Vanlead tire unit to kick off global forays

Guangzhou-based company to start building $1 billion plant in South Carolina next year

The group also plans to set up a research center in Europe and a joint research facility in Akron, Ohio, which is seen as the "Silicon Valley" of the rubber industry, said Fu Shoujie, chairman of Vanlead.

The US tire plant will mark a major step in Vanlead's effort to build its brand globally. In 2016, Vanlead became the first Chinese tire company to pass the tests of German testing company TUV Rheinland. Two series of tire products and a production line were tested.

The first phase of the US project, involving an investment of $600 million and to be located in Orangeburg county, will have a capacity of producing 6 million sedan tires annually.

It is expected to create about 1,200 local jobs. The second phase will be devoted to truck tires, said Fu.

"In the fiercely competitive tire market, only prestigious brands find room for development, and a brand can be enhanced only in a high-end market."

The US, the largest tire market in the world, saw sales of 290 million light-duty vehicle tires in 2015, more than half of which were imported.

Imports from China stood at 18.2 million tires last year, sharply down from 56.7 million tires in 2014, due to higher taxes on such imports resulting from anti-dumping and anti-subsidy cases.

Although labor and construction costs in the US are higher, cheaper land, electricity and gas lower the overall cost of tire making, compared with production costs in China, Fu said.

South Carolina is home to an assembly plant of German automaker BMW AG and more than 200 auto part suppliers.

Among the prominent labels are French tiremaker Michelin and German auto parts supplier Robert Bosch GmbH. The state boasts strong industrial and technological strengths, and efficient labor force.

With a plant in the US, Vanlead would be able to get closer to its consumers, better understand market demand and enhance its product quality, said Xu Wenying, secretary-general of the China Rubber Industry Association.

The US plant can also help safeguard the company from high anti-dumping duties, which have been levied on Chinese tire companies in recent years, she said.

For Chinese tiremakers, severe competition in the domestic market has created a need to invest overseas.

That has become a trend. A number of projects have come up or are coming up in some Southeast Asian countries, Xu said.

Around 590 million car tires were produced in China last year.

Vanlead's tire subsidiary was founded in 1988. It produces 16 million tires a year, exporting 52 percent of them and supplying 30 percent to car producers such as Dongfeng Peugeot Citreon Automobile Co, JAC Automobile Co and GAC Honda Automobile Co.

Wang Ting contributed to this story