Continental AG announced it will invest 150 million euros (US$216 million) to build its first Chinese tire-making plant in Hefei, Anhui Province, to meet growing demand and to catch up with rivals like Japan's Bridgestone.

The new facility, awaiting approval from the central government, will be able to produce four million passenger tires a year in the long term, the company said in a statement yesterday.

Construction will start in the middle of next year and production is due to begin in early 2010.

Continental joins a handful of tire makers in boosting investment to localize production in China as the nation's rapidly growing auto market spurs demand for the tires. China is now the world's second-largest auto market with projected sales of 8.5 million units this year.

"With this move, we are entering one of the world's most dynamic markets, following careful analysis and intensive preparation," said Manfred Wennemer, chairman of the executive board.

"All divisions of Continental will thus have production locations in China and will profit from the continuing positive development."

Continental lagged behind rivals such as Bridgestone Corp, Goodyear Tire & Rubber Co and Michelin in entering the Chinese market. Michelin has two tire plants in the country, and Bridgestone has four. Goodyear has a site in Dalian, Liaoning Province, and was the first global tire firm to set up a plant in the country.

Germany-based Continental started exporting treads from China in the 1990s. It set up its first office in the nation last year and recently built a warehouse in Shanghai to tap potential in emerging markets.

Asia only accounts for four percent of Continental's global passenger and light-truck tire sales and six percent for its commercial vehicles, an official of the firm said earlier.

(Shanghai Daily October 29, 2007)