(Yicai Global) March 12 -- Chinese tiremaker Doublestar plans to invest USD92.3 million to increase its production in Vietnam via its South Korean affiliate Kumho Tire.

Doublestar’s Hong Kong unit has penned an agreement with Kumho Tire for the former to indirectly hold a 41.4 percent stake in Kumho Tire Vietnam, turning it into a joint venture, the Qingdao-headquartered firm said in a statement yesterday.

Doublestar's parent Doublestar Group is also the controlling shareholder of Kumho Tire so the deal is a related party transaction. In March 2018, Doublestar Group bought a 45 percent stake in the struggling South Korean firm.

After the new deal, Kumho Vietnam’s output will be lifted by 3 million units to 8.5 million radial tires for passenger cars. Moreover, the plant will start making such products for trucks and buses, resulting in an annual capacity of 800,000 units.

The agreement should help the Chinese company deal with trade barriers while enhancing its competitiveness, according to the statement. Moreover, it's a move aimed at eliminating horizontal competition. Doublestar Group promised to do so within five years after the stake purchase in 2018.

Doublestar’s stock price [SHE: 000599] rose by 3.3 percent to CNY4.11 (60 US dollar cents) this afternoon.

Editor: Emmi Laine, Xiao Yi