◎ Shi Yifeng

Ⅰ. Current Economic Operation Conditions of Tire Industry

From January to September, the economic operation conditions of China rubber tire industry kept stable and had steady progress on the whole. Since the prices of natural rubber, synthetic rubber, all-steel cord, etc. were stably low, although the costs of carbon black, rubber chemicals, energy, manpower, environmental protection, etc. became higher, it was controllable on the whole; seen from the demand of domestic and foreign markets, the demand of domestic market was relatively flat while that of export market was relatively better, however, affected by the trade protection-ism factors such as “anti-dumping and anti-subsidy”, the tire export was hindered; the tire enterprises grasped the opportunity and was progressive, the economic benefits of the industry were in a phase of slow climbing.

Completion Conditions of Economic Indicators of Industry

China Rubber Industry Association Tire Branch carried out statistics on 37 key enterprises, and see Table 1 for completion conditions of main economic indicators from January to September.

Table 1: Completion Conditions of Economic Indicators of 37 Key Enterprises from January to September

The export data of passenger car and truck and bus tires of General Administration of Customs shows that affected by rise of trade protectionism, the tire export became more difficult, however, the tire enterprises faced the difficulty, the unit export price stably rose, the export delivery value had obvious growth, but the growth of total export showed a declining trend. See Table 2 for export conditions of motor and passenger car tires (40111000) and bus or truck tires (40112000) in China from January to September.

Table 2: Export Conditions of Tire in China from January to September

Sales Conditions of Automobile Industry

According to the statistics of China Association of Automobile Manufacturers, the total auto sales from January to September increased by 1.49%, in September, it had a quarter-on-quarter growth of 13.82% and a year-on-year decline of 11.55%, which had a significant contribution to supporting products of the tires. However, the automobile industry also began entering the phase of low growth, especially the growth of passenger vehicle was in a relatively low level, which brought about shadow to supporting products of the radial tires of passenger vehicles. See Table 3 for auto sales conditions in China from January to September.

Table 3: Sales Conditions of Automobiles in China from January to September

Contribution of Transportation Industry, etc. to Tire Consumption

At present, the total national mileage in highway open to traffic ranks first in the world to reach 4,773,500 km, in which that of expressway reaches 136,500 km, that of first-class highway reaches 20,700 km, that of second-class highway reaches 9,500 km and that of independent bridges and tunnels reaches 883 km. From January to September, the cumulatively completed fixed-asset investment in transportation was 1,91 Trillion Yuan, with a growth of 0.2%, in which the completed investment in highway construction was 130 Million Yuan, the investment in expressway increased by 12.3%, and the investment in ordinary national and provincial highway and rural highway declined by 15.3% and 2.3% respectively, thus creating good basic conditions for development of road transport and high-performance radial tire.

The economic operation of road transport continues the trend of stable development. From January to September, except that the highway passenger volume declined by 6.7%, the highway freight, delivery volume and port production kept a stable growth, which were 7.5%, 27.2% and 4.3% respectively, thus bringing about a fair contribution to the consumption of truck tires, especially radial tires of light truck.

The production of steel, cement and coal is stable. From January to September, the growth was respectively 7.2%, 1.05% and 5.1%, thus bringing about certain support to consumption of truck tire.

From January to September, the dispatched passenger volume, passenger turnover, freight delivery and freight turnover of all railways in China grew by 9.3%, 5.1%, 7.9% and 6.5% respectively, which plays an obvious offset role on consumption of passenger tire and truck tire.

Radial Tire Production Enterprises and Capacity Distribution in China

There are nearly 90 radial tire manufacturing enterprise groups and about 150 production factories in China, including nearly 20 foreign-funded enterprise groups, about 40 foreign-funded production factories, about 70 domestic-funded enterprise groups and nearly 110 domestic-funded production factories. There are about 80 production factories of all-steel radial tires, in which foreign-funded factories account for 19.5% and domestic-funded factories account for 80.5%; there are about 82 production factories of semi-steel radial tires, in which foreign-funded factories account for 40.2% and domestic-funded factories account for 59.8%, and the concentration of tire enterprises is still scattered.

Among capacity of all-steel radial tire, foreign-funded enterprises account for 13.3% and domestic-funded enterprises account for 86.7%; among total capacity of semi-steel radial tire, foreign-funded enterprises account for 41.9% and domestic-funded enterprises account for 58.1%. Classified as per geographical distribution of enterprises, those in Shandong region account for 51.4% of total capacity of all-steel tire and 46.8% of total capacity of semi-steel tire; those in Jiangsu, Zhejiang, Shanghai, Anhui and Fujian regions account for 25.0% of total capacity of all-steel tire and 32.3% of total capacity of semi-steel tire; those in three northeast provinces account for 6.7% of total capacity of all-steel tire and 5.6% of total capacity of semi-steel tire; and those in other regions account for 16.9% of total capacity of all-steel tire and 15.3% of total capacity of semi-steel tire.

Ⅱ. Development Highlights of Tire Industry

High-quality Tire Enterprises Accelerated Adjustment and Layout and Technological Reform

The local tire enterprises accelerated adjustment and layout. Qingdao Doublestar obtained 45% equity of Kumho Tire by injecting the capital of KRW 646.3 Billion (USD 611 Million), which became another world tire acquisition major case after Aeolus Tyre, and Qingdao Doublestar accumulated and enlarged the advantages in the aspects such as technology and brand; Linglong Tire settled in Hubei Jingmen Chemical Recycling Industrial Park and built a high-performance intelligent production line with an annual output of 14.46 million tires to expand the support and radiate Central China; Prinx Chengshan (Shandong) Tire Co., Ltd. successfully got listed in the main board of Stock Exchange of Hong Kong to become the 11th listed company in tire industry; the old factory of ZC Rubber removed for environmental protection and the capacity began to be transferred to the places such as Jiande and Fuyang, and a capacity of nearly 20 million high-performance all-steel tires will be formed; the old factory of Jiangsu General Science was adjusted and reformed to build a production line with a capacity of 1.20 million high-performance intelligent all-steel radial tires; and Double Coin, Triangle, Wanli, Guizhou Tyre, etc. successively completed removal and adjustment of old factory.

Powerful tire enterprises were increasing technological input of software and hardware. The enterprises such as Sailun Group recruited more capable personnel, introduced “external brain” and constantly enhanced construction training of scientific research institutions, R&D systems and senior and middle-level technician teams to lay a solid foundation step by step; Prinx Chengshan established Prinx Chengshan (Qingdao) Industrial Research and Design Co., Ltd. in Qingdao to fully utilize the geographical advantages of Qingdao, absorb high-level R&D talents in the industry and promote improvement of overall R&D level of the company, its serial products of radial tire casing for trucks was in the first batch of champions in single item of manufacturing industry in Shandong Province; a batch of long-established companies such as Triangle closely co-operated with world-class companies and never stopped in input of technological reform.

Foreign-funded tire enterprises had a strong momentum in technological reform, capacity adjustment and environmental governance. Shanghai Factory and Shenyang Factory of Michelin, Hefei Factory of Continental, Dalian Factory of Goodyear, Hunan Factory of SUMITOMO, Kunshan Factory of Cooper, etc. constantly made efforts and consolidated advantages in the aspects such as capacity expansion of high-performance radial tires for passenger car, input and reconstruction of advanced equipment and improvement of environmental protection facilities, firmly grasped the commanding heights of the raw and accessory material markets and constantly got rid of the stale and brought forth the fresh in standardizing the replacement market and serving the consumers.

Qualified Tire Enterprises Accelerated the Development Step of “Going out”

The enterprises which had “gone out” had stable development. The capacity release of Vietnam Factory of Sailun Jinyu as well as Thailand Factory of Ling Long, ZC, Sentury and Double Coin had a strong double-digit growth, the tire enterprises realized by “going out”, which not only expanded the new market and realized international development, but also avoided trade friction and constantly enhanced the influence and competitiveness of the tires of Chinese brands in international market.

The enterprises which were ready for “going out” quickened the pace. The construction of the tire factory of Guizhou Tyre in Vietnam, that of Triangle Tyre and Sentury Tire in America, that of Linglong Tire in Serbia, that of Jiangsu General Science in Thailand as well as that of Prinx Chengshan and Zhaoqing Junhong in Malaysia entered a substantial phase. In addition, the construction of the factory of Aeolus Tyre in Bangladesh and Sichuan Haida in Southeast Asia was under active planning.

The channel construction and service of overseas market were especially important. These powerful enterprises such as Double Coin, Triangle, ZC, Sailun, Aeolus and Guizhou Tyre also made great efforts in channel construction of overseas sales company and strove to get good prices.

Green Production, Intelligent Manufacturing and Cyclic Utilization Were Intensified

Green development and environmental protection became the basic state policy of China, big data, informationization, intellectualization and sharing developed rapidly, which was beyond imagination, and green manufacturing, intelligent manufacturing and high-quality development had become the main directions for transformation and upgrading of tire enterprises. China Rubber Industry Association (hereinafter referred to as CRIA) had held the activity of “6·15 China Tire Safety Week” for 4 years in a row to promote the development of green tire, emphasize brand construction and bravely undertake the social responsibility of safety and environmental protection. The Chinese tire grading standard promoted by CRIA won active response from the tire enterprises, and at present, a total of 51 domestic-funded and overseas-funded tire enterprises had filed an application, in which 26 enterprises had completed label application and obtained 149 labels.

Domestic-funded and overseas-funded tire enterprises had tremendous input in environmental protection and cleaner production, and centralized treatment and organized discharge of rubber mixing exhaust gas and incineration and vulcanization exhaust gas had good practice examples. For example, RTO exhaust gas treatment system applied by ZC Chaoyang Tire Company passed national acceptance and reached international advanced level, the complaint conditions of the residents surrounding the factory became better, and facts proved that the odor problem during production of tire factory could be solved. The environmental protection input of some benchmark enterprises accounted for 1.8%~3% of project input.

Following Aeolus, Sailun, Doublestar, Triangle and Sentury starting early in integration of “informatization and industrialization” and intelligent manufacturing, Wanli (Hefei), Double Coin (Thailand), etc. had built tire factories with larger scale and higher intelligent degree and put into operation, the tire quality evenness, production efficiency and benefit, energy consumption and waste gas discharge control had been improved greatly, and the labor employment sharply dropped. Taking Wanli (Hefei) as an example, it realized full-field intellectualization, whole-process automation and all-around greening, and its per capita output was 3.3258 Million Yuan/year, which was three times that of traditional mode; the product percent of pass reached 99.9%; the comprehensive energy consumption was 0.18 tons of standard coal; it realized 6-step utilization of differential pressure power generation and zero discharge of industrial waste water; with no fresh water used during production, it saved the water of about 400,000 tons and the electricity of about 26 million kWh every year; the waste gas treatment rate exceeded 98% and the dust treatment rate reached 99.5%; it won the title of the first batch of “Green Factory” in 2017 awarded by the Ministry of Industry and Information Technology. In intellectualized reconstruction of old factory, ZC Rubber introduced the concept of ET industrial brain of Alibaba Cloud to firstly enable the sleeping big data to “speak” during the process of rubber mixing, thus accurately guiding production, purchase and R&D, and constantly extend deeply to construct larger physical model, thus constantly realizing higher and more practical intelligent development.

In treatment and cyclic utilization of waste tires, some large domestic-funded tire enterprises proactively acted to establish special institution and invested heavily in research, especially achieved active progress in the world difficult problem treatment of waste passenger car tires, advanced new thermal cracking technology and thermal energy conversion and utilization technology might become ideal methods for comprehensive utilization of waste passenger car tires.

Ⅲ. Future Development Outlook

Affirm the Innovative Development Concept, Adjust Structure, Cut Overcapacity and Seek for Upgrading

Since the economic downward pressure in China is difficult to disappear in a short time, the European and American tire export markets are constantly limited, the influence of escalation of Sino-US trade war constantly becomes large, the contraction in demand part of the tire market is inevitable; the environmental protection requirements become stricter and stricter, the tire production cost such as the price of raw materials, energy and labor surely will become higher and the path relying on large-scale and low-price competition method will become narrower. The path taken by the developed countries in the world has proven that the development of the enterprises must follow the objective law of market development, the allocation of market resources will finally tend to the high-quality enterprises and it is imperative for domestic tire enterprises to reduce the low-end capacity.

The tire enterprises must firmly rely on the thought of innovative development to adjust the structure, transform and upgrade and cut the low-end backward capacity. Only by building a fair competition environment, relying on excellent technology, excellent talents and advanced scientific management and insisting on reasonable product price, can we obtain due profits, keep virtuous cycle and constantly gather R&D input and high-quality talents, thus keeping the enterprise competitiveness in micro growth era with new kinetic energy and new vitality.

Pay Attention to the Direction of the Price of Raw Materials, etc. and Strictly Control the Enterprise Risks

The cost of raw materials accounts for a high proportion in tire manufacturing and is key to the enterprise benefits. At present, although the price of natural rubber is low, it fluctuates actively under the influence of the factors such as natural weather and financial futures, and the price of synthetic rubber is closely connected to the factors such as oil supply.

Carbon black, framework materials and rubber chemicals are closely related to environmental governance efforts, thus the price direction shall be paid close attention to and the funds and production shall be arranged properly.

Safety production, environmental governance, labor force level upgrading, etc. are necessary hard input of the enterprises, relaying automation and intellectualization to greatly improve the labor productivity of the enterprises is an unchanged large direction. At present, the tire enterprises shall focus on being stable to control the infrastructure scale and debt risk and ensure reasonable cash flow.

Focus on New Changes Brought About by Relevant Industrial Development to Tire Consumption

Great development of railway and rail transport brings about new changes to tire consumption. On one hand, highway passenger transport is largely diverted to high speed rail, bullet train and rail transport, and the demand for passenger car tires fall; on the other hand, the rail freight capacity is improved unprecedentedly to provide convenience to medium- and long-distance transport of coal, minerals, steel and various bulk cargo, which will make the ratio of road transport have new changes and insert a considerable impact on the consumption of truck radial tires. 

Development of high-grade highways will bring about new requirements to the tires. At present, the high-grade highways account for only 3.3% in China, and there is a large development space. On one hand, the road infrastructure will support tire consumption; on the other hand, with growth of high-grade highways, the unit wear of the tires will fall, the service life of the tires will be prolonged correspondingly, green tires will have an ampler scope for abilities, and higher new requirements will be proposed for the performances of the tires such as aging resistance at the same time.

China’s automobile industry will have greater development in quantity and quality. It is predicted that in 2030, China’s automotive output can be increased to 40 million vehicles/year, therefore, there is strong confidence in the domestic market of semi-steel radial tire for long term. In addition, new energy vehicles are entering a new era, the year of 2025 will be a turning point, high-performance and high-value-added tires with large rim, wide section, low rolling resistance, low noise, wet grip, wear resistance and aging resistance will account for a higher and higher ratio, and have bright market prospects.

As a traditional real economic industry, China’s tire industry possesses complete upstream and downstream industrial chain support and is highly competitive in global tire market; China is also the country best fit for tire manufacturing in the world and tire manufacturing occupies an important position in China’s national economic development. Although it undergoes various difficulties at present, it is firmly believed that the future of China’s tire industry will be promising.