SHANGHAI -- Michelin is looking to expand capacity in China to meet booming demand for tires in the world's third-largest auto market after the US and Japan.
The French tiremaker likely will add new facilities in China and elsewhere throughout Asia as it seeks to grow its market share, said managing partner Edouard Michelin.
"Only 2 percent of our business is from China, but it was zero in 1996," said Michelin during the recent Michelin Challenge Bibendum rally here.
Michelin is the world's largest tiremaker, but while it holds a market share of 40 percent or more in Europe, its share in Asia is only about 10 percent.
However, Michelin is strong in the passenger car radial replacement tire business in China -- with 24 percent share, with another 5 percent from its Warrior subsidiary.
At present, Michelin is the No. 4 tire maker in Asia but soon should stand second (behind Bridgestone), said Jean Marc Francois, president of Michelin Asia-Pacific.
Michelin employs 5,000 people in China, where annual wages for its factory employees are in the $4,000-$5,000 range, some 40-50 percent higher than the typical Chinese factory worker's earnings.
The Shanghai Michelin Warrior Tire Co. plant soon may be producing more tires than any other Michelin facility worldwide, said Plant Manager Gary Scheide.
Asked whether such factories in China might soon be a source of tires for other markets, Francois said that for the foreseeable future China needs all the tires Michelin can build.
China has hundreds of tire makers, most of which build just for their immediate vicinity.
However, the country has national brands, including Michelin, Bridgestone, Goodyear, Hankook, Kumho, GT and Warrior, a 70-year-old brand and China's largest native tire maker.
In 2001, Group Michelin took a controlling interest in Warrior when it won approval from the Chinese government to spend $200 million for a 70-percent stake in a joint venture with Shanghai Tire.