MILAN, Italy (Nov. 12, 2004) — Pirelli S.p.A. has signed a letter of intent with China's Aeolus Tyre Co. Ltd. to create a joint venture for producing tires and steel cord at new plants to be built in China's Henan Province.
The as yet unnamed joint venture will start next year with radial truck tires—primarily for the Chinese and Southeast Asian markets—Pirelli said, and then venture into radial passenger tires and steel cord. The letter of intent calls for a $180 million investment over three years.
'We have identified in Aeolus Tyre a high profile partner with all the necessary qualities to succeed in this joint venture,' said Francesco Gori, general manager of Pirelli's Tyres Sector. “Pirelli is a technology leader in radial tires worldwide and we intend to be among the key players at this time of strong growth of the radial tire business in China.”
“We believe Pirelli is the best possible foreign partner, either in terms of technology and international experience and in terms of brand recognition on the Chinese market,' said Cao Chaoyang, chairman of Aeolus Tyre. “We are confident that this partnership will offer us the opportunity to meet the increasing demand for radial tires in China.”
China is the fastest growing tire market in the world. In the first half of 2004 alone, the production of radial tires in China increased by 28.5 percent.
The venture's truck tire element will expand Pirelli's global capacity for such products by about a third, supplementing output from Pirelli's existing plants in Italy, Turkey, Egypt and Brazil.
Pirelli did not disclose the projected capacities of the factories.