BANGKOK: Shandong Linglong Tire Co, one of the top five tyre producers in China, plans to expand its investment in the Thai rubber industry, focusing on a tyre-testing centre and rubber-compound manufacturing. The decision followed the success of its subsidiary Linglong International Tire (Thailand). LLIT set up a US$700-million (Bt24.5 billion) tyre factory in Rayong province in November 2012.
The Chinese company committed to the investment expansion plan under a letter of intent signed on Friday on the sidelines of a “Rubber City” seminar held by the Thai Industry Ministry during a roadshow in Qingdao, Shandong province, to woo Chinese rubber investors.
Under the agreement, LLIT in its third phase expects to produce some rubber compound. This is a midstream industry that can consume a large amount of natural rubber, Industry Minister Atchaka Sibunruang said after the meeting. The company’s rubber-compound output is for export. The compound contains chemicals that result in a product of higher quality than general block rubber to produce tyres for use in the auto industry.
Shandong Linglong Tire president Wang Feng said in a presentation to Atchaka and other officials that the company’s investment in Thailand was part of its “3+3 strategy” under which it would develop its three plants based in China – in Zhaoyuan, Dezhou and Liuzhou – and three overseas factories in parallel.
The plant in Thailand is seen as the starting point of the company’s globalisation strategy to form three overseas manufacturing bases, he said, adding that LLIT’s first two phases had hired more than 2,000 Thais. However, he personally proposed to the Thai authorities that they should support more private investment in research and development, chemicals, and rubber moulds as well as skilled tyre technicians.
Moreover, an area for a tyre-testing centre and R&D centre should be made available near Bangkok, Wang said. LLIT was able to complete the construction of its factory in three years, four years faster than planned, and enjoyed $20 million in profit despite being hit by fire early last year, he said.
Apart from the letter of intent signed by Shandong Linglong, a memorandum of understanding was agreed between the Industrial Estate Authority of Thailand and the Shandong Rubber Industry Association on supporting investors from China in the rubber and related industries.
The “Rubber City” in Songkhla province has campaigned to attract foreign investors with tax and other privileges in response to the government’s policy to shore up the price of natural rubber and increase the competitiveness of the rubber and related industries. The next roadshow is scheduled for Malaysia, Atchaka said. Thailand is the world’s largest rubber exporter, at 4.7 million tonnes last year, while China is the world’s third-largest rubber importer.
