(Yicai) Dec. 18 -- Chinese tire maker Sailun Group plans to partner with the owner of Mexico's largest tire dealer to build a USD240 million automobile tire plant in the South American country to enhance its ability to cope with international trade barriers.

Sailun's Singaporean unit will join hands with TD International Holdings to build a plant with an annual production capacity of six million semi-steel radial tires for the North American market in Leon in Mexico's Guanajuato State, the Qingdao-based company announced late on Dec. 15. The construction period will be 12 months.

Sailun's unit and TD International will set up a JV to invest, build, and operate the plant, the firm added. Sailun will own 51 percent of the JV and TD International the remaining 49 percent. The pair is also considering building another plant with an annual production capacity of nearly 1.7 million all-steel radial tires.

Semi-steel radial tires are mainly used on sedans or light trucks, while all-steel radial tires are generally used on heavy-duty trucks or construction machinery vehicles.

After reaching its designated annual capacity, the plant is expected to realize a net profit of USD40.6 million and revenue of USD219.4 million per year, with a post-tax payback period of 6.3 years, Sailun pointed out.

TD International's unit Tire Direct is Mexico's biggest tire dealer, with a complete sales network and rich local operation experience, Sailun said, adding that Tire Direct has been a partner of the Chinese firm's Singaporean unit for years.

Besides four production bases in China, Sailun also have oversea production bases in Vietnam and Cambodia. Last year, the company's overseas sales reached CNY17 billion (USD2.4 billion), accounting for 78 percent of the total, according to Sailun's latest annual report.

Sailun's shares [SHA: 601058] were trading down 0.6 percent at CNY11.23 (USD1.58) as of 2.15 p.m. in Shanghai today.

Editor: Futura Costaglione