Pirelli to pursue high-value growth strategy in China

Pirelli & C. S.p.A. has said that it plans to pursue a high-value growth strategy in China by focusing on catering to the growing demand in the local market for high-end products. This was revealed at a function in Beijing that was attended by Ren Jianxin, chairman of Pirelli’s parent company, ChemChina and Pirelli Executive Vice Chairman and CEO Marco Tronchetti Provera.

One of Pirelli’s strategies to drive demand would be to expand its network of retail points of sale. Pirelli had 3,700 points of sale by the end of 2017 and ChemChina affirmed that it would give Pirelli all the support it needs to grow by offering its expertise and access to established channels.

After its acquisition by ChemChina, China has assumed growing importance in Pirelli’s global strategy. Pirelli’s revenues in Asia Pacific grew 14.3 percent in 2017 to USD 909 million with as much as two-thirds of that growth coming from China. Most of this growth in China was driven by “high value” products.

Pirelli’s CEO, Tronchetti Provera said that China offers great opportunity to Pirelli for ongoing growth. Pirelli is known for its innovative technologies and with help from Chem China, it would be able to further strengthen its presence in one of the fastest growing automotive markets in the world.

Pirelli has been manufacturing tires in China from 2005 and has factories in Yanzhou and Jiaozuo. In the Chinese market, it has OE partnerships with leading global and premium car makers who are active in China, and have recently been working on development of electrified models for the Chinese market.

Ren Jianxin said that ChemChina is committed to a global strategy and has expanded in the mid to high end in the industry chain, value chain, service chain and supply chain. It is now in the process of consolidating domestic and overseas assets and businesses, like Pirelli, by leveraging the full convergence between overseas and Chinese businesses in consolidated business models and effective incentive systems. The goal is to totally transform the business with regard to supply-side transactions and improve the global layout and the quality of development.

In order to support this goal, Filippo Maria Grasso, the vice president of institutional relations of Pirelli, has been appointed as the CEO of China National Tire & Rubber Corp.

Other strategies to solidify Pirelli’s presence in China include investment in innovative technologies, including products, production facilities and 4.0 manufacturing processes.

After it was acquired by ChemChina in 2016, Pirelli has divested its commercial and industrial tires business under the Prometeon brand and the brand has been revamped as a “pure” consumer tire company dealing with the supply of car, light truck, motorcycle and bicycle tires globally. ChemChina’s Aeolus Tire Co. Ltd.’s consumer tire business was made a part of Pirelli and plans are now afoot to upgrade Aeolus’s manufacturing facility in Jiaozuo, China to make more high-end tires.