China’s tiremakers are facing tougher – and growing – competition from major industry names as companies like Groupe Michelin, Bridgestone Corp. and others are boosting their investment in China.
According to the People’s Daily, “Booming domestic market made foreign companies more confident in their expansion in China, and will lead to more fierce competition in China," said a manager from an unnamed Chinese tiremaker located in Shandong province.
Michelin recently announced a $1 billion investment to build a tire plant in Shenyang in southeast China; that facility is slated to open in 2012.
Continental AG started construction of a new plant in China last September with investment of 600 million euros and annual capacity of 18 million tires, including a new research and develpment facility in Shanghai.
Bridgestone is expanding its factories in China, and Yokohama Rubber Corp. said it was expanding its Hangzhou factory to achieve annual output of 5 million tires. Toyo Tire & Rubber Co. is investing $9.8 million to build a plant in Jiangsu.
China Association of Automobile Manufacturers has reported that China’s tire industry faced overcapacity of around 10% to 15%. “Compared with foreign-funded tiremakers, products of domestic companies mainly go to the low-end market, where tough competition continues," said the manager.
"In the coming couple of years, China’s demand for autos will remain as high as 15% to 20%. With the growing auto industry, alternative tire market will also expand," said Chen Aihua, an analyst with Guoxin Securities.
