Rubber Industry Calls for Change of Time

Deng Yali thought that “The overall situation conforms to the expectations, however, it is also unexpected and worry in stability still exists.” when analyzing the economic operation and development conditions of the industry in 2017.

According to the statistics of CRIA, the output, sales revenue and export delivery value of 410 key member enterprises in the whole industry have a relatively large growth of 2 digits, however, the growth of economic benefits is not balanced, and the realized profit of the whole industry declines obviously. In the first quarter of 2017, the profit had a year-on-year (same below) growth of 6.72%, while it declined by 4.0% in the second quarter and even declined by 13.54% in the third quarter; the profit decrease of tire industry is worse, which declined by 40.38% in the first quarter, declined by 68.26% in the second quarter and still declined by 57.96% despite of slightly narrowed decline trend in the third quarter.

“Chinese rubber industry experienced ups and downs for more than half a year.” Shen Jinrong, executive chairman of CRIA Presidium Enterprise and president of ZC Rubber Group, expressed that affected by large fluctuation of raw material price in the first half year of 2017, the benefits of the tire industry sharply declined, and the profit decline reached up to about 70%, and still was about 58% despite of improvement in the second half year.

“Achieving such tragic indexes in case of growth of sales revenue indicates that the industrial development is unhealthy.” Shen Jinrong thought, such situation is mainly caused by two aspects, firstly, the natural rubber raw material was controlled by the fund and futures trader to become their “gambling house”, under such mechanism, the global and Chinese natural rubber prices were totally distorted. If such system and mechanism were not completely changed, the influence on long-term development of rubber industry would be fatal. Secondly, China possessed the advantages of low artificial cost, perfect supporting industries as well as high quality and cheap price, however, the prices of some auxiliary materials sharply rose since last year to make the advantages no longer obvious.

“Since 2017, the polarization trend has gradually occurred in the industry, the overall situation is severe, and quantity increase without income increase is the common challenge faced by the tire industry.” Xiang Chundong, chairman of Sichuan Haida Rubber Group Co., Ltd., said.

“Some enterprises stop production and close down due to low technical level, poor innovative ability, capital chain rupture, etc.” Zhang Hongmin, chairman of Shandong Rubber Industry Association, expressed when introducing the merger and reorganization conditions of the rubber industry of Shandong Province in recent years, occurrence of such conditions was normal, bankruptcy reorganization would get rid of a part of low-end outdated capacity, and the tire industry of Shandong Province would have a qualitative leap.

Deng Yali said, during rapid development of rubber industry, some regions and enterprises mainly depended on the growth in scale and quantity, the problem of structural overcapacity was prominent, with middleand lowend products excessive and middleand high-end products insufficient; with weak independent innovation ability, they lacked of core competitive advantages and could not seize the future opportunity; their products lacked of

quality and brand and lacked of popularity, reputation and loyalty as well as influence and bargaining power; the level of integrating informationization with industrialization was low, economic growth completely relied on promotion by factor input and was only extensive development. She thought that the rubber industry could not cast off the ingrained habits overnight, and urgently needed a revolution to arm the brain with new thoughts and new ideas to greet the new era.

New Era Requires Power Generation of 4 Key Points

To realize the dream of rubber industry power is absolutely not easy, but requires hard work, greeting challenge and new thought. Deng Yali shared her new thought and analyzed four key points, “level, difference, brand and power”.

Deng Yali thought that socialism with Chinese characteristics entered a new era, which indicated that the rubber industry would greet transformation from a large country to a power, the rubber industry must take improvement of quality of supply system as the main direction, promote quality revolution, efficiency revolution and power revolution to realize a new layout of industrial development with quality first and benefit oriented.

In new era, the demand level of the consumers goes up, only by being middleand high-end can the demand of new beautiful life be satisfied; “high-cost era” comes, if being middleand high-end can not be realized, the enterprises can not consume high cost and realize sustainable development. If the commodities are different, the profits will be different, thus only by realizing differentiation can there be pricing power and high value be obtained. By creating added value by depending on level and difference can our products be more competitive, therefore, middleand low-end homogeneous products must be transformed to into middleand high-end differentiated products.

The products truly selling well in the market have brand value. To improve the competitiveness, we can not realize by product price war, but must create self difference and self brand value. The result of price war is that we have no money to improve the technology, no money to improve the quality and no money to carry out more promotion. If the product level and reputation can not be raised, the consumer will not know no matter how good the products are, then we will be trapped in a vicious circle, economic benefit is out of the questions and development can not be obtained by capital accumulation. Many Chinese enterpris- es insist on scientific and technological innovation during development, the quality of their products are largely improved to be not inferior to that of the products of world brands, however, they lack of brand reputation and client loyalty. Therefore, we must transform from relying on product price competition to participating in competition by brand value and transform from scale maximization to benefit optimization.

Deng Yali said, the consequences of over depending on investment and export low-cost growth were excessive capacity, price war and trade friction. Therefore, we must transform growth momentum to establishment of competitive advantage based on high factor cost and advance from middle and low end to middle and high end in the industrial chain.

Embracing revolution, the industry is being constantly innovated

On the conference, many entrepreneurs and experts shared their achievements in intelligent manufacturing, process and equipment innovation, scientific and technological development, etc. and their expectations for future rubber industry.

Yuan Zhongxue, chairman of MESNAC and deputy director of National Engineering Research Center for Rubber and Tire, expressed that as Intelligent Manufacturing and Standardization Alliance would launch 9 standard systems before the end of 2018 and research and application of green raw material EVE would achieve success, these key technical innovations would realize upgrading of intelligent manufacturing of tires and promote industrial restructuring. In the future, high-performance products would be produced in a new mode, that is, raw material processing and part processing before tire molding process would be completed in the factory producing new materials, and several tire intelligent satellite factories would carry out molding and vulcanization until the finished products were completed. The investment on these satellite factories would be no more than 50 Million Yuan, the number of the personnel would be reduced to be 20, the scale would reach annual output of 500,000 units of semi-steel tires and 150,000 units of all-steel tires and the output value would be close to 400 Million Yuan.

Zhang Tao, general manager of Triangle Tire Co., Ltd., introduced that Huayang Rubber Technology Co., Ltd. located in Nanhai New Area, Weihai was a high-performance passenger tire production base built by this company with efforts and a world first-rate factory with high automation and intelligentization built by Triangle Tire by promoting transformation and upgrading as well as international strategy. Although the one-time input was 1.25 times that of traditional factory, it had obvious advantages in improving production efficiency (with efficiency improved by over 20% and personnel reduced by 22%), improving product quality, lowering resource and energy consumption (energy consumption and water consumption were 11% and 82% of those of traditional factory), enhancing operation management, etc.

Wang Fengju, secretary general of Working Committee for Comprehensive Utilization of Eucommia Ulmoides, introduced that the natural eucommea rubber aviation tire initiated by China passed the appraisal of scientific and technological achievement on November 7, 2017, with the overall technology reaching international advanced level; synthetic eucommea rubber all-steel tire developed by Jiangsu General Science Technology Co., Ltd. would be produced in batches soon; ChemChina Zhuzhou Rubber Research and Design Institute achieved success in emulsification of natural eucommea rubber, which had a good mixing effect with hevea latex, and produced high-altitude sounding balloon with mixed latex blends. Development of eucommia ulmoides industry attracted high attention from national defense and science industry departments, which would speed up application of eucommea rubber in rubber products.

Full electromagnetic induction heating tire direct pressure molding and vulcanization process and equipment of College of Mechanical and Electrical Engineering of Beijing University of Chemical Technology satisfied the high-precision manufacturing requirements of high-performance tires, the vulcanization efficiency cycle could be shortened by 12.2%, and the energy consumption of single tire vulcanization was saved by 86.9% compared with the traditional process to provide strong technical support for tire production’s practising green manufacturing concept.

Chen Zhanxun, chief engineer of Qingdao Siwei Chemical Co., Ltd., introduced the modification technology of precipitated silica and its application on ESBR thread rubber to provide feasibility basis for modified ESBR’s substituting or partially substituting SSBR in green tire.

New era, new starting point, Chinese rubber industry is taking promotion of structural reform of supply side as the main line and seek for new advantages of new round competitive development through “three revolutions” of quality, efficiency and power to realize sustainable growth, and leap from being middleand low-end to middleand high-end, from being extensive to being intensive and from quantity to quality.