Malaysian conglomerate Lion Forest Industries Bhd. said Tuesday it was teaming up with Chinese tire manufacturer Shandong Luhe Group to establish a joint venture to produce Silverstone tires in China.

Lion Forest would hold a 75 percent stake in the joint venture, while Shandong Luhe would hold the rest, the Malaysian company said in a statement.

The new company would be established through Lion Forest's subsidiary Lion Rubber Industries Bhd. with a paid-up capital of 152 million yuan (US$18.32 million), Lion Forest said.

Lion Rubber and Quay Class Ltd., a unit of Lion Forest, have clinched an agreement with Silverstone Bhd. for the provision of technical supports and the use of the Silverstone brand name.

Silverstone Bhd. is a wholly-owned subsidiary of Silverstone Corp. Bhd., one of Asia's largest tire makers.

Lion Forest, formerly known as Posim Bhd., focuses on trading and distributing of building materials, consumer goods and petroleum products.

China's tire industry is still largely driven by multinational giants like Michelin and Bridge-stone and their joint-venture partners, with Michelin alone accounting for about 30 percent of the replacement tire market.

Although a considerable segment of the industry is concentrated in the Shanghai, Jiangsu, Shandong and Liaoning areas, China's homegrown industry is still largely scattered across the country, resulting in a lack of cooperation.

(Shenzhen Daily December 16,2004)