Michelin and Double Coin sign Chinese production Memorandum
On 18 April Michelin announced that it has signed a Memorandum of Understanding (MoU) with Double Coin Holdings Ltd. and Shanghai Huayi (Group) Company to create a joint venture to produce and market Warrior-brand passenger car and light truck tyres for the Chinese market. The transaction is still subject to signature of the final agreements and approval by Chinese authorities. The new company would be 40 per cent owned by Michelin and 60 per cent by the Chinese partners. It will operate a plant now being built in Wuwei County, Anhui province, around 400 kilometres west of Shanghai.
Earlier reports published in December 2010 suggested that Double Coin Holdings would invest at least RMB 3.18 billion (£301.5 million) establishing a wholly-owned subsidiary in China’s Anhui Province. Within this subsidiary, known as Double Coin Huili Tire Co., the company was planning to establish a new factory capable of producing 15 million tyres per annum. Then the suggestion was that Double Coin would provide RMB 1 billion of the funds for the factory project, with the remainder coming from bank loans and from a RMB 900 million loan obtained from controlling shareholder Shanghai Huayi (Group) Company.
A month later at the start of 2011 (one year after the two companies went their separate ways from an earlier venture), local news sources indicated that the two companies were “in negotiations concerning Double Coin’s planned passenger car tyre plant in Hefei, China.” Then Michelin denied rumour it had taken a 30 per cent share in the new plant, but offered no other statement. It is not clear if the latest reports refer to the same plant as the December 2010/January 2011 coverage.
Present in China since 1988, Michelin currently employs more than 6,000 people in the country, with four industrial sites producing passenger car tyres and/or truck tyres (three in Shanghai and one in Shenyang). Its retail network comprises more than 4,000 sales outlets, including the TyrePlus franchise network (611 sales outlets).
In late 2010, Michelin launched a $1,350 million capital expenditure program in Shenyang, China, designed to relocate part of the plant’s activities, to expand it and upgrade it too. The new unit will eventually have twice the production capacity as the former plant. According to the company, it will mainly produce “Michelin-brand fuel-efficient tyres”, with capacity eventually reaching 10 million passenger car and small truck tyres, 1.8 million truck and bus tyres, and 300,000 retreads for trucks and buses.
In early 2010, Double Coin, a partner with Michelin in the Shanghai Michelin Warrior Tire Co. passenger car tyre plant in Shanghai, formally ended its relationship with Michelin and sold its 30 per cent stake in that operation to Michelin.