The tire industry urgently needs to resolve the contradiction of overcapacity

The tire industry urgently needs to resolve the contradiction of overcapacity

——Interview with Xu Wenying, Secretary General of China Rubber Industry Association

Since the reform and opening up, especially since entering the 21st century, China's rubber tire industry has made great progress. What is the current situation of the industry, what problems are still facing in its development, and what policies will the Chinese government implement to regulate and promote the healthy development of the industry? The reporter interviewed Xu Wenying, Secretary General of China Rubber Industry Association. Xu Wenying said that China's tire industry has developed rapidly, but it is large but not strong. There is an obvious gap with the international advanced level in terms of brand awareness and innovation ability. She called on all parties to work together to resolve the contradiction of overcapacity and revitalize the whole industry.

Reporter: what is the production capacity and current situation of China's tire industry?

Xu Wenying: as soon as I talk about the current situation, I will first ask how many enterprises there are in China. Many people have asked me the same question. In fact, I don't know how many there are, but there is a clear figure that more than 300 enterprises have passed 3C certification. The second concern is how big the output is. We can proudly say that China's tire output has ranked first in the world since 2005. The third concern is the world rankings. This year, the global tire 75 strong list has 26 Chinese mainland enterprises. The fourth is the development potential of the future industry. China's automobile after-sales market is becoming larger and larger, and the future development speed of China's tires will fluctuate between 3% and 8%. The last one is the tire export situation. The export market is very important to China, because about 42% of the products need to be exported. The proportion of exports has declined in the past two years, only about 39%. In fact, the total export volume has not decreased because the production base is large. According to the statistics of tire branch, China's tire output increased from 330 million in 2007 to 470 million in 2012, an increase of 143%.

According to the calculation of British LMC company, the demand of China's tire market in 2013 was about 490 million. The National Bureau of Statistics estimates that the national radial tire output in 2013 will be 545 million. According to the reverse calculation of the radial rate of 88%, the total national tire output will reach 620 million, far exceeding the figure of LMC company, with 130 million overcapacity. However, if considering the global demand for 1.8 billion tires in 2013 and China continues to expand tire exports, it can alleviate the contradiction of domestic overcapacity.

Taking Dongying and Weifang as examples, it is reported that the production capacity of semi steel tires in the two regions was more than 80 million in 2013, including 60 million newly put into operation in Dongying in 2012, 23 million newly invested factories and 60 million new first half steel tires by 2016. In addition, 20 million new steel tires will be added in 2013. If all projects reach production capacity by the end of 2016, the tire production capacity will be seriously surplus!

Reporter: how far is the gap between China's tires and the international advanced level?

Xu Wenying: the signals reflected in the ranking of the top 75 are: first, the tire sales show negative growth for the first time after entering the new century; Second, the investment in global tire projects is decreasing, but the investment in China and India is increasing; Third, profits have increased significantly; Fourth, 48 foreign enterprises among the top 75 have produced tires in China.

However, the total sales volume of the world's top 75 is 187 billion 200 million USD, and the total sales of 26 enterprises in Chinese mainland are only 25 billion 200 million USD, accounting for 13.5% of the total sales. The total of the three tire giants is US $73.7 billion, accounting for 40% of the total sales. In terms of investment in R & D expenses, Bridgestone and Michelin rank the top two, with us $1.04 billion and US $800 million respectively, accounting for 2.7% and 2.9% of their sales revenue respectively. The R & D investment of Chinese enterprises is pitifully small. There is also a ranking of capital expenditure / sales revenue rate. Zhengxin international ranks first with 15.6%, and the second and third places are Indian Apollo 14.1% and Finnish Nokia tire 13% respectively. The average capital expenditure / sales revenue ratio of tire enterprises is 7.7%. Seeing such data, Chinese enterprises should carefully consider whether to invest in projects.

Another comparative figure is that the total tire sales revenue of China's top 10 enterprises is US $18.3 billion, which is equivalent to the US $18.9 billion level of Goodyear, the third largest company in the world. However, if China's tire enterprises unite and double the tire price, at least two tire enterprises in China will enter the top five in the world. Therefore, we also need to do more work in improving brand awareness and product added value.

Reporter: how about China's tire export in recent years?

Xu Wenying: according to car tire and truck tire products.

In terms of car tires, China's export volume in 2012 was about 1.5 million tons, and the delivery value was about 6 billion US dollars. Compared with 2009, both export volume and export volume increased by 36%, indicating that export prices also increased simultaneously. The United States and the European Union are important export regions of car tires in China. These two markets account for 50% ~ 60% of the total export of car tires. Affected by the special tire insurance case of the United States, the proportion of the U.S. market was declining in the past few years, and the proportion of the EU market increased. But generally speaking, the proportion of the two major markets is decreasing year by year. From 61% in 2009 to 47% in 2012. Nevertheless, if these two markets have a disturbance, China's car tire export will be affected. For example, from January to August this year, China's tire exports to the United States increased by 65% year-on-year, and the proportion of the U.S. market was 33%, indicating that China's exports to the United States have rebounded rapidly after the end of the special insurance case. It also reminds enterprises to pay close attention to the excessive export growth, which may bring the next round of trade friction.

In terms of truck and bus tires, China exported 2.3 million tons in 2012, with a delivery value of about US $8 billion. Compared with 2009, the export volume increased by 64% and the average price increased by 40%. The United States is the largest exporter of truck tires in China, accounting for about 18% of the total exports; Followed by the United Arab Emirates, Russia, Australia and Saudi Arabia. From 2009 to 2010, India was the top five countries in China's export of passenger car tires, accounting for 3% ~ 4%, but it has declined very fast in the past two years. China's exports to Mexico grew rapidly, accounting for 3%.

Reporter: what grade are our tires in the United States?

Xu Wenying: the United States is the world's largest importer of tires and has always been China's most important exporter. The products of various countries are highly competitive in the U.S. market.

Judging from the average price of the car tire, the tires in China are the lowest, and the price of each tire is only 39 US dollars, which is lower than that in Taiwan, Thailand and Indonesia. Although the price of passenger car tires is not the last, it is only $1 higher than that in Vietnam, with an average price of $68 / piece. In contrast, in Japan, the price is 1.7 ~ 2 times that of us. It can be seen that China's tire brand image is at the low end.

Reporter: what are the characteristics of China's exports in the first few months of this year?

Xu Wenying: according to the data of the General Administration of customs, from January to August, the export volume of car tires increased by 17.2% year-on-year, much higher than the increase in 2012, an increase of 11.1 percentage points; The export volume of passenger car tires increased by 11.2% year-on-year, slightly lower than 13.1% last year. It is not difficult to see why some enterprises report that it is difficult to export truck tires this year, while car tires are easy to sell.

In terms of price, the export price of car tires decreased by 9%, and the export price of truck tires decreased by nearly 10%, because the raw materials are cheaper this year. Generally, the price of tires is the highest during the Spring Festival every year, because there are few exports during this period. From March to April after the Spring Festival, it was the lowest. Since then, the export volume rose month by month and reached the highest value from July to August. It should be said that the most difficult time for export this year has passed, and the export situation sends a positive signal - the overseas market is gradually recovering.

In the inherent market of Chinese tires, even if the price does not drop, customers will buy our products. Why do we have to lower the price ourselves? I also call on enterprises to analyze which market "cake" is ours and stop relying on price competition.

Reporter: what are the practical problems faced by China's tire industry?

Xu Wenying: Generally speaking, the main problems existing in China's tire industry include the following aspects: first, the operating rate is insufficient. In 2012, about 95% of large tire enterprises, about 80% of medium-sized tire enterprises and about 60% of small tire enterprises. Second, the average profit margin of the industry is low, only 3% ~ 4%, which is far lower than the profit margin of 15% of well-known brands. Nokia tire is the most profitable company in the world. Although the production quantity is small, the profit margin is very high. Third, insufficient investment in technology research and development and insufficient innovation ability. Fourth, the homogenization of products is relatively serious.

Reporter: now that we understand the problem, what are the considerations in improving the overall competitiveness of China's tires?

Xu Wenying: as an association, we have been thinking about how to guide the industry to improve its overall competitiveness. First of all, I hope the government will introduce policies and regulations to support the development of the industry, including the introduction of China's tire labeling law, and enforce energy-saving and environmental protection tires such as green tires, tubeless tires and retreaded tires, so as to guide the healthy development of the industry. Second, enterprises should adjust the industrial structure and carry out industrial upgrading; Increase investment in science and technology and introduce advanced management experience; Establish a good brand image, improve product quality, and take the brand as the life of the enterprise. When exporting products, enterprises should think that they represent not only the image of the enterprise brand, but also the image of made in China. The third is the work carried out by the association. China Rubber Association is formulating the technical specification for green tires. Instead of copying the EU labeling law, we add green raw materials, cleaner production, energy consumption and pollutant emission on its basis, so as to better guide enterprises to achieve green development.

Reporter: can you disclose the content of the "tire industry access conditions"?

Xu Wenying: the Ministry of industry and information technology and the association have convened some large tire enterprises to hold three meetings to discuss the "tire industry access conditions". At present, it is in the review stage and will be issued soon.

The government's intention of formulating access conditions is very clear. The basic principles are: strictly control new projects; Strict management and acceptance of projects under construction, such as whether the project is green; Strictly control the expansion and reconstruction projects. The government issued a clear signal to encourage enterprises to merge and reorganize and carry out industry integration.

The biggest highlight of the entry conditions for tire industry is the announcement management system. On the website of the Ministry of industry and information technology, announce the tire enterprises that have met the access conditions. Only those enterprises that are allowed to enter the announcement can obtain bank loans, be listed conditionally and enjoy preferential policies.

This industry access will no longer focus on output and scale, but on technology, environmental protection, safety, resource consumption, credit rating, self owned capital investment, investment intensity and labor productivity. It is hoped that the formulation of access conditions can curb the current situation of overcapacity in the tire industry and make the industry truly glow with due vitality.

——From China rubber network