Goodway Rubber has announced that its Chinese subsidiary company, Suzhou Goodway Rubber products Co Ltd (China), has made an initial investment of RMB 50 million in a new tread rubber production facility in Nantong, China. The plant, which is scheduled to begin production at the end of the year, will be constructed in phases and will eventually have a production capacity of 3,000 tonnes per month - three times the company's current capacity. The majority of the investment has been made in new presses and manufacturing lines as well as in relocating Goodway's existing plant, which is located in Taicang City, Jiangsu Province.

According to Tai Qiyao, Head of Franchising, the main priority of the new plant will be to service a new franchised retreading network, which Goodway intends to launch in early 2010. "Servicing the new franchise system will be a key area of focus for the new plant says Tai, "but we will also be supplying other retreaders in the Chinese market too".

According to Tai, the main aim of the new franchise system will be to expand the Supercool brand in China by improving the know-how of retreaders and by getting the market to appreciate the benefits of quality retreading. "There is plenty of room for improvement in quality levels in China", he says, "and our franchise system will be the tool to enable us to achiev e both optimum quality and an increased profile in the Chinese market".

Goodway has actually already been present in China for a number of years, initially with a representative office in Beijing and later also via a joint venture retreading facility in Shenzhen. The company saw significant potential for growth in China and invested in Suzhou Goodway in 2005-6.

Goodway currently imports rubber from Malaysia and presses it in China as well as importing considerable amounts of finished pre-cured tread strips. Activities, says Tai, are supported by the Chinese Government thanks to reduced import taxes on tread rubber for retreading as well as the encouragement of local retreading by allowing retreaders to apply for exemptions/reductions in VAT. According to Tai, Goodway is currently introducing procedures to optimise the quality control process at the Chinese plant and once this has been achieved the company expects to gradually reduce the amount of imported finished treads in favour of locally produced product.

"It may also eventually be possible to introduce mixing in China", added Tai, "although the availability of natural rubber in Malaysia makes it likely that Goodway will continue to import raw materials, at least for the foreseeable future.

To support its activities in China, Goodway supplies retreaders with a range of locally manufactured machinery, partly to keep costs down for local retreaders but also because of the availability of local engineering support. Tread rubber is supplied in a range of popular patterns adapted to local market and road conditions. According to Tai, the company's cushion gum is particularly popular in the local market.

According to Tai, Goodway is now continuing to make progress in the Chinese market despite the economic difficulties. "In early 2008 we experienced some problems due to the economic climate but we are now seeing a recovery", he said. "People are realising the savings that can be made with retreads that their performance is comparable to that of new tyres".

"The local market in China is still developing rapidly", he concluded. "There is lots of space to expand for local retreader. The most important thing for retreaders to consider, though, is the right quality of retreads and the right knowhow".

Issue 2009/4