◎ Secretariat of China Rubber Industry Association Tire Branch

In recent years, average capacity utilization rate, production and sales rate and profit ratio of the entire industry were 85.0%, 93.1% and 3.0% respectively. While expanding the scale of production and sales, it has realized self-owned technological progress and innovation from learning, referring and opening up, so that China’s tire industry and enterprises gradually become mature from immature.

Ⅰ. Tire Industry Entering a New Era

In 1978, China’s tire production was only 9.36 million, ranking behind the USA, Japan, the UK and France. In 2018, the tire production reached 665 million, with an increase of 71 times. The average growth rate remained between 3% and 10% for most of the time, and even reached a high speed of more than 15% in some years.

In 2018, nine tire companies in mainland China entered the top 30 in the world tire rankings, among which, Zhongce Rubber Group ranked among the top 10 for seven consecutive years.

During the practice, tire enterprises adhere to the concept that market has demand, research & development have key points and development owns goals, and seize the integrated acquisition to become a new economic growth point.

Firstly, in 2015, China National Chemical Corporation acquired Italian Pirelli Company with an annual output of 80 million tires. In the past two years, AEOLUS Tyre has undergone great changes through benchmarking and integration with Pirelli. The operating model has also been changed from the original several companies to the “head-quarter + bases”, which are under the control of existing listed company. AEOLUS Tyre has steadily promoted the integration of headquarter functions and base’s transformation and upgrading to factory functions. As for the overseas market, the market business layout has been adjusted and optimized, and the proportion of highly profitable products has been continuously increased. According to the strategic positioning of the company’s export market brand, the average selling price of tire exports remains at the forefront of Chinese enterprises. It has carried out in-depth digestion and absorption of Pirelli technology, increased product added value and accelerated the transfer and implementation of Pirelli technology.

Secondly, in 2018, Qingdao Doublestar Group acquired Korean Kumho Tire with an annual output of 60 million tires. The acquisition was mainly a combination of advantages in brand, network, product and technology, bringing into full play Doublestar’s advantage in the field of truck and bus tires and Kumho’s advantage in car tires.

Thirdly, Sailun Group made deep cooperation with Cooper Company. On September 26, 2018, Sailun announced to acquire 35% equity of Qingdao GRT with RMB 220 Million Yuan, while another 65% equity belonging to Cooper Company. On December 12 of the same year, cooperating with Cooper, Sailun built an all-steel radial tire factory with an annual output of 2.4 million in Vietnam. The total investment of the project is USD 280 Million. The mutual cooperation can improve the technical level and brand influence of Sailun.

After expanding the opening up and deepening the reform, there are more than 30 world-class tire enterprises settling in China, including the World’s Tire Big Three and tire groups of eight major producing countries. Through the transitional restructuring of state-owned enterprises, transformation & upgrading of township enterprises and investment & development of private capital, there are about 300 tire enterprises above designated size in China, including about 250 private enterprises. At present, in the tire industry, it has formed a multi-dimensional and mixed development situation of tripartite confrontation, with state-owned accounting for about 20%, private shareholding system (including mixed ownership) accounting for about 50% and foreign capital (including joint ventures) accounting for about 30%.

At present, in the domestic market, in terms of high-end passenger car tires, foreign-funded enterprises account for 60% to 65%, and domestic-funded enterprises account for 35% to 40%; as for truck and bus tires, foreign-funded enterprises account for 30% to 35%, and domestic-funded enterprises account for 65% to 70%.
The facts show that the rapid development of China’s tire industry has always been accompanied by innovation. Focus on and try to change, and to foresee and explore, so as to fully promote the development of the industry.

Ⅱ. Transforming, Upgrading and Innovating Technology in Tire Industry

In the past 40 years of reform and opening up, China’s tire technology progress has made gratifying achievements. It mainly includes innovating and mastering tire balance design theory, computer simulation structure design, 3D printing technology and technology for the combination of nanometer, absorption & activation and high-tech fusion in rubber formulations, solving the potential safety hazard of flat tire on pneumatic tires and difficulties on the production technology of non-pneumatic tires, and using advanced technology to achieve revolutionary innovation of tire products. It mainly manifests in two aspects:

Firstly, the construction of science & technology innovation system has been continuously improved. Now China has changed from a world tire manufacturing factory to a global tire intelligent manufacturing and technology research & development base. The State has approved the establishment of national-level technology centers for domestic key tire enterprises, such as Linglong, Double Coin, Triangle, Doublestar, AEOLUS, Prinx Chengshan, Wanli, Guizhou Tyre, Zhongce, Sailun, Xingyuan and General Tires; at the same time, it has been established national-level tire engineering development centers, laboratories and tire testing sites etc., implementing a technological innovation system combining industry, university and research; some enterprises have established their own technology development centers; in addition, some enterprises have made use of social forces to strengthen technical team building, and Sailun Group has established the Qingdao Rubber New Materials and Equipment Center with ten related units such as Qingdao University of Science & Technology; Wanli Tire has led 15 colleges and universities and other related units to participate in the establishment of tire rubber industry technology innovation alliance; Zhongce Rubber and Ningbo Institute of Materials, CAS have jointly built an engineering technology center; Triangle Tire, focusing on tire production technology and technological innovation, has successively obtained three major research & development platforms, including national-level technology center, national-level industrial design center and national engineering laboratory, and also established the Triangle Tire (USA) Technology R&D Center; and in Shandong Province, it has formulated guidelines for investment in key industrial technology transformation, and tire enterprises are encouraged to carry out technological transformation from technical processes, equipment and products. Tire companies have greatly enhanced their technological innovation strength both at home and abroad, and have developed a large number of new products, new technologies, new process equipment and new raw materials with international standards.

Secondly, technological achievements emerge constantly. In the 40 years of reform and opening up, tire industry has had fruitful achievements. Tire enterprises have won 24 national-level awards, including two First National Award for Scientific and Technological Progress (one of Tsen Tai Rubber Factory  and one of cooperation between Triangle and Tianjin Saixiang), and 22 Second and Third National Award for Scientific and Technological Progress; and has won 58 Awards for Scientific and Technological Achievements of China Petroleum and Chemical Industry Federation (CPCIF), including 13 first prizes and 45 second and third prizes.

From 2013 to 2014, Linglong, General, AEOLUS, Doublestar, Chengshan and Triangle won the title of “National Technology Innovation Demonstration Enterprises”. In 2015, 16 enterprises won the “Innovation and Development Award for Enterprise” of China Rubber Industry Association (CRIA), namely, Zhongce, Linglong, Triangle, Doublestar, Double Coin, AEOLUS, Guizhou Tyre, Huanan, Cheng Xin Xiamen, Giti, Sailun Jinyu, Prinx Chengshan, Xingyuan,  TUTRIC, General and Shengtai. On December 9, 2018, Linglong Tire won the “China Grand Awards for Industry”; and on December 3, Double Coin Tyre and Jiangsu General won the title of “Technology Innovation Demonstration Enterprises of the Year” of China Petroleum and Chemical Industry Federation (CPCIF).

Ⅲ . Self-owned Tire Brands Continuing Growing

The growth of Chinese self-owned tire brands has always been a beautiful landscape in the 40 years of reform and opening up. At the beginning of reform and opening up, China’s radial tire research, development and production just started. In 1985, the radializaiton rate was only 1.3%. Now the tire radialization rate has reached 93%. Passenger car radial tires and commercial car radial tires have achieved full coverage of middle and low-end products, and high-end products are gradually entering the domestic and international markets.

Through 40 years of tempering and progressing, Chinese self-owned brand tires have grown out of nothing, from less to more, and from general to better. In terms of brand building, tire enterprises set about from thinking mode, strategic planning, R&D management and personnel training etc., conduct in-depth exploration and research on new technologies, new ecology and new markets, and gradually narrow the gap with international first-class tire brands.

1. Benchmarking Production

Enterprises conscientiously implement relevant standards, such as tire industry policies, process standards and quality management systems etc., attach importance to the overall improvement of human resources quality. Employees’ product quality concept and brand awareness continue to increase, so that they can produce high-quality tires.

In terms of passenger car tires, the situation has been gradually changed that there are no self-owned tire brands in factory-matched tires for mid-to-high end car above RMB 200 Thousand Yuan. Enterprises have bravely shouldered the burden of building mid-to-high end self-owned tire brands to enter matched-tire market, including Linglong, Triangle, Zhongce, Doublestar, Sailun, Wanli, Sentury and Hixih. Major products of many tire enterprises have been all-round tested and pilot produced in early stage. According to the test method of EU Tyre Labelling Regulation, all technical indicators of the products are advanced and applicable, and the technical performance is close to or reaches the advanced level abroad. They are welcomed by domestic and foreign automobile manufacturers and consumers in replaced-tire market.

In terms of commercial car tires, enterprises have strictly controlled the structural design, formulation process and other links. Tire products have withstood the severe test of various roads, long-distance driving, overtime and overload. Objectively speaking, a considerable number of self-owned brand commercial car tires in China are as good as world-class famous brands in terms of technology, quality and other performance. Many brand products have been recognized as green tires by the U.S. Environmental Protection Agency (EPA), and are also favored by customers in markets such as Europe, including time-honored tire brands which are known nationwide since the planned economy, and new brands which emerged during the 40 years of reform and opening up, such as Chaoyang, Triangle, Linglong, AEOLUS, Advance, Wanli, Doublestar, Sailun, Chengshan, Xingyuan, General, Landsail, Changzheng and Duraturn.

2. Promoting Value

Brand is the soft power and core competitiveness of an enterprise. Enhancing brand awareness and product added value, and achieving the simultaneous improvement of quality and brand have become the focus of enterprises.

The tire industry vigorously disseminates the reputation of self-owned brand tires and enhances its influence.

Firstly, CRIA organizes tire enterprises to carry out brand promotion in the form of Green Tire Safety Week, and demonstrates tire use skills on the spot, so that consumers can deepen their understanding from the sensibility and rationality, playing a positive role in promoting tire brand awareness and influence.

Secondly, advertise on CCTV to expand brand influence.

Thirdly, every year, many enterprises participate in domestic and international automobile tire exhibitions in Beijing, Shanghai, the US and Germany etc., exhibiting the image of brand tires together.

Fourthly, Zhongce Rubber Group and Wanda Boto Tire Company have successively scrolled their brand tire advertisements on the big screen of Times Squares in New York, the USA, and voiced the world for “Chinese Tire”.

3. Achieving Tangible Results

No pains, no gains. From 2015 to 2018, CRIA had awarded “Excellent Brand Awards” to tires of Double Coin, Triangle, Chaoyang, Linglong, Advance, AEOLUS, Wanli, Cheng Shin, HILO, Giti, Doublestar, Sailun, Chengshan, TIANLI, Celimo and Three-A; Doublestar Tire won the title of “Top 500 Brands in Asia”, “National Industrial Brand Cultivation Demonstration Enterprises” and “National Customer-Satisfied Brands”; Chengshan Tire won “Chinese Brand Awards”; Linglong Tire won the “National Brand Building Award”; tires of Double Coin, Linglong, Doublestar and AEOLUS brands were selected as “China’s Top 500 Most Valuable Brands”;

Doublestar, Linglong, Chaoyang, AEOLUS, Triangle, Double Coin, Cheng Shin, Chengshan, Wanli and Giti Tire announced “China’s Top Ten Influential Tire Brands” in Hong Kong, China; General Tires won the title of “National Customer-Satisfied Products” for three consecutive years.

Ⅳ. Tire Industry Going Towards High-quality Scale Development

In the new era, tire industry begins to shake off the old way of relying on capital investment and low level of repetition, develops towards grouping and high quality, establishes an intelligent production mode with technological innovation as the engine, fully implements economic growth driver conversion and industrial transformation and upgrading, and insists on the development concept of innovation, coordination, greenness and openness, high-quality production development, high-efficiency work performance and high-integrity operating service to acquire high corporate and social benefits. New changes appearing in tire industry include the following:

1. Diversified, Collectivized and Internationalized Tire Enterprises

In recent years, there have emerged large companies and large groups in tire enterprises. At present, among the 23 major tire enterprises with annual output of more than 10 million radial tires and annual sales income of more than RMB 2 Billion Yuan, it has formed a situation of three state-owned enterprises, ten private enterprises and ten large foreign companies and large groups. In tire industry, it has changed from the original all state-owned enterprises to a diversified status of common development of state-owned, private and foreign-funded enterprises.

2. Tire Industry Promoting Intelligent, Environmental and Green Manufacturing

In terms of green development and environmental protection, many tire enterprises have adopted green design, green technology, intelligent manufacturing and green supply chain throughout the whole production process. Wanli, Linglong, Triangle, Tongli and other enterprises were selected as Green Factories; Prinx Chengshan was rated as a High-Performance Green Tire Life Cycle Service Manufacturing Demonstration Project by the Ministry of Industry and Information Technology (MIIT); and Doublestar Tire has realized “sustainable development” in green intelligent manufacturing, and established “Industry 4.0” intelligent factory. Together with Great Wall Motors, it won the 2018 “China’s Enterprise Management Outstanding Contribution Award”.

3. Transformation and Upgrading in Tire Industry

In the process of shifting from labor-intensive and capital-invested to technology-developing, many tire enterprises have shifted from “following” tactics to “running-to-gether” tactics in technology, helping China’s rubber industry to become one of the industrial clusters that the sales revenue is nearly RMB 1 Trillion Yuan. Hereinto, the sales revenue of tire industry accounts for more than 52%. At the same time, China’s total tire production accounts for about one-third of the world’s total tire production.

4. Merger and Reorganization in Tire Industry

A group of small- and medium-sized enterprises have been gradually knocked out of the game, whose product quality is low, brand popularity is low and market share is low. They are not suitable for the development situation. According to incomplete statistics, nearly 20 enterprises have been closed, liquidated, bankruptcy and auctioned. Mergers and acquisitions in tire industry are becoming more and more active. For example, Shandong Huasheng Rubber acquires RMB 40 Million Yuan of debts respectively from Hengyu and Guofeng; the overall assets of Weifang Guopeng Rubber are auctioned; and Huadong Rubber acquires Longyue Tire, participates in mergers and acquisitions, and expands its production and business operations.

5. Advantageous Tire Enterprises Becoming Stronger and Stronger

A group of advantageous enterprises with innovative capabilities have become powerful integrated ones of producing, manufacturing, operating and selling. For example, Zhongce Rubber Group has undergone major strategic thinking and practice, and has continuously upgraded adapting to changes in the market. From a small rubber factory along the Qiantang River to sales network all over the world, it had a sales revenue of RMB 26.7 Billion Yuan in 2018, which was only RMB 2 Billion Yuan in 2000. It has become China’s largest tire manufacturer, ranking top ten in the world. However, some original large companies and large enterprises were not able to keep up with the economic development situation, and the transformation of them has lagged behind, therefore they have been sinking in the tide of market economy in succession.

6. Expanding Production in Upstream and Down-stream of Tire Enterprises

Cooperate with key raw material enterprises to develop together, such as rubber, carbon black, additives and skeleton materials etc., combine research with development, collaborate to innovate, and improve the quality of raw materials.

7. “Going Global” Strategy of Tire Enterprises Making Significant Progresses

Since 2013, capable tire enterprises have developed abroad one after another, expanding from product export trade to capital output, deploying both domestic and international markets, and implementing an international business strategy.

At present, five companies have already headed overseas to develop, establishing five tire factories in two countries, with an annual output of more than 40 million units and sales revenue of more than RMB 13 Billion Yuan. Five tire companies are building factories abroad, with planned production capacity of 50 million units; what’s more, there are six companies firmly grasping the opportunity to plan and select location to head overseas. In short, China is transferring from “world’s tire factory” to Chinese tire factory heading towards the world, not only in Southeast Asia, but also in Europe and the USA. Hereinto, Triangle Tyre has started to establish factory in North Carolina, the USA.

8. Enterprise Listing and Capital Operation

The core of enterprise’s development is to improve the system of board of directors, stock listing, capital operation, and strong financial, technical and market power. The listed enterprises in tire industry have grown from 5 in 1992-2003 (Double Coin, Guizhou Tyre, Doublestar, AEOLUS and Hualin S Giti) to 11, and newly added 6 listed companies (Sailun, Linglong, Triangle, General, Fengyuan and Prinx Chengshan). Several other enterprises are actively preparing and selecting time for listing.

While tire industry has achieved success in reform and opening up, the CRIA statistics are mingled. On one side, quality is high, benefit is high, and good things keep coming; on the other side, cost is high, benefit is low, and it’s going through a hard time. The strong contrast between the “high and low” of enterprise benefits highlights the great differentiation of enterprises in the great revolution.

Tire industry’s 40 years of development track is not a simple stack of data. In the new year, faced with complicated and ever-changing economic situation, tire industry shall grasp the pulse of the era, strengthen the base course of industrial upgrading and new & old growth driver replacement, further promote technological innovation, intelligent manufacturing, global sales and lean management, and consolidate the foundation for high-quality and sustainable development of the industry.