SHANGHAI—Shandong Linglong Tire Co. Ltd., China's third largest tire maker with annual sales of more than $2 billion, has selected a site in northern Serbia for a $994 million consumer/commercial tire plant.
The plant, to be built in three phases over six years, will be Linglong's second overseas factory and sixth overall. The first overseas plant opened in Rayong, Thailand, in 2014.
In an Aug. 20 filing with the Shanghai Stock Exchange, Linglong said it chose the site, in the Zrenjanin Free Trade Zone, because of the region's "cost advantage."
"The government's economic policy is to attract foreign investment, create jobs, reform and revise investment," according to the filing.
The investment and the establishment of a Serbian entity—Shandong Linglong Tire Co. Ltd. Overseas (Serbia)—will need the approval of the Chinese National Development and Reform Commission.
Linglong said it expects construction work on the 4.2 million-sq.-ft. plant will start in April 2019. The project will be completed in three phases, and at full capacity can produce 13.6 million high-performance radial tires per year—12 million passenger, 1.6 million truck/bus and 20,000 off-the-road tires.
Full completion of the three phases is set for March 2025.
Linglong has been searching for a site for its second overseas plant since early 2016, when Linglong Chairman Wang Feng announced the company's "3+3" strategy of development, with three plants in China and three internationally.
That strategy since has morphed into a "5+3" strategy, and Linglong recently broke ground on its fourth Chinese factory, and $875 million project in Hubei Province with a rated capacity of 12 million passenger tires, 2.4 million truck/bus tires and 60,000 OTR tires.
The Chinese company said it studied a number of sites in other Eastern European states, including Poland, Czech Republic, Slovakia and Hungary before opting for Serbia due to its "low labor and energy costs."
The company also is mulling the construction of another international production base, with the U.S. high on the list of potential sites.
Zrenjanin is a city of about 75,000 located in Province of Vojvodina, roughly 50 miles north of Belgrade and situated on a tributary of the Danube River. The Zrenjanin Free Trade Zone covers an area of 98 hectares and offer free trade-zone benefits.
Linglong will become the fourth tire company with a factory in Serbia. The others are: Cooper Tire & Rubber Co. (in Krusevac); Group Michelin (Pirot); and Trelleborg Wheel Systems (Ruma).
Linglong is represented in the U.S. by Linglong Americas Inc., a subsidiary in Medina, Ohio.