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Cooper eyes China growth

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SHANGHAI (Aug. 31, 2009)—Cooper Tire & Rubber Co. is shooting for double-digit revenue growth in China in the years to come, according to Allen Tsaur, vice president and general manager of Cooper's Asia operations.

"Our revenue in China last year was close to 5 billion yuan ($732.1 million) and the China operations are now contributing a significant portion of Cooper Tires' global revenue," Mr. Tsaur said in late July.

Findlay, Ohio-based Cooper runs two joint venture tire plants in China—one in Shandong province with domestic Chinese tire maker Chengshan Group Co. and the other in Jiangsu province with Taiwan's Kenda Rubber Industrial Co. Ltd.

The Shandong plant produces truck and passenger tires for the domestic market as well as the export market. The Jiangsu plant produces passenger tires for the U.S. market.

After being negatively affected by the market downturn in late 2008, Cooper Tire's sales in China have recovered since March this year.

"Starting in April, our tire supply has been fallen short of demand," Mr. Tsaur said.

In the first half of this year, auto production and sales in China reached 6 million and 6.1 million units, respectively, up 15.2 percent and 17.7 percent, according to the China Association of Automobile Manufacturers.

Given the 4 trillion yuan ($585.7 billion) fiscal stimulus package launched by the Chinese government in late 2008, Mr. Tsaur expects China's auto sales to remain strong for the rest of this year.

In spite of strong market growth, Mr. Tsaur said Cooper has no immediate plans to add capacity in China.

In a separate interview in Qingdao, China, Cooper Chairman and CEO Roy Armes said the company's U.S. operations would benefit short-term from import tariffs imposed on Chinese imports, but longer-term imports from other countries—Brazil, Vietnam, Thailand, Indonesia or Central and Eastern Europe—will fill the void.

"I think there is going to be disruption in the market," he said of the possible tariffs. "On the other hand, there could be pricing opportunities to help the operations. But that's on a short-term basis. In the long term, this equalizes out because of the other alternatives to bring products into the U.S."

Mr. Armes said Cooper is assessing the potential impact, both postive and negative, of the tariffs, and added: "In either case, whatever the outcome is, we'll fully cooperate with the government on whatever decision is made."

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