Table 2: Ranking of China Domestic Tire Enterprise in 2019 (Top 20)

Unit: 100 Million Yuan

Enterprises with relatively large changes in ranking also include, Doublestar falling from No. 9 to No. 11, Aeolus Tyre falling from No. 8 to No. 12; Qingdao Sentury rising from No. 21 to No. 16; and Shandong Huasheng rising from No. 24 to No. 18.

Reasons for these changes can be attributed to “merger & reorganization” and “overseas construction”.

Shandong Haohua’s successive mergers and acquisitions in the past two years have made its ranking rise sharply. In 2017, Huadong Rubber was reorganized. In 2018, Shandong Longyue was acquired. Therefore, its ranking in 2018 rose from No. 23 to No. 12, and in 2019, it rose again from No. 12 to No. 5.

Shandong Huasheng has also frequently made major movements in recent years. After leasing production equipment from Guofeng Rubber & Plastic, Yongtai Group, etc., it respectively acquired RMB 40 Million Yuan of creditor’s right from Hengyu Technology and Guofeng Rubber & Plastic at the beginning of the year. In March, it also signed a cooperation agreement with Zhejiang Materials Industry to jointly establish Shandong Linghang Tire Co., Ltd., whose main business includes the trusteeship of tire business project, tire asset acquisition, centralized procurement, tire sales, etc.

Qingdao Sentury’s overseas sales revenue grows rapidly, rising from No. 26 to No. 21 in 2018, and from No. 21 to No. 16 in 2019. The Thai factory of Double Coin Tyre put into production in 2018. Although its production capacity has not been fully released, and the sales revenue is not high, it has surpassed Doublestar with a slight advantage. 

As can be seen from Table 2, among the top 20 tire enterprises, more than half of them have declining sales revenues, especially all-steel tire manufacturers. This is related to the “anti-dumping and anti-bribery” of the US and Europe against China’s tires, as well as the decline in the prices of major raw materials. In addition, in 2018, China’s automobile production and sales fell, and China has released policy of “conversion of highway transport to railway transport and highway transport to waterway transport”, etc., also making a greater impact on China’s tire market.

Tire Production in Chinese Market

Among the 53 enterprises that participated in 2019 China’s Tire Enterprise Ranking, there are 52 tire enterprises reporting their production capacity and output data.

Table 3: Sales Revenue of China’s Tire Ranking Enterprises in 2015-2018 

As can be seen from Table 3, in the past 4 years, China’s tire industry has the following characteristics:

Firstly, the sales revenue and output of overseas tire factories of China’s tire enterprises have increased year by year, mainly demonstrating in the increment of semi-steel tires. The output base of all-steel tires in 2015 was small, but in 2016, the output increased largely by 93.4%; and in 2018, it increased by 42.3%.

In 2015, there were two overseas factories of Chinese enterprises achieving actual production capacity. In 2016, the number increased to four, and the sales revenue increased by 151.4% year-on-year (the same below) as a result. In 2017, there were still four overseas factories, and the sales revenue still increased by 74.7%. In 2018, it increased to five factories. However, because the Thai factory of Double Coin put into production not for a long time, its production capacity was not fully released, and the sales revenue has increased by 8.99%. This shows that under the circumstance that foreign countries continue implementing “anti-dumping and anti-bribery” to China’s tires, Chinese tire enterprises have increased their investment in overseas factories.

Secondly, although the number of enterprises participating in the ranking of 2019 has decreased, tire production, especially that of radial tire, has increased by 36 million compared with the previous year. On the one hand, in terms of production of 2017, data of two enterprises with large output was missing, and data of Triangle Tyre, Zhaoqing Junhong and other enterprises was added. On the other hand, output data of Xiamen Cheng Shin and Tongli Tire was added in 2018. In addition, due to the merger and reorganization of tire enterprises, the scales of quitting enterprises are small, and some of their production capacity has been reorganized into other enterprises. Therefore, the concentration of tire enterprises in 2018 has increased, and the output is still higher than the previous year.

Thirdly, in 2018, the total production of tires in China’s factories increased by 5.85%, but the sales revenue increased by only 0.9%, which was far lower than the increase of output. This indicates that tire enterprises have not increased their tire prices when raw materials and other costs are stable.
In 2018, whether for radial tire (including all-steel tires and semi-steel tires) or OTR tires, the operating rate has increased compared with that of the previous year, while the operating rate of 2017 was all declined.

Taxation of Profit of Tire Enterprises

From 2015 to 2018, the numbers of enterprises involved in the taxation of profit statistics were not much different, being 49, 50, 51, and 47 respectively.

Table 4: Operating rate of tire industry in 2015-2018

Unit: %

However, enterprises’ taxation of profit fell sharply in 2017, with a 31.8% decrease compared with the previous year. This is consistent with the statistics of CRIA Tire Branch. In 2017, according to statistics of the association, key tire enterprises achieved a profit decline of 49.56%. It can be seen that the benefit of China’s tire industry declined significantly in 2017.

In 2018, statistically, taxation of profit of 47 enterprises increased by 70.42%. Main reasons for the large increase include, firstly, large enterprises with better benefits did not report the taxation of profit data for some reason in 2017. The second is that the number of loss-making enterprises decreased. For instance, Aeolus Tyre and Guizhou Tyre both turned loss-making into profit-making, and the benefits increased substantially. Thirdly, the stronger keep being strong, and enterprises with good benefits all have a large increase. According to the statistics of CRIA Tire Branch, the taxation of profit of 31 key enterprises realized an increase of 8.46% in 2018.

Conclusion

Future trends in China’s tire industry:

Firstly, structural adjustment and industry integration are imperative. The merger and reorganization of enterprises and the pace of de-backward production capacity will accelerate, the gap between brands will expand, and resources will be concentrated to advantageous  enterprises;

Secondly, the pace of tire enterprises going global is accelerating, and the internationalization process is speeding up;

Thirdly, enterprises must innovate in all aspects of thinking, management, technology, products, marketing, channels, etc., enhance their core competitiveness and achieve high-quality development;

Fourthly, safety, environmental protection and energy conservation are the foundation for the survival of enterprises and important driving force for enterprise innovation.

Fifthly, more new materials, new technologies and new equipment will be applied to tire production.