broad market prospects”.

Previously, the tyre manufacturer’s original strategy was that the products of the Thailand factory were mainly targeted at the US and European markets, and the tyres manufactured by the Cambodian factory were sold to Brazil and other regions that have set up trade barriers for Chinese tyres. As the Cambodian factory expands production, how to adjust its sales strategy in overseas markets has become a vital issue for Jiangsu General to consider.

A person familiar with the situation at Jiangsu General told Tyrepress China that “the Cambodian plant will provide 300,000 all-steel radial tyres for the Brazilian market, and the remaining all-steel production capacity will be released to the US market”.