• Home
  • News
  • Tires
  • Business
  • People
  • Service
  • Products
  • Commentary
  • Original Video
  • Club 3633
  • Top Shop
  • Research
  • Buyers Guide
  • Webinars
  • Magazine Archive
  • Advertise
  • Subscribe
  • Contact Us
Tire Review Magazine
Tire Review Magazine
Babcox
Tire and Rubber Technology Accelerates Chinese Growth

by Oliver Haiqing Hua

China’s Tire Mold And Branding Problems

by Tire Review Staff

Sponsored Content
Automotive Belts, While Lasting Longer Than Ever, Still Wear Out Over Time

by Dayco

State of the Industry/China
August 22, 2018

Industry Update: Growth in Adversity for China-Based Tiremakers

Share Tweet
Print Print Email Email
Yogender Malik

Yogender Malik,author

View bio

  • Bio
  • Recent Posts
  • Popular Posts

Yogender Malik is a New Delhi-based freelance writer on the Indian and South Asian industry and economy, with more than 10 years experience writing on the automotive industry. administration degrees, he also works as an analyst on these industries with a New-Delhi-based organization.

Industry Overview: South Korean Roots Anchor Global Tire Brands

Industry Update: Growth in Adversity for China-Based Tiremakers

China on the Rise Tire Companies Making Waves Around the Globe

Indian Tire Industry Influences Higher Demand, Demonitization Impact Growth

Indian Tire Industry Faces Tough Year

Despite a very tough year, the Chinese tire industry continues to make headlines for its sheer size, overseas expansions by domestic players and tariff and non-tariff barriers imposed by some of the key export markets. Below is an overview of the Chinese tire industry and major events in last 12 months.

Overview

Comprising more than 225 big and small tire producers, the Chinese tire industry struggled in 2017 with rising input prices, a slowdown in domestic consumption, environmental regulations and the imposition of tariff and non-tariff barriers by some key export markets.

In China, the tire industry is highly fragmented and often works on very small margins. Most of the mid-scale Chinese producers operate on wafer-thin margins, thus even a marginal change in raw material prices often results in a number of hardships for the mid- and small-scale producer. After a number of years of oversupply of natural rubber and low oil prices, the main ingredients of synthetic rubber, these costs increased by many percentage points in 2017. Since these costs account for about 60% of total input costs for tire producers, most of the tire producers were forced to increase prices in 2017.

Shandong, Jiangsu and Zhejiang provinces continued to dominate the Chinese tire industry. Shandong province accounts for approximately 50% of the bus and truck tires produced in the country. The province also accounts for more than 25% of the car tires produced. Jiangsu and Zhejiang provinces collectively account for more than 50% of the car tires produced in the country.

Weak automotive sales in 2017 had an adverse impact on sales of tires in the domestic market. According to the China Automotive Industry Association data, automotive sales for the first 11 months of the year had risen to 25.8 million vehicles, up 3.6% from the previous year. This was one of the slowest growths registered by country’s automotive industry in a number of years.

In April, the Chinese government announced one of the biggest liberalizing moves for the country’s automotive industry in decades. The government is allowing global carmakers to operate wholly owned factories by 2022 in the country. Foreign ownership limits – currently capped at 50% – will be completely lifted by 2022 on carmakers that assemble passenger cars in the country. This move is expected to give a much-needed fillip to domestic tire consumption in coming years.

Zhongce Rubber Group (also known as ZC Rubber) retained the pole position in terms of total revenue with 2017 sales of 22.74 billion yuan (RMB) ($3.36 billion), an increase of 23.72 % from yearly revenue of 18.38 billion yuan ($2.71 billion). The second-placed Giti Tire trails in total revenue by more than 8 billion yuan (about $1.18 billion) with annual revenues of 14.71 billion yuan ($2.17 billion) in 2016.

Impact of Environmental Regulation 

For most of 2017 and the first half of 2018, the Chinese tire industry suffered from lower capacity utilization due to environmental restrictions and a slowdown in domestic automobile growth rates. China’s environmental inspection has especially hit Shandong, a province housing a number of tire plants and feedstock facilities. In the province’s Zibo city alone, 5,000 chemical companies have been closed in year 2017. Seven Shandong cities out of a total of 28 are named in the most polluting cities in China. Many big tiremakers have facilities located in these seven cities.

Major Expansions Underway

Shandong Linglong Tire Co. Ltd. is in the process of building its fourth factory in the country with an investment of $875 million in Hubei province of the country. The company broke ground in May on the factory with the potential to produce nearly 14.5 million car, truck and industrial tires annually. Commercial production of tires from this site is expected to start by mid 2020.

In 2017, Continental, one of the leading global tire manufacturers, started an expansion of its existing Hefei tire plant. With a total investment of around €250 million ($293 million), the Hefei tire plant expansion will allow Continental Tire to boost its annual production capacity from about 8 million to 14 million tires by 2019.

In 2016, Goodyear Tire & Rubber Co. broke ground on a $485 million expansion of its state-of-the-art tire factory in Pulandian, Dalian. When completed in 2020, the expansion will increase the plant’s capacity by about 5 million tires a year, enabling Goodyear to meet the strong and growing market demand for premium, large rim diameter consumer tires in China and the Asia Pacific region. Goodyear was the first global tire manufacturer to enter China when it invested in a tire manufacturing plant in Dalian in 1994. The company moved production to the new Pulandian factory in 2012 and opened its new China Development Center on the Pulandian campus in 2015 to increase the speed and efficiency of developing high-quality premium tires for China-based auto manufacturers.

Overseas Moves by Chinese Tire Producers

Overcapacity in the domestic market and stiff price competition has prompted Chinese tire producers to increasingly look to overseas markets. Imposition of tariff and non-tariff barriers by a number of countries in the last few years has encouraged Chinese producers to set up manufacturing plants in foreign countries.

As the second largest Chinese tire producer by revenue, Giti Tire’s American arm commenced operations at its U.S. plant in 2017. Coming up with an investment of $560 million, the plant at Richburg, South Carolina supplies Dextero-brand car tires for Walmart Inc. The company is preparing to add GT Radial-brand production this year and launch a range of Giti-branded tires in the current year.

Shandong Linglong Tire Company, the third largest Chinese producer in terms of sales revenue, is in the process of zeroing in on two overseas production sites. One of these plants will be in U.S., while the other one will be in Europe.

Another leading tire producer, Doublestar Group, acquired a controlling stake in South Korea’s Kumho Tire. The company completed an agreement with the Korea Development Bank (KDB) to acquire a 45% stake in Kumho for 3.9 billion yuan ($597 million). Through the deal, Doublestar becomes Kumho’s controlling shareholder, while KDB and other Kumho creditors remain the second largest shareholder with a 23% stake. TR

  • Tags:
  • China
  • China Tire Watch
  • Chinese Tires
  • Chinese-made tires
  • Giti Tire Fujian Co. Ltd.
  • Shandong Linglong Tyre Co. Ltd.
  • State of the Industry Report
  • ZC Rubber
Search for:
Show Full Article

Archives

  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • August 2008
  • July 2008
  • June 2008
  • May 2008
  • April 2008
  • March 2008
  • February 2008
  • January 2008
  • December 2007
  • November 2007
  • October 2007
  • September 2007
  • August 2007
  • July 2007
  • June 2007
  • May 2007
  • April 2007
  • March 2007
  • February 2007
  • January 2007
  • December 2006
  • November 2006
  • October 2006
  • September 2006
  • August 2006
  • July 2006
  • June 2006
  • May 2006
  • April 2006
  • March 2006
  • February 2006
  • January 2006
  • December 2005
  • November 2005
  • October 2005
  • August 2005
  • July 2005
  • May 2005
  • April 2005
  • March 2005
  • February 2005
  • December 2004
  • November 2004
  • October 2004
  • August 2004
  • July 2004
  • May 2004
  • April 2004
  • March 2004
  • February 2004
  • January 2004
  • December 2003
  • November 2003
  • October 2003
  • August 2003
  • July 2003
  • June 2003
  • May 2003
  • April 2003
  • March 2003
  • February 2003
  • January 2003
  • December 2002
  • November 2002
  • October 2002
  • September 2002
  • August 2002
  • July 2002
  • June 2002
  • May 2002
  • April 2002
  • March 2002
  • February 2002
  • January 2002
  • December 2001
  • October 2001
  • September 2001
  • August 2001
  • July 2001
  • June 2001
  • May 2001
  • April 2001
  • March 2001
  • February 2001
  • January 2001
  • December 2000
  • November 2000
  • September 2000
  • August 2000
  • July 2000
  • June 2000
  • May 2000
  • April 2000
  • March 2000
  • February 2000
  • January 2000
Copyright © 2019 Babcox Media, Inc. All Rights Reserved
  • Privacy Policy
  • Home
  • News
  • Tires
  • Business
  • People
  • Service
  • Products
  • Commentary
  • Original Video
  • Club 3633
  • Top Shop
  • Research
  • Buyers Guide
  • Webinars
  • Magazine Archive
  • Advertise
  • Subscribe
  • Contact Us