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Published on September 3, 2007

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Date Published September 3, 2007

The opening of a new Yokohama Rubber Co. Ltd. truck and bus tire plant in China is being delayed by nearly a year, but that hasn't curtailed a huge growth in the firm's sales in the nation.

The Suzhou Yokohama Tire Co. facility in Suzhou, Jiangsu Province, was scheduled to open this month. But problems in meeting environmental regulations has put back the opening of the factory until August 2008, the company said.

When the $81 million plant does start up, it will have a first-year production target of 80,000 tires, according to Yuji Sakamoto, general manager, marketing communication department at Yokohama Rubber (China) Co. Ltd., the Japanese manufacturer's holding company in China. Annual capacity will reach 350,000 units by 2009, he said.

Yokohama's other tire plant in China-the Hangzhou Yokohama Tire Co. Ltd. operation in Hangzhou that makes passenger and light truck tires-itself is undergoing a $25.4 million expansion. Sakamoto said that project will double annual capacity at the site to more than 2 million tires by May 2008.

The projects are under way while Yokohama expects to achieve a 50-percent increase in revenue in China this year, to nearly $115 million, with a 60/40 split between replacement and original equipment market sales. In 2006, China contributed only 1.5 percent to Yokohama's global tire sales, but by 2017 that will be closer to 10 percent, Sakamoto said.

Besides its aftermarket presence in that nation, Yokohama is a major OE supplier to the Chinese assembly operations of Honda Motor Co. Ltd., Mitsubushi Motors Corp., Toyota Motor Co. Ltd. and Suzuki Motor Co. Ltd. Sakamoto said the firm has exclusive supply status in China for the Toyota Camry and the Honda Civic.

Being an OE supplier is quite important in China, Sakamoto said, because 70 percent of Chinese car buyers want to replace their vehicles' original tires with the same brand as the OE tires. This contrasts sharply with Japan, where fewer than 30 percent of consumers stick with the same tire.

"Chinese customers don't know they can change the tire," Sakamoto said.

Passenger tires also are exported from China for sale in the Japanese aftermarket, but for now at least, Yokohama is not exporting to the U.S. from China.

"Aftermarket sales (are) getting higher and higher," he said. "We need to ride the wave."

Hangzhou Yokohama has made a change in its source for natural rubber. Earlier this year, the company reported it began using NR in its tire production grown on China's Hainan Island. The company declined to name the supplier.

Previously all natural and synthetic rubber was imported from Japan and Southeast Asia. SR is still imported, and Sakamoto said he expects the Chinese NR to be exported to Yokohama in Japan in the future.