Goodyear became the first major Western tire company to establish a manufacturing presence in China when it entered into a joint venture with Dalian Rubber General Factory early last year. But the deal, inked April 27, became shrouded in controversy when China Tire Holdings Ltd. claimed a 75-percent ownership in Dalian through a joint venture it formed with Dalian in mid-1993 called CSI Rubber Industries Ltd.
The issue went before the China International Economic Trade Arbitration Commission of Shenzhen China.
It decided that Dalian Rubber General Factory's transfer of interest in Dalian International Nordic Tire Co. Ltd. to Goodyear constituted a breach of Dalian's prior contract with C.S.I. Rubber Industries.
The commission ruled the $13.5 million received by Dalian in transferring assets of the Dalian C.S.I. joint venture to Goodyear should be repaid to Dalian C.S.I., according to a spokesman with C.S.I.'s parent, China Tire.
Goodyear said the decision would not affect its joint venture.
The Akron-based tire manufacturer has invested $30 million to increase annual production of radial passenger tires at Dalian's two-year-old Liaoning Province factory from 400,000 to 1.4 million units by early 1995.
The arbitration panel's decision ``will not affect (the company's) ongoing plans to begin producing tires,'' according to Goodyear.
The U.S. tire manufacturer said it had received approval in October from Chinese state and municipal governments to proceed with its joint venture.