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Pirelli targets Chinese market with its first local Tyre facility

Pirelli Targets Chinese Market With Its First
Local Tyre Facility

  • The Radial Truck Tyre Factory In Shandong Will Employ
    750 And Produce Approximately 1.2 Million Tyres Per Year When Fully
  • Production Will Be Aimed At China And Markets In
    South-East Asia And Australia

  • The Goal Is To Capture 3% Of The Market In One Year And
    Grow At Double The Market Rate

  • A Car Tyre Plant, Which Will Serve The Growing Chinese
    High-Performance Market, Will Be Also Built

  • Total Forecast Investment In China Approximately 180
    Million Dollars In Next Two Years

Yanzhou, 12 October 2005 – The Pirelli
has launched the
production of tyres in
China , inaugurating today a new radial
truck tyre plant
in Yanzhou , in the
Shandong Province . The
Chairman of Pirelli & C. SpA
, Marco Tronchetti Provera , and the
General Manager of the Tyre
, Francesco Gori , were present,
as were Pirelli’s Chinese partner Niu Yishun ,
chairman of Yinhe Group, and representatives of
the Chinese Authorities and of the Italian Embassy in Beijing

The factory covers an area of 500,000 square
metres, will employ approximately 750 people and
has an initial annual production capacity of
approximately 540,000 tyres . At full capacity,
the plant will be able to produce more than 1.2
tyres a year. The output of the
Yanzhou plant is destined for the Chinese ,
South-East Asian and Australian

The Pirelli Group believes that China will become a key
for tyre producers in the coming
years. Its tyre market is today the fastest growing in the world
and represents 9% of the world market, with a
value of approximately 8 billion dollars, with
radials accounting for more than 60%. In 2004, the
production of radial tyres grew
33% compared with 2003, exceeding 100
units and equal to 50% of China
‘s total tyre production.

Pirelli, a leader in radial technology for cars
and trucks, is a well known and respected brand in China and
aims to take leading role in this

Pirelli’s goal is to capture 3%
of the Chinese radial truck tyre market by the end of
2006 , with the aim of then
growing at twice the speed of the

Pirelli will develop its presence in China with an investment of
approximately 90 million dollars in 2005, which
will grow to approximately 180 million in a
couple of years , allowing the company to
establish itself quickly as one of main producers
of tyres in China . These investments will also allow Pirelli to
start the realization of a car tyre plant, which
will serve the Chinese market’s growing demand for high-performance
tyres. This is the most important expansion plan
ever undertaken by the Pirelli Group in the Far-East.

Pirelli will operate through a 60%-controlled
, the result of a joint-venture agreement signed
on 16 June 2005 with Roadone Tyre, which is a part of China ‘s
Yinhe group.

The Yanzhou plant has the best machinery available on the market
and will use the Pirelli Group’s most modern production technology,
constituting a natural evolution of Pirelli’s “zero gradi”
technology, already known and used in China for almost 20 years. In
the 1980s and 1990s, Pirelli Tyre had a key role
in the transition of Chinese manufacturers to radial technology,
through know-how licence contracts and the supply of machinery. It
is estimated that over half of China ‘s radial tyre production for
industrial vehicles is based on Pirelli’s “zero gradi”

The entire workforce and almost all of the staff at the Yanzhou
factory are local, including the workers involved in the
construction of its infrastructures. Pirelli is the first
international tyre maker to open a plant in the Shandong Province ,
where over 35% of the market’s production capacity
is located.

The training of new personnel is a priority in Yanzhou: the company
will establish a wide-ranging professional, technical and
linguistic training programme. The workforce will receive ad hoc
training on all machinery and production processes used in the
plant, while staff will attend English and Italian language

The launch of production in China consolidates the
international presence of Pirelli Tyre, which
already counts 24 plants in 12
, as well as a widespread commercial and
distribution structure across five continents. The new Chinese
plant will stand alongside Pirelli truck radial facilities in Italy
, Turkey , Egypt and Brazil.

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