From October 16 to October 17, CRIA Rubber Materials Specialized Committee held the “2020 (17th) China Rubber Materials Summit Forum and Rubber Materials Specialized Committee Member Conference” in Haikou.

On the meeting, Li Chao, new chairman of CRIA Rubber Materials and president of China Hainan Rubber Industry Group Co., Ltd., made a report on Systems, Technologies and China’s Rubber Industry Reform. He analyzed the development of China’s rubber industry from three levels, macroeconomics, system, and technology. 

See Development of Rubber Industry from the Aspect of Microeconomics

The sudden COVIDI-19 epidemic this year has had a major impact on the global economy, and the rubber industry has also been severely affected as a whole. Under the epidemic situation, China's economy has shown extremely strong resilience, showing a trend of differentiation at home and abroad. Affected by demand and the impact of the epidemic, some foreign tire manufacturers have closed some factories. However, the top companies in China’s rubber industry had good performance in the first three quarters. For example, the net profit of Sailun had a year-on-year increase of 23.4%, the net profit of Guizhou Tire had a year-on-year increase of 375%-513.48%, and Qingdao Doublestar's operation revenue increased by 40%. Li Chao believed that China's rubber industry still had large space for growth in the future, and a pattern dominated by internal circulation was taking shape, China's economic volume continued to grow, and the overall situation continued to be improved.

The current development of the industry presents the following characteristics: Firstly, the price of raw materials has risen rapidly in the short term, but there are still uncertainties in the long term. For example, the tonnage price of NR has exceeded 13,000 Yuan; secondly, the industry continues to eliminate outdated production capacity, leading companies seize global market share and the bottom enterprises are shut down and transfer production.

See Development of Rubber Industry from the Aspect of System

Li Chao analyzed that the current industry development still had a backward supply chain model. Firstly, the vicious circle of high sourcing and low selling, upstream and downstream squeezing as well as low price and low quality does not conform to the needs of high-quality development. Giving reasonable profits to upstream and downstream and improving product quality was a virtuous circle. Secondly, the industry was scattered, and the phenomenon of being small, scattered and weak was obvious, and the role of synergy effect had not been given play; the resource integration lacked cluster effect and scale advantage. Thirdly, the overall understanding and utilization of finance and capital were seriously insufficient, financial tools and ecological platforms were less used, and the capital pressure on the enterprises was huge.

See Development of Rubber Industry from the Aspect of Technology

Li Chao said that China had not yet fully established an independent guarantee system for NR materials.

Firstly, the dependence on raw material supply was too high. From 2017 to 2019, the world's annual supply and demand of NR was about 14 million tons, and China consumed about 6.5 million tons of NR each year, which was close to half of the world's total consumption. However, its self-sufficient volume was only about 800,000 tons, and its external dependence was more than 80%. .

Secondly, the technological strength of high-end NR materials was weak. Internationally, the R&D strength, technological level and industry standards of rubber materials had long been in the hands of developed countries in Europe and America, and the pricing right of the products was controlled by the major international financial centers led by Singapore and Tokyo. China lacked competitive rubber products with independent intellectual property rights, and there was still a long way to go before building an in-dependent guarantee system for high-end NR materials.

Thirdly, the cluster effect and scale advantage were still insufficient. Domestic planting, primary processing, finishing, technological research and development, and other industrial chain links were scattered throughout China. Resource integration lacked cluster effect and scale advantage, and various resources could not be effectively integrated to unite the strength of the whole nation to form the “fist force” of the NR industry. 

For this purpose, overally building an independent guarantee system for NR materials was a mission that must be completed under the new situation. In four aspects, collection, preparation and research and development of raw materials, independent preparation of high-end products, level of environmental protection and recycling and application of new technologies such as digitization, China's rubber industry, as a whole, still had a lot of room for improvement and a long way to go.

He proposed that, firstly, as for concept update, we should firmly follow the development mode of “competing in the market with high-quality products”, and increase the global market share in the corresponding field; secondly, as for research and development and innovation, we should increase research and development expenditures, and carry out integration of production, education and research as well as transformation of scientific and technological achievements, strengthen the training of talent team and lower the external dependence degree of the core products; thirdly, as for resource integration, we should establish industrial alliance, through merger and reorganization, by virtue of large companies and conglomeration, pool industrial resources to change the industrial status of being small, scattered and weak; fourthly, as for standards and brands, we should pay attention to establishment of industry standards and brands, and build a batch of top brands in the world.

In addition, digitization, informationization and platformization would become the long-term development direction of the enterprises. For this purpose, firstly, we should change our thinking. In the future, the rubber industry surely would form an industry-finance ecosystem model with industry as the core and platform as the expansion method; secondly, we should establish the open and win-win concept of industrial community of shared destiny with jointly discussing, building, sharing, and prospering; thirdly, we should actively participate in the construction of new infrastructure for industrial platforms. The rubber industry should have its own underlying infrastructure and use a unified blockchain standard to help the enterprises access to a unified underlying infrastructure, thus avoiding repeated investment and waste.