Tokyo (Novemver 2, 2001)— The Yokohama Rubber Co., Ltd. announced that it obtained an approval from the Chinese government for the establishment of a joint venture company in January 2002 in Hangzhou City, Chekiang Province. The new company will manufacture and market radial tires for passenger cars in China. In the first stage, it will begin manufacturing operations by April 2003 by constructing a tire plant with a production capacity of 750,000 tires a year. In the second stage, it will increase the capacity to 1.5 million tires a year, depending on the strength of market demand. The two stages will require a total investment of 60 million dollars or 30 million dollars each.

Called tentatively as Hangzhou Yokohama Tire Co., Ltd., the new company will be created jointly by Yokohama Rubber, YHI Holdings Pte. Ltd. and Hangzhou Rubber (Group) Co. with total paid-in capital of 12 million dollars. These companies have already agreed that Yokohama Rubber would take the leading role in steering the new company.

YHI Holdings is a Singapore-based company that has been selling Yokohama-brand tires since 1973 in Singapore, after that other Asian countries and China. Hangzhou Rubber is headquartered in Hangzhou City and one of the largest tire manufacturers in China.

The new company will employ a small-lot production system being developed by Yokohama Rubber. The system features significant compactness in size of a whole production line for tires with quality as good as those produced in Japan. Also, the system can be constructed with smaller investment compared with a large-scale tire plant. For the future, Yokohama Rubber plans to add several plants for the manufacture of radial tires for passenger cars in China in order to meet increasing local demand.

The new company will earmark its products for the Chinese replacement tire market for the time being. However, it will not exclude the possibility of making entry into the original equipment tire market in future. Also, it will continue watching trends in the Chinese market for tires for trucks and buses.

Yokohama Rubber has been selling its passenger car radial tires throughout China by using the sales network of YHI Holdings. Yokohama-brand tires have a good reputation in Asian countries. In China, too, Yokohama is established as the top brand among imported radial tires for passenger cars. Yokohama has been studying production in China because the local demand for radial tires was expected to grow strongly.

Name: Hangzhou Yokohama Tire Co., Ltd. (tentative name)
Paid-in Capital: $12 million
Location: conomy and Technology Development Region, Hangzhou City,Chekiang Province (200km southwest of Shanghai)
No. of Employees: Approx. 300
Production Capacity: Annual 750,000 tires (1st stage), Annual 1.5 million tires (2nd stage)
Start of Operation: May 2003 (1st stage), 2006 (2nd stage)
Total Investment: $30 million (1st stage), $30 million (2nd stage)

Paid-in Capital: 268 million yuan
Line of Operations: Production, sale and trade of tires, shoes, etc.
Annual Sales: 1.03 billion yuan
Head Office: No.1 Haichao Road, Hangzhou City, Chekiang Province, China 310008

Paid-in Capital: S$1.5 million
Line of Operations: Import, export, manufacture and sale of tires, rims and industrial batteries
Annual Sales: S$70 million
Head Office: No.2 Pandan Road, Singapore 609254