TAIPEI, Taiwan (Aug. 31, 2009)—Cheng Shin Rubber Ind. Co. Ltd. has agreed to buy Toyo Tire & Rubber Co. Ltd.'s minority shareholdings in two Chinese tire manufacturing ventures, allowing it to increase its focus on the growing Chinese domestic markets.
Cheng Shin—which goes to market internationally as Maxxis International—did not disclose what it expects to pay Toyo for the shares. Toyo owns 22.4 percent of Cheng Shin-Toyo Tire & Rubber (China) Co. Ltd. in Kunshan and 21.4 percent of Cheng Shin–Petrel Tire (Xiamen) Co. Ltd. in Xiamen. The Kunshan plant makes passenger and light truck tires while the Xiamen unit makes radial truck tires.
Cheng Shin said the decision to end the ventures with Japan's Toyo Tire was by mutual agreement as both companies “believe that they have achieved the goals originally set for the joint ventures and anticipate continued growth with the new arrangement.”
Toyo disclosed Aug. 27 it was exiting the ventures and instead would build its own passenger tire plant in China at a cost of more than $105 million. Start-up capacity will be 2 million passenger and light truck tires by 2011.
Toyo cited its need “to respond to increasing tire demands in accordance with the rapid progress of motorization in the Chinese market” for its decision. The firm said it will switch its relationship with Cheng Shin to a consignment manufacturing agreement, which will allow it to continue to supply customers until its own factory comes on stream, which it's targeting for year-end 2011.
Toyo and Cheng Shin teamed up in 1995 to build the plant in Kunshan, which came on stream in 1997. The Xiamen joint venture was established in 2002.