HANOVER, Germany (Sept. 21)—Continental A.G. has taken a first step toward its long-awaited move into tire manufacturing in China, signing a memorandum of understanding with Qingdao Doublestar Tire Industrial Co. Ltd. of Qingdao, China.
The memorandum covers both companies' intention to establish a tire-manufacturing joint venture in spring 2005. Conti expects to be the majority partner, according to a statement from the tire maker, and the two firms expect to expand tire capacity at Qingdao's existing location and to build a plant to make passenger and light truck tires.
Hans-Joachim Nikolin, Conti board member responsible for the project said, "We have found Doublestar to be a company with a very good position in the market, and are confident that an alliance can be created that is profitable for both parties."
"We are full of confidence about the cooperation with Continental, and we are sure that this will lead to a common success," said Song Xin, board member of Doublestar Group responsible for the project.
Qingdao Doublestar Tire—previously known as Qingdao Huaqing Tyre Industrial Co. Ltd.—operates an 8-year-old plant in Qingdao with annual capacities of 1.5 million steel radial truck tires; 2 million bias heavy-duty tires; 2 million agricultural tires; and 4 million inner tubes. It was ranked 30th in the world in the most recent Rubber & Plastics News Global Tire Top 75 with sales of more than $220 million. It forecasts sales growth to more than $800 million by 2006, according to information posted on its Web site.