Pirelli, an Italian tyre and power cable manufacturer, will establish a joint venture (JV) in Jiaozuo, in central China's Henan Province next year.

The company has signed a letter of intent with Aeolus Tyre Co to start the production of radial truck tyres in the new plant in the first half of next year.

Aeolus is a leading company in engineering vehicle tyre manufacturing that trades in the Shanghai Stock Exchange.

"We will pour nearly 15 billion yuan (US$200 million) into the joint venture in the next three years," said Francesco Gori, managing director of Pirelli's tyre business.

The JV will be Pirelli's first tyre factory in Asia, and is expected to increase the company's annual truck tyre output by more than 30 percent and "all steel" truck tyre output by nearly 50 percent.

Besides the Chinese market, the new plant will supply markets in other Asian countries as well.

China has become the fastest growing tyre market in the world, with production of radial tyres jumping 28.5 percent year-on-year in the first half of this year.

Pirelli set up a representative office in Beijing this year.

(China Daily December 8, 2004)