As China’s demand for environmentally friendly tyres grows, the Michelin Group has accelerated the process of building new factories in China. A few days ago, Michelin's new plant in Shenyang was officially put into operation, with an investment of nearly 1.5 billion U.S. dollars. Shenyang New Factory is a high-performance radial tire tire relocation and expansion project, which was originally planned to be completed in 2014 in Shenyang, but will eventually start production in early 2013. Why did Michelin speed up at this time? How does it view the Chinese market? To this end, the reporter interviewed the president of the Michelin Group, Ronald and the president of Michelin China Wanneng Yi.
Reporter: The Michelin Shenyang plant announced the start of production one year ahead of schedule. It is reported that this plant has a planned annual production capacity of 12 million (tires). What motivates you to complete the project one year in advance? Why is the new factory so large?
Sunnard: We can announce the start of the factory this year. The factory has not completely completed its construction yet, but it has already begun production. In China, we have many employees with outstanding capabilities. Through their support in all aspects, we have been able to accelerate the pace of project construction.
Michelin's new plant in Shenyang is designed to produce more than 12 million tires per year. Among them, there are 10 million car tires, and the rest are truck and bus tires. The new plant in Shenyang produces green tires and high performance tires. Invest in China because the Chinese market has very strong potential. At present, China has about 120 million car ownership. We predict that China’s car ownership may double after five years. Therefore, the future growth potential of tires is huge. We believe that replacing the tire market will maintain the same growth rate as the Chinese automobile market, or even faster. In particular, some high-end tire product markets, such as green tires, high-performance tires, the demand for products in this area is huge, which is exactly what Michelin's longevity. Therefore, we believe that now is the best time to invest in the Chinese market.
Reporter: Since you are so optimistic about the Chinese automobile tire market, you have also invested heavily in building a new factory. So, what kind of growth does Michelin expect to achieve in the future?
Wan Nengyi: Mr. Sunnard put forward some requirements for me. To speed up the development in China, it is best to be able to develop faster than it is now, and to develop twice or even three times the current speed. We also have the confidence to achieve this goal.
On the one hand, China's overall demand has more room for growth. Beijing, Shanghai, and Shenyang may each have different car ownership and conditions. However, currently the average number of vehicles owned by thousands of people in China is 75 to 80, and the figure in developed countries is 10 times that figure. This means that the demand for cars by Chinese consumers is still huge; on the other hand, with the growth of China’s economy, the three-, four-, and five-tier cities are further expanding, which means there are more. Consumers in Tier 4 cities have tire requirements. Due to their demand for safety, environmental protection and durability, Michelin tires provide market opportunities.
Reporter: 20 years ago, Michelin became the world’s first company to launch green tires. In 2003, it also brought the first green tires to the Chinese market. What is the proportion of green tires in the world so far? What is the proportion of China? After the completion of the new factory, how many green Michelin tires will account for China's sales?
Sunard: At present, sales of Michelin green tires in China account for more than 75%, and this figure will still rise. First of all, the original tires supplied by the Michelin China factory to Chinese automakers are all green tires. With the further increase in the OEM (original) market demand for energy-saving and environmentally friendly products, the proportion will increase further. It is expected to reach 100% sales in 2019 and 2020. The new plant will produce 100% green tires.
Reporter: Affected by the European debt crisis, the European auto market is weak. As a tire company from France, how do you view the status quo of the European automotive market? How do you ensure continuous profitability in an era when the prices of important raw materials such as rubber are fluctuating?
Sunard: The current problems in the auto industry are mainly caused by political and economic reasons. If the European automotive industry strengthens unity, such as establishing a federal system, the crisis in the European automotive industry is expected to be resolved.
Michelin's strength lies in its technological leadership. It is this advantage that has caused Michelin to remain profitable despite rising raw material prices. In fact, the pillars of the manufacturing industry's development strategy lie in technological innovation, improving competitiveness, and increasing the degree of internationalization, of which technological innovation is the most important.
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