US Goodyear Tire and Rubber Company will relocate its Asia-Pacific headquarters from the United States to Shanghai before June as part of a major initiative to reinforce its presence in China and the Asia-Pacific Region.

"The decision shows our long-term commitment to China and the region," said Robert Keegan, chairman and chief executive officer of the Goodyear Tire and Rubber Company.

Over the past few years, Goodyear has been concentrating on strengthening its position in the North American market, but "now the time is right to enlarge our business in the (Asia Pacific) Region," Keegan said.

He said new dynamic management has been set up to lead Goodyear's Asia-Pacific and China teams in a drive to accelerate its retail activities.

Keegan told Shanghai Star in an interview over the weekend that the relocation aims to increase procurement from China 10-fold to reach 10 per cent of Goodyear's global total procurement by 2010.

"We will reach the objective by enhancing local supplier relationships," he said.

At present, the company's procurement from China accounts for only 1 per cent of its global total.

Goodyear insiders said the move will boost the company's existing manufacturing and retail activities.

Keegan said Goodyear's objectives are two-fold: to meet the increasing demand in the China automotive market and to purchase more materials, equipment and products in China.

"China will become our strong base in the Asia Pacific Region and we are now ready to achieve this," he said.

Sales in the Asia Pacific Region reached US$1.3 billion last year up from US$581 million in 2003 and its regional tyre unit production increased from 13.4 million in 2003 to 19.5 million in 2004.

"We believe Asia and particularly China will be a critical growth engine for Goodyear," Keegan said.

John Tseng, chairman and president of the Goodyear Tire Co Ltd China, said Goodyear has decided to put additional investment of US$120 million into the Dalian factory.

The investment will expand its annual 1 million tyres to 5.3 million by the first quarter of 2007, Tseng said.

At present, every 100 Chinese families have only 1.3 cars but Malaysia has 40, which indicates that "the tyre market in China has a huge potential," he said.