(Yicai Global) Aug. 21 -- Leading Chinese tiremaker Shandong Linglong Tire plans to invest USD1 billion to build a production base in Serbia as it looks to extend inroads into the European market and capture a larger market share.

The firm will build the plant at a free trade zone in Zrenjani in the southeast of the country, it said in a statement yesterday, adding that it will use USD300 million of its own money and secure the remaining funds from bank loans. Construction will begin in April and is scheduled to finish in March 2025, after which it expects to make 13.6 million tires a year, generating the annual profit of USD160 million on USD600 million in revenue.

Building overseas factories can help Linglong circumvent international trade barriers, cut logistics costs and reduce inventory, as many of the firm's retail and car-making clients are based in Europe, the statement added. Low investment, construction, labor and energy costs are what guided it to Serbia rather than other countries in the region, it said.

Linglong is one of China's biggest tire manufacturers and supplies to over 60 carmakers around the globe, including Volkswagen, General Motors, Ford and Tata Motors in India.

Editor: James Boynton