Wanli Tire Co Ltd, a State-owned enterprise based in Guangzhou, capital of Guangdong province, has begun construction of a new-phase production base amid a recovery of the country's tire industry last year.

The company's third-phase expansion project, located in the existing factory area of its production base in Conghua, a suburb of Guangzhou, aims to create a green, intelligent and efficient tire-making demonstration factory, with a designed annual production capacity of 12 million units.

The company's production capacity expansion was driven by a sharp increase in orders, company executives said.

"Currently, market orders are full, especially for steel radial tires, which are in short supply," said Cao Xiandong, general manager of Wanli Tire.

In 2023, Wanli's production and sales volume surged 18.77 percent and 19.42 percent, respectively, with a profit increase of 292 million yuan ($40.69 million), the company said.

Not only has the company turned losses into profits, but its sales performance has also achieved double-digit growth in the past two years. "We remain optimistic about future market growth," Cao said.

With expanded production capacity and deployment of smart technologies, the company's goal is to achieve a revenue scale of some 10 billion yuan by 2025, he said.

China's tire sector experienced a resurgence last year, with sustained strong demand from the automobile industry.

Production of steel radial tires in China reached 139 million units in 2023, an increase of 14 percent compared to the previous year. Production of partial steel radial tires reached 591 million units during the same period, or a 22 percent year-on-year increase, according to a report by National Business Daily.

According to the report, many manufacturers in China said their tire orders are already scheduled for delivery two months ahead, and their tire product inventories have also dropped to record low levels, driven by strong demand from domestic automakers and increased orders from overseas.

Wanli has increased its investment in research and development, especially targeting the new energy vehicle sector.

Prior to construction of the third-phase project, Wanli Tire had carried out multiple technological transformation investments to enhance smart production at its two major production bases in Guangzhou, and Hefei, Anhui province.

Its Hefei base is its first fully intelligent and automated green tire factory.

The company will also expand its overseas footprint, with plans to build a factory in Cambodia, according to local media reports.

Market insiders said Wanli Tire expanding its production will trigger a surge in local industrial investment, especially in emerging industries.

Industrial investment in Guangzhou achieved rapid growth in 2023, with a year-on-year increase of 20.8 percent from January to November, according to local statistics.

Guangzhou's government work report said the value-added amount from strategic emerging industries accounted for more than 30 percent of the city's GDP, which is expected to surpass 3 trillion yuan in 2023.

"Investments such as Wanli's expansion in production will inject new impetus into Guangzhou's industrial development in the long run, helping promote continuous optimization of the city's industrial structure and enhancing competitiveness," said Zhang Zhengang, a professor at the school of business administration, South China University of Technology.

qiuquanlin@chinadaily.com.cn