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Pirelli open factory in China
Yanzhou, China – Pirelli has begun manufacturing high-performance car tires in China at the Group’s second factory in the Shandong Province. The new industrial facility, which is located in the same area as the factory for truck tires which opened in 2005, was inaugurated in the presence of Riccardo Sessa, Italian Ambassador to the People’s Republic of China, Marco Tronchetti Provera, Chairman of Pirelli, Francesco Gori, CEO and General Manager of Pirelli Tire, Niu Yshun, Chairman of Yinhe Group, and Chinese authorities.

The factory occupies a covered surface area of 70 thousand square meters and has a manufacturing capacity of about 3 million pieces per year, with areas sufficient to contain manufacturing expansion up to 10 million pieces per year. Employees, nearly all of local origin, number 1,000. The investment made by Pirelli to build the factory amounted to nearly 100 million dollars. Production will be destined for China and the main markets in the Asia-Pacific area.

Realization of the car tire factory starts the second phase of the Group’s expansion plan in China, one of the world markets of reference for tire manufacturers. In the next four years, growth in the local tire market will be driven by a significant increase in demand for new cars, resulting -more from the combination of several factors: GDP growth (estimated at about 10% per year between 2008 and 2010), the improved quality of life for large segments of the population, better road infrastructure, and the trend towards lower prices due to increased competition and technology innovation.

Following the investment in the truck tire factory, which allowed Pirelli to establish its presence in the Industrial business - confirmed by the leadership gained from supplying original equipment to CNHTC (the No. 1 domestic manufacturer of industrial vehicles) - the objective now is to conquer the growing Chinese automobile market, in particular in the mid-high range segments, where double-digit CAGR (cumulative annual growth rate) is expected over the next four years. Pirelli, whose brand is highly regarded throughout China, intends to play a leading role in this growth process and aims to conquer a double digit market share in the high end of the Chinese market. The growth strategy of Pirelli in the local market also includes strengthening the distribution network, which will grow to more than 1,000 points of sale (of which about 2/3 monobrand), by the end of 2008.

The new Yanzhou plant, one of the most modern in the world for tire manufacturing, uses the best non-robotized technologies and has been conceived for production of mid-high performance tires. The entire industrial complex, with two large, technologically advanced plants, will therefore become an important manufacturing, logistic and commercial hub for all of the Far East. For its realization, in the last three years, Pirelli invested a total of over 200 million dollars.

Much attention has been dedicated to corporate social responsibility, with a campaign to sensitize employees on CSR themes, and to intercultural integration initiatives and work-life balance initiatives such as recreational events and trips. Pirelli has also launched a free vaccination campaign for all workers.

Pirelli operates in China through a subsidiary company, the result of the joint-venture agreement signed in 2005 with the Yinhe Group. The stake in the venture has recently been increased from 60% to 75%in a transaction valued at about 11 million Euros. The strengthening of the Yanzhou -more hub adds to Pirelli’s strong international presence of 25 factories in 12 countries around the world.

To celebrate and commemorate its expansion in China and throughout Asia, the Pirelli Group has decided to present in Shanghai, “Pearls of the Orient”, the 2008 edition of the celebrated Pirelli Calendar. The latest edition of “The Cal”, shot by photographer Patrick Demarchelier, will be unveiled at a special event there today.

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