"We are making the final decision of the destination between two Chinese cities for passenger- and light-duty truck-use tyres production," said Manfred Wennemer, chief executive officer and chairman of the executive board of Continental during his visit to Auto China 2006 in Beijing.

The CEO refused to disclose the names of the cities.

Wennemer also said after manufacturing tyres here, his company plans to open 100 retail stores in the country by 2007.

"The distribution of our tyres will be combined with franchised and wholly owned stores," Wennemer said.

China has been the world's biggest rubber consumer for the past two years, with annual consumption exceeding 3.1 million tons. The strongest demand for rubber resulted from strong domestic tyre consumption.

Statistics from the China Petroleum and Chemical Industry Association show domestic tyre production volume hit 300 million units last year, 19 per cent higher than in 2004. Sales revenues hit over 79 billion yuan (US$10 billion), the best performance in the past 10 years, and a 29 per cent increase from 2004.

Since entering the China market in 2002, Continental has had a very slim market share in the tyre market through its dealerships in 10 coastal provinces.

In China, "we only provide tyres for replacement for high-end imported vehicles which come from our global OEM (original equipment manufacture) partners like BMW, Mercedes-Benz and Porsche," Wennemer said.

He added that the company is dealing with its latecomer status in the market. "We are ready to invest here to establish the Continental brand in the China tyre market," Wennemer said.

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