Pirelli began manufacturing high-performance car tires in China this week at the Group’s second factory in the Shandong Province. The new industrial facility, which rises in the same area as the factory for truck tires which opened in 2005, was inaugurated in the presence of both government and Pirelli officials. 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. Production will be destined for China and the main markets in the Asia-Pacific area. In the next four years, growth in the local tire market will be driven by a significant increase in demand for new cars, resulting from the combination of several factors: from GDP growth (estimated at about 10% per year between 2008 and 2010) to the improved quality of life of large segments of the population; from better road infrastructure to 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, 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. With the completion of the car tire plant, the workforce at Yanzhou has doubled, growing from about 1000 to about 2000 employees.