Tag Archives: Goodyear

Kicking The Foreign Investment Tires

The U.S. tire-maker Goodyear is close to investing $1 billion in a second plant near Dalian, according to Reuters, though the company says it has yet to make a final decision.

Goodyear has been producing in China since 1994, when it set up a joint venture with Dalian Rubber General Factory, and now has a retail distribution network through its Eagle Stores. Rivals Michelin, Continental AG and Bridgestone also produce in the world’s second largest car market for both local and export sales.

An investment of this size will need State Council approval, which it is likely to get. Contrary to the impression held by some outside the country, China is welcoming to new foreign direct investment, even if it provides competition for existing local manufacturers. China has a large enough domestic tire industry to account collectively for 6% of the world market with sales of $6.5 billion, including the export of 30 million tires a year to the U.S.

What China won’t allow is foreigners taking over existing local enterprises, unless they are basket cases, and foreigners taking control of the major state-owned enterprises in industries where there is a designated national champion. China Law Blog has an exemplary post today laying out China’s FDI rules in plain English.

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