Ground broke on Newbustar (Cambodia) Tire Co Ltd’s tyre factory on May 9, in the southeastern corner of Kratie province, which according to the provincial governor, is backed by an investment of $138 million and has an annual production capacity of 8.5 million units.
Newbustar is part of the Chinese state-owned Doublestar Group, which has a Shenzhen-listed member: Qingdao Doublestar Co Ltd. The factory will be built on a 40ha plot in the UBE Snuol Special Economic Zone of Trapaing Sre village, Pi Thnou commune, Snuol district, the Kratie Provincial Administration affirmed.
Speaking while presiding over the groundbreaking ceremony for the plant, Kratie provincial governor Va Thorn revealed that the first phase of the project is scheduled to be completed in October, and noted that its investors are “from Qingdao, Shandong province” in China.
Qingdao Doublestar earlier this year said in a statement that the factory would be backed by a 1.4 billion yuan ($200 million), and have annual production capacity of 8.5 million “high-performance” radial tyres – seven million semi-steel and 1.5 million all-steel. Construction was planned to be completed in 15 months, it said.
Once fully operational, the factory is expected to generate average annual sales of 2.8 billion yuan and net profit of about 550 million yuan, the statement said, adding that the facility constitutes part of its “localisation” strategy and is to “actively respond” to international trade barriers, given the “high tariffs” imposed on Chinese goods.
By shifting production to the Kingdom, Doublestar could avoid the risk of anti-dumping action in its major markets, it added.
Doublestar will have an 80 per cent stake in the project, with its partner in the venture, industrial park developer UBE Development Co Ltd, holding the rest, it said, noting that factory equipment and the land use rights will be supplied by the former and latter, respectively.
The statement also mentioned that Doublestar Group owns South Korea’s second-largest tyre maker Kumho Tire Co Inc – second only after Hankook Tire & Technology Co Ltd, which is listed on the Korea Exchange as well.
The provincial governor commented at the groundbreaking that Doublestar Group would complement the efforts of the Snuol and Kratie administration to advance socio-economic development.
This, he said, “by boosting economic growth, contacting development partners to invest in the region, and contributing to poverty alleviation, as well as other benefits leading to the development of the UBE Snoul Special Economic Zone from year to year”.
Doublestar chairman Chai Yongsen said the decision to invest in the Kingdom was motivated by its “deep ties” with China and keenness to building a “community of common destiny for mankind”. He also brought up Prime Minister Hun Sen’s visit to China in 2020, in which he “stood with the Chinese people” amid the Covid-19 outbreak, despite “strong winds and snow”.
Kratie, in particular, boasts favourable policies and has high potential for natural rubber and other resources, he said.
Chai claimed that Doublestar aims to promote “friendly trade” between China and Cambodia, boost industrial and economic development in the Kingdom, and create lots of jobs. He also indicated that the project is in step with China’s Belt and Road Initiative (BRI).
According to the group’s website, “as a 98-year-old company, Doublestar … launched the acquisition plan of Kumho Tire in South Korea in 2016” in a bid to “further build a world-class enterprise with a larger scale”, and the acquisition was completed on July 6, 2018.
“Holding 45 per cent of shares, Doublestar has been a controlling shareholder of Kumho Tire, becoming [among] the world’s top 10 and China’s largest tyre company,” it says.
Set to be one of Doublestar’s main competitors in the Kingdom is General Tires Technology (Cambodia) Co Ltd, the company behind a $300 million tyre factory that began production on March 18, with annual production capacity of about 5.9 million tyres. The plant is located on an 18ha plot in Preah Sihanouk province’s Sihanoukville Special Economic Zone (SSEZ).
The Ministry of Commerce’s business directory notes that General Tires Technology was previously named General Intelligence (Cambodia) Co Ltd, which Shanghai-listed Jiangsu General Science Technology Co Ltd – the company behind the TBB brand – identifies on its website as an “overseas subsidiary”.