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Cooper Tire aims for 30% of global sales from China

Updated: 2009-12-18 16:08
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Cooper Tire & Rubber Co aims to generate at least 30 percent of its global sales in China in three years, up from 25 percent now, banking on robust demand after China surpassed the United States as the world's biggest auto market this year.

"That's our minimum target. The Chinese domestic market is explosive and the pie is expanding. We have to grow fast to keep up the pace," said Allen Tsaur, general manager for Cooper Tire's Asia operations.

China has been a major bright spot this year amid a steeper-than-expected global industry downturn, as government incentives sent vehicle sales to record monthly highs.

Cooper Tire's sales in China are estimated to exceed $600 million this year, up as much as 20 percent from 2008, Tsaur said in an interview, and he is hoping for growth of 20 to 25 percent in 2010.

He expected continued solid auto sales in China next year, although the pace of growth would slow because of a much higher comparative base after an estimated 40 percent rise in sales this year.

Tsaur is also optimistic about the prospects for the replacement tire market due to continued growth in car ownership in China.

Adding capacity

The US replacement tire maker is a relative late comer to China compared with Goodyear Tire & Rubber Co and Michelin SA.

In 2003, it set up a manufacturing venture with Taiwan's Kenda Rubber Industrial Co in east China making tires for passenger vehicles targeting the US market.

Three years later it teamed up with Shandong Chengshan Tire Co in a 51-49 venture, making tires for trucks and passenger cars for sale in China and overseas.

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The two plants now have combined annual production capacity of 11 million tires and Tsaur said he planned to add 1 million units of capacity for passenger tires next year in the existing facility in eastern China's Shandong province.

"We are restrained by capacity, otherwise we could have grown much faster this year," said Tsaur, who holds a doctorate degree in chemical engineering from the University of Houston.

He ruled out building a greenfield plant for the time being as there is plenty of room for expansion at its existing ventures.

Cooper Tire currently exports 45 percent of its China-made products and Tsaur expected to cut the ratio down to 35 to 40 percent within three years, due largely to brisk demand in the Chinese market.

He said that, in response to additional import duties imposed by the Obama administration on Chinese-made tires in September, the company's US-bound exports from China would be cut by half starting from the second quarter of next year and redirected to other overseas markets.