Pirelli to pursue high value strategy in China

Beijing – Pirelli & C. SpA aims to further reinforce its position in China by capturing the growth of local demand for high end products, according to an 8 May release by parent company ChemChina.

The release pointed to an undated meeting between ChemChina chairman Ren Jianxin and Pirelli executive vice chairman and CEO, Marco Tronchetti Provera, where the two leaders discussed investment in new technologies.

Stating that ChemChina was undergoing “a revolutionary transformation”, Ren said it was important for the company to “deepen supply-side structural reform and to build a modernised economic system.”

ChemChina said it would “give all the support needed”, drawing on its experience and established channels in China, to accelerate Pirelli’s growth.

To support this strategy, Filippo Maria Grasso, the vice president of institutional relations of Pirelli, was also appointed as the CEO of CNRC (China National Tire & Rubber Corp).

Without giving further details on Pirelli’s strategy in China, the release said expansion in innovative technologies, including products, production facilities and 4.0 manufacturing processes, were part of the deal.

Since its acquisition by ChemChina in 2016, Pirelli has relaunched itself as a ‘pure consumer tire company’ supplying car, moto and bicycle tires globally.

The company has repeatedly stated that its global strategy was to shift focus on “high value” segments.

Post-acquisition, and after taking over Aeolus consumer tire business, Pirelli announced plans to upgrade the Jiaozuo Aeolus factory, which involves a “digital transformation and the reconversion” at the facility.

It is part of a bigger Pirelli plan to convert its standard tires globally to high-value ones.

Pirelli’s revenues saw 14.3% year-on-year growth in Asia Pacific in 2017 where the company sold €806.2 million.

Of that amount, two-thirds were from China, mainly driven by “high value” products, the ChemChina release said.

To further capture the Apac market’s growth Pirelli plans, among other things, to expand its commercial network in China, where at the end of 2017 it already counted over 3,700 points of sale.