Green Wheels
By Li Fangfang (China Daily)
Updated: 2008-09-22 08:09

In late 1980s, a personal automobile was still out of reach for most Chinese people and as a result China's tire industry was in its infancy and professional talent was scarce.

"In the early 1990s, most of the Chinese managers' knowledge about management was quite limited, so Michelin Group sent over 10 managers from France," says Chapot.

"It leveraged the strengths and weaknesses between different cultures and the knowledge spread better and faster inside the company."

The company later also sent Chinese employees to France for training.

"We understood the challenge very well from the beginning. That's why most of the people that Michelin Group sent to China were not managers but technology experts," adds Chapot.

However, today, 15 Chinese are now working in high-level positions in France and other regional headquarters.

In China, it has 5,500 employees and plans to hire more as its business expands.

In 1994, the Chinese government jump-started the country's auto industry development with a policy officially sanctioned linking cars with the family, by first time putting forward that the private purchase of vehicles set to be encouraged to change the sedan consuming restructure.

Before that, sedans in China are limited to be sold to public. They are majorly produced for official usage.

Passenger car production in 1995 increased 85,000 units over 1994, more than the total production volume of 1991.

At the end of 1995, Michelin's first joint venture operation in China, Michelin Shenyang Tire Co Ltd was established and it was transformed into a wholly foreign-owned enterprise in 2003. The total investment currently reaches $150 million.

In 1998, China became the tenth largest auto market in the world. More auto manufacturers came to China, establishing production facilities to grab market share.

In April 2001, Michelin Group and Shanghai Tire and Rubber Co Ltd formed a new joint stock company, Shanghai Michelin Warrior Tire Co Ltd, for the manufacture and sale of radial passenger car tires with a total investment of $200 million.

The company produced domestic Warrior brand tires and started to produce Michelin brand tires in 2002.

Michelin's headquarters in China moved to Shanghai in 2001. In the same year, Michelin (China) Investment Co Ltd was set up in Shanghai, which gave the company more opportunities to develop and reinforce Michelin's long-term commitment in China.

"In 1990, the car inventory in China was 5.5 million. Now the number is up to 160 million. The fast developing Chinese market gave Michelin a big sales volume increase," says Chapot, declining to disclose specific figures.

"But we have to use different ways to solve problems. In Europe, it usually takes us half a year to make a decision since the market is quite stable and the strategies are often made for the longterm. But in China, we may make it in six weeks. The development and changes in China are very fast, so Michelin should make new decisions more actively and specifically," he adds.

Michelin's top rivals in China are US-based Goodyear and Japan's Bridgestone. The three brands occupy 60 percent of China's tire market.

However, Chapot thinks there is still huge potential for Michelin to develop.

"For example the truck tire market is the largest in the world, while the radial tire only takes 25 percent of the share," says Chapot.

"Moreover, the passenger and light truck market is held by international brands or local brands, while the truck tire market is dominated by domestic brands," he says, implying the segment will be Michelin's target in the future.

"Michelin's goal in the passenger and light truck market is to grow faster than the market average to keep our leading position."

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