Chinese tyre maker Jiangsu General Science Technology Co. Ltd. is looking elsewhere for a plant in Southeast Asia and has decided to locate its planned US$300 million tyre plant in Thailand instead of Cambodia. The reason the firm said was that it would be able to tap on cheaper raw material costs in Thailand since the country is the world’s largest rubber producer.
The plant will have a capacity of 1 million truck and bus tyres/year and 6 million passenger car tyres/year. When in full capacity, the facility will contribute US$320 million in revenue, said the firm in a filing to the Shanghai Stock Exchange. A full return of investment will take around seven years, the public-listed firm added.
It also said it is investing US$80 million to set up a Thai subsidiary in line with its set up of its first facility abroad.
The Wuxi, Jiangsu province-based firm furthered that the facility in Rayong province, a hub for petrochemical and polymers, will allow it to be able to save on costs, including import taxes and transport costs for the raw material required for producing tyres.
Thailand also offers foreign investors tax exemption for corporate taxes for the first eight years of operation.
According to report on Chinese news agency Caixing, in April the company had announced that it planned to set up a plant in Cambodia’s Sihanoukville Special Economic Zone, and that it would be built by Chinese and Cambodian enterprises, in line with China’s Belt and Road Initiative.
The filing to the stock exchange said the company will complete construction of the Thai plant within 15 months.
Set up 15 years ago, the company went public on the Shanghai Stock Exchange in September 2016.