Pirelli to pursue high-value growth strategy in China

Pirelli & C. S.p.A. is hoping to build its presence in China by focusing on local demand for high-end products, parent company China National Chemical Co. (ChemChina) said recently at a function in Beijing attended by ChemChina Chairman Ren Jianxin and Pirelli Executive Vice Chairman and CEO Marco Tronchetti Provera.

Among the moves Pirelli anticipates making to grow its business in China is to expand its network of retail points of sale, which numbered 3,700 at year-end 2017. ChemChina said it would "give all the support needed," drawing on its experience and established channels in China, to accelerate Pirelli's growth.

Underscoring China's position in Pirelli's global strategy, the companies noted that Pirelli's revenues in Asia Pacific grew 14.3 percent last year — to $909 million — and that two-thirds of the growth came from China, mainly driven by "high value" products.

"China is a great opportunity for ongoing growth for Pirelli. Its innovative technologies have always made Pirelli a unique entity in its industry," Mr. Tronchetti Provera said, "and, together with ChemChina's valuable contribution, will allow us to further strengthen our presence in the country."

Pirelli has been producing in China since 2005 and operates tire plants Yanzhou and Jiaozuo. Among its business activities there are OE partnerships with global prestige and premium car makers active in China, which in recent years have stepped up their development in the electric segment.

"ChemChina has been committed to a global strategy," Mr. Ren said.

"We have expanded in the mid to high end in the industry chain, value chain, service chain and supply chain. We have stepped up consolidating domestic and overseas assets and businesses, such as Pirelli, by leveraging the full convergence between overseas and Chinese businesses in consolidated business models and effective incentive systems."

ChemChina, he said, is undergoing a "revolutionary transformation" with an eye toward supply-side structural reform and improving the global layout and the quality of development.

To support this strategy, Filippo Maria Grasso, the vice president of institutional relations of Pirelli, has been appointed CEO of China National Tire & Rubber Corp.

Messrs Ren and Tronchett Provera also discussed investment in "innovative technologies, including products, production facilities and 4.0 manufacturing processes," ChemChina said without giving further details.

Since its acquisition by ChemChina in 2016, Pirelli has divested its industrial/commercial business and relaunched itself as a "pure" consumer tire company supplying car, light truck, motorcycle and bicycle tires globally.

Included in the merger with ChemChina was the integration of Aeolus Tire Co. Ltd.'s consumer tire business with Pirelli's. The Italian company since has announced plans to upgrade Aeolus's Jiaozuo, China, including a "digital transformation and the reconversion" at the facility.