Apollo Tyres is planning to be the first Indian tyremaker to enter China, the world’s largest tyre producer and exporter as well as a major consumer.
Over capacity and lack of regulatory transparency in regulations have kept others out but Apollo is likely to use local expertise.
“We aim to be a global tyre producer with footprints in all corners of the world,” chairman Onkar Kanwar told the Hindustan Times at the launch of the Apollo brand in Europe. “With our entry here, we are now present in Asia, the Pacific region, Europe, Africa (through Dunlop), and America (Vredestein). Only China is out of bounds right now but we will chart a strategy to be present there as well, through either a joint venture or a contract man- ufacturing arrangement.”
China, which has a production capacity of over 600m tyres but has always been dogged by allegations of dumping. Last September, the US government imposed punitive safeguard duties for three years against Chinese tyre imports.
India, too, imposed anti-dumping duty on Chinese truck and bus radials in February.
“China is a difficult market to operate in as the procedures are not clear and the capacity there is huge,” said Apollo’s CFO Sunam Sarkar. “But a market this big and growing so strongly cannot be left untouched.”
Apollo’s presence in the US through Vredestein is also minuscule, but the company said it would rather focus on growth markets like Latin America and Africa.
“We will grow organically (through capacity addition) as well as inorganically (acquisitions) and are looking for targets in Africa and Latin America,” Kanwar said. “The US market itself is in a downturn and margins are wafer thin. It is also one of the most challenging markets due to its product liability clauses.”