Chinese boom lures Continental

GERMAN automotive supplier Continental AG is considering its first tire-manufacturing plant in China, according to company executives.

The firm is evaluating potential locations, and a decision could be made as early as in the second half of this year, Klaus Kreipe, head of Continental Tires' China operations, told a media conference late on Thursday. Kreipe said the plant, if they decide to build, will be wholly owned. Global tire companies, along with multinational auto makers, are increasing investment and sales in China to tap into its fast-growing market as sales in mature markets stagnate. China is now the world's second-largest auto market.

Continental started exporting treads in China in the 1990s, but it's a relative late comer compared with others like Bridgestone Corp, Goodyear Tire & Rubber Co and Michelin which have already built up local manufacturing operations.

The firm set up its first China office last year and recently built a warehouse in Shanghai. "We know we have to have a plant in China," said Andreas Esser, an executive vice president who was recently sent to Shanghai to head the Asian replacement-tire business unit.

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