In 2010, China's auto market sold 18.06 million vehicles throughout the year and sat firmly on the throne of the world's largest auto sales. However, for foreign companies in China's tire market and tire companies with their own brands, they all have their own tastes.
In the Spring Festival this year, Xu Peng (a pseudonym) who has not returned to his hometown for several years has returned to his hometown in Hebei from Guangzhou. He is a molding worker in South China Tire & Rubber Factory. For many years, the company had only 3 to 5 days of Chinese New Year holidays. Because the work unit is too far away from his hometown, he has never been home to reunite with his parents in recent years.
However, the company informed this year that it will extend the holiday time for the Spring Festival and suspend production for half a month. For Xu Peng, who has not returned home for a long time, his heart feels a little excited, but there is also a hint of anxiety. “The tire factory's sales performance has been very good for many years. It's not normal to put such a long holiday all at once.â€
On January 5 before the Spring Festival, Xu Peng was in charge of the head of Huanan Tire & Rubber Co., Ltd., and Aeolus Tyre Co., Ltd., Shuangqin Group Co., Ltd., Hangzhou Zhongce Rubber Co., Ltd., and Guizhou Tire Co., Ltd. (Hereinafter referred to as é»” Tire), Triangle Group, Shandong Linglong Tire Co., Ltd.'s six counterparts to participate in the China Rubber Industry Association emergency tire economic analysis will be held.
All participants were sad. “Now the bosses of domestic tire companies must be mad,†said Shen Jinrong, chairman of Hangzhou Zhongce Rubber Co., Ltd. The purpose of their trip is to work together with the China Rubber Industry Association enterprises and hope that the National Development and Reform Commission and the Ministry of Commerce will pay attention.
In stark contrast to the tireless demise of domestic tire companies, China’s auto industry is reveling in becoming the world’s top production and sales market.
The best times
According to statistics from the China Association of Automobile Manufacturers, at the end of 2010, although the growth rate of China's auto market was somewhat lower, the average monthly production and sales exceeded 1.5 million, and annual production and sales reached 18,260,000 and 18.06 million, respectively, setting a new global record.
The rapidly increasing production and sales figures of the Chinese auto market in recent years have given foreign-invested tire companies a reason to believe that this is an excellent opportunity to “recover the rest of the worldâ€.
As a result, the world’s top ten multinational tire companies that had entered China before 2005 had started a new wave of capacity investment in the past two years.
September 9, 2010, Japan's Toyo Tire Group invested 9.8 million US dollars Zhangjiagang factory formally laid the foundation, plans to put into production at the end of 2011, starting capacity planning for 2 million high-performance tires. This new plant is the second overseas production base after the United States "Toyo Tire North America Manufacturing Inc.", and it is the first Asian factory except Japan.
Continuing conservative and prudent Dongyang Tire's expansion measures have become the best footnote for foreign tire companies to accelerate “staking their claims†in China.
On November 21, 2010, Michelin Shenyang Tyre Co., Ltd., with a total investment of 1.457 billion U.S. dollars, officially launched the “Environmental Relocation, Expansion and Expansion Project for High-Performance Meridian Tires.†Michelin's new Shenyang plant is scheduled to be completed and put into production in 2014, and its annual production capacity will reach There are 10 million tires for cars and light trucks, 1.8 million for truck and bus tires, and 295,000 retreaded treads for trucks and passenger cars.
At the same time, other companies in the world's top 10 tire brands also have plans in the Chinese market.
According to incomplete statistics, in the past 12 months, the world’s major tire manufacturers have invested more than US$8 billion in 2010, and plans to add 100 million sets of tire production capacity. It is worth noting that the most attractive place for attracting investment in tires is China, with a total value of more than US$3 billion. [next]
Worst times
Foreign tire brands have taken a 70% share of China's tire market. Domestic tire companies can only "snake in to the international market with low-tech, low-cost means." After the United States "tire special protection case" occurred, China's tire exports to the United States were seriously hindered. In addition, more than 10 countries and regions, including the European Union, Brazil, Argentina, and India, also submitted anti-dumping and countervailing investigations to Chinese tire exporters.
Chinese tire manufacturers have a very high degree of dependence on foreign trade. About 60% of tires are exported to foreign countries, and more than 15% are exported to the United States. This failure means that the overcapacity situation of domestic tire companies will become more serious. A person in charge of Shandong Shengtai Tire admits: "I am pessimistic about the future development of Chinese tire companies."
In addition to the need to face foreign companies in the attack on the tires and foreign trade barriers, the recent rise in natural rubber and other tire raw material prices is even more "domestic tires".
In June 2010, the main contract for natural rubber on the Shanghai Futures Exchange began to rise from more than 20,000 yuan per ton, and exceeded 30,000 yuan in October 2010. On January 19 of this year, the price of natural rubber exceeded 40,000 yuan per ton, and rose to 43,500 yuan per ton at the highest. As of March 4, the price is still 40,000 yuan.
"This year, the price of natural rubber will not be lower than 30,000 yuan per ton." Yan Yan, a mid-term futures analyst in Beijing, told reporters.
The price of natural rubber accounts for about 50% of the cost of tire companies and controls the pulse of corporate profits. According to industry sources, the average price of natural rubber that tire companies can afford is between 33,000 and 34,000 yuan. Above this price, the net profit of a large number of tire companies will be greatly swallowed, and a group of small and medium-sized tire companies will face bankruptcy.
At present, several tire listed companies have issued announcements of profit reduction or even loss in 2010. Fengshen Co., Ltd. (600469.SH) expects 2010 net profit to decrease by approximately 50% year-on-year; Tire A expects net profit for 2010 to drop by 50% to 70% year-on-year; S.Getter (600182.SH) expects 2010 net profit to decline year-on-year. above 50.
Cai Weimin, secretary general of the tire division of the China Rubber Industry Association, said that the reduction in production and production of Chinese tire companies began last year, and by the end of last year, this trend was even more pronounced. According to the latest statistics from the Tire Division on China's 10 major tire companies, in December 2010, there were 7 companies with a month-on-month drop in output, with one flat and two slightly increasing. The overall decline rate reached 3.6%, and individual companies fell by more than 20%.
Purchasing tires at current rubber prices and then selling them at market prices will undoubtedly result in a loss for tire companies. Zou Yongzhi, general manager of Huanan Tire & Rubber Co., Ltd., expressed the company's difficulties in extending the holiday time for the Spring Festival. “With less production, there is less loss. Enterprises choose Spring Festival holiday and overhaul equipment. It is a last resort, but it is currently the most feasible choice.â€
Wang Feng, the general manager of Fengshen Tire Co., Ltd., agreed that internal factors cannot be absorbed by the company. “The holiday is a corporate self-help behavior.†There seems to be no better way for the other companies to participate in the conference. [next]
Individual demands
Under the pressure of rising raw materials, at the beginning of this year, multinational tire giants represented by Michelin and Bridgestone took the lead in increasing the selling prices of tires in the Chinese market by 5% to 8%. Domestic tire companies such as Shuangqian, Triangle, and South China also increased their tire sales prices by 5% to 8%, while export tire prices also rose by around 6%.
Zhang Wanyou, deputy general manager of Shuangqin Group, said that last year, double money has gone up 9 times in small steps, and the total increase has been as high as 15%, but the overall cost of tires has risen by nearly 40%, and more than half of them need to be digested by the companies themselves. A lot of pressure.
However, the same is to raise the tire factory price, the domestic tire company's emboldenedness appears to be somewhat inadequate. Another manager of the tire company's sales department told reporters that with several price increases since the second half of last year, orders from downstream vendors and end-users decreased significantly, and sales of the company’s products also fell, while foreign tire manufacturing The giant's products have high premium and added value, but price increases have little effect on their sales.
An old taxi driver in Beijing referred to the world-famous tire when referring to domestic tires: “We haven’t used domestic tires for many years, and there is still a gap in technology. Like some international big-name tires, although one single is more expensive than other brands. More than a hundred dollars, but our consumers still pay for it."
But this does not mean that foreign tire companies have no trouble at all. As the vehicle companies' bargaining power for tire companies has also risen, so many tire executives have complained privately that for the OEM market for complete vehicle companies, the single-tire profits have been maximally compressed by the entire vehicle company.
In view of this, more and more foreign-funded tire companies have begun to build outlets that integrate sales and service throughout the country, turning to a private replacement tire market where the profit margin is approximately 2-3 times that of the supporting OEM market.
Bridgestone has established a “Wings of the Wing†store in the country directly, and it has expanded to 500 at the end of 2010. Jia Pingtai, general manager of passenger tires of Giti Tire (China) Investment Co., Ltd., said that in 2011, Giti Tire will strive to achieve a share target of 10% in the replacement market, and build 10,000 homes in the country within 2 to 3 years. The goal of the car service station network.
For domestic tire companies, the most realistic thing right now is how to tide over the difficulties. Seven companies such as Huanan Tire & Rubber Co., Ltd. and the China Rubber Industry Association called on the relevant state departments to pay close attention to the highly distorted prices of natural rubber, promptly sold reserve rubber, kept market prices down, and prevented the industry from hit hard.
Fan Rende, president of the China Rubber Industry Association, said: "At present, natural rubber domestic satisfaction rate is about 20%, while demand accounts for more than 25% of the world's total. The State Reserve Plastics should play a role at a crucial moment."
"As soon as the State Reserve Plastics is put into use, it is the most direct and effective way to stabilize the price of natural rubber." Shen Jinrong said that in April last year, the country put in 100,000 tons of State Reserve rubber, which stabilized the price of natural rubber.
As for the long-term development of China’s tire companies, industry insiders pointed out that the products of China’s tire companies do indeed have low prices, poor product technology, low brand value, and can easily cause trade disputes. In addition to smartly circumventing markets such as the United States, In addition to expanding its efforts in markets such as the Middle East, Africa, and Latin America, China’s tire companies must shift from factor-intensive to technology-driven and enhance their competitiveness in the international and domestic markets. Otherwise, the EU Tire Fuel Efficiency Label Regulations, which will be implemented on November 1, 2012, will still cast a shadow over the prospect of Chinese tire exports to the European Union.
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