When a few days ago, the Chinese Rubber Industry Association 2014 annual meeting, Zhang Wanyou, general manager of Double Coin Holdings Ltd., keynote speaker for the Chinese tire market situation pointed out that China's tire industry is currently facing many problems.
Zhang Qianyou, General Manager of Double Money Group Co., Ltd.
Supply exceeds demand caused product prices to fall
Zhang Wanyou said that in 2013, the domestic comprehensive tire output and export volume were higher than in 2012, and the industry’s income showed a negative growth due to repeated declines in tire prices. In the second half of the year, the rebound in the price of natural rubber further reduced the profits of tire companies, making the industry increase 40.3% lower than the same period in 2012.
According to Zhang Wanyou's analysis, in 2012, China's TBR (all-steel radial tire) production capacity reached 93.74 million, and in 2013 it exceeded 100 million. The number of commercial vehicles in China was only 24.49 million, an increase of 4.9% year-on-year. With the increase in supply, slowing demand and low product price, the average sales price of tires in mainstream brands has fallen year after year.
Low-end capacity saturation High-end capacity scarcity
Zhang Wanyou also put forward his own opinion on the structure of the tire industry. He said that the saturation of low-end production capacity in the Chinese tire industry and the scarcity of high-end production capacity are very prominent.
According to the analysis, in recent years, the rapid development of China's tire business, the proportion of the global industry has continued to increase, while multinational companies have invested in China. However, unlike domestic companies, foreign-funded enterprises rely more on their own technology and economic strength to seize domestic high-end markets, and domestic-funded enterprises are limited by conditions and cannot do anything about it.
According to Zhang Wanyou, production costs have risen, product prices have fallen, and corporate profits have been squeezed; environmental protection policy restrictions and foreign trade barriers and other factors cannot be ignored. Domestic tire companies also need to bear considerable pressure for this purpose.
Low-speed growth in the tire industry in 2014
Zhang Wanyou said that from the perspective of rigid market demand, the fundamentals of the tire industry in the next two years are still good. According to the forecast of the China Automobile Association, the national automobile will maintain a growth rate of 8%. It is expected that the national tire production in 2014 will increase by 6%-8% year-on-year, maintaining a moderate to low growth rate.
For the future development of the tire industry, Zhang Wanyou made several suggestions.
First of all, we must adhere to reform and innovation, take the road of sustainable development, change from a big tire country to a tire power, and at the same time we must adhere to the “going out†strategy, expand foreign investment, and develop the international market.
The second is to adapt to market demand, improve the development of “green tiresâ€, and encourage the recycling of used tires.
At the same time, through government and market guidance, further mergers and reorganizations will be implemented to eliminate outdated production capacity, open up new market models, and increase the core competitiveness of tire companies.
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