China Tire: Preemptive Layout Advantages

A few days ago, several domestic listed tire companies responded positively to the high tax “double reverse” ruling imposed on Chinese tires by the United States.

The exquisite tires, triangle tires, Aeolus tires and the racing wheel Jinyufa announced that their anti-dumping rates will be levied at 22.57%, 9%, 22.57%, 9%, and the countervailing duty rate is 52.04%.

However, several companies have stated that the United States’ "double opposition" has less impact on the overall operation of its own company.

Under high tariffs, why do they still have such confidence?

Tires High tariffs have less impact on individual tire companies

Analysis of the development path of some domestic tire companies in recent years may be able to find the answer.

The development layout of these enterprises is nothing more than several aspects: building factories overseas; improving product quality; taking the road to internationalization.

Delicate tires: switch market orders

In the past two years, Linglong tires have accelerated the pace of overseas expansion.

At present, its Thai plant already has 10 million semi-steel tires and 1.2 million full-steel tires, which can basically satisfy the company's actual orders in the US market.

The company said that it has completed the order switch in the US market ahead of schedule, and in 2017, shipments to the US market are expected to hit a record high.

In the first 11 months of 2016, the company's tire production and sales increased by 15.84% and 17.81% year-on-year, respectively, achieving rapid growth.

Triangle tires: the pursuit of high-performance products

The triangular tires, which have been introverted for years, have increased brand awareness before and after listing in 2016.

In particular, its high-profile launch of the two new "smart factory" projects put into operation: 4 million high-performance passenger car tire projects in the South China Sea area; 2 million high-performance commercial tire projects in Lingang area.

Tires Triangle tires pursue high performance products

According to the data, from January to September 2016, triangular tires and wholly-owned subsidiaries exported products to the United States, which involved “double-reverse” card passenger car tire sales, which accounted for only 1.11% of their operating income.

This means that the company will not be troubled by the United States' "double reverse".

Qingdao Double Star: Participate in International Acquisition

Prior to the Spring Festival, Qingdao Binxing became a limelight as it participated in the acquisition of Kumho Tire in South Korea.

The company participated in the establishment of Xingwei International, a subsidiary controlled by Qingdao Xingwei Micro Equity Investment Fund, and became the preferred negotiating partner for the sale of shares by Korea’s Kumho Tire creditors.

If the acquisition of Kumho Tire becomes true, Double Star will have the opportunity to fully integrate the domestic and international market layout and achieve rapid expansion.

The company’s 2016 performance forecast indicates that its net profit has increased by 50%-80%, which is also a big winner in the market.

Race Wheel Jinyu: Exploiting Overseas Markets

Tire World Network learned that the racing wheel Jin Yuzheng is stepping up efforts to open up overseas markets outside the United States in order to deal with tire "double reverse."

After its Vietnam plant was put into operation, the first all-steel radial tire was off the assembly line and it is expected to be mass-produced in 2017.

According to the performance forecast, in 2016, the company's net profit increased by 85% to 105%, which is a case of overflowing.

The future of Chinese tire companies

In 2008, China’s tires faced the United States’ special security case for the first time and were subject to high tariffs. This is seen by the industry as setting a bad precedent.

Since then, trade protection and relief measures have become the “killer” for the United States to deal with Chinese tires.

According to analysis, on the other hand, the industry’s heavy losses have also contributed to the rapid growth and maturity of Chinese tire companies.

Some companies adopt a method of transferring production bases overseas to avoid the market risks brought about by trade policies.

Most of them are optimistic about Southeast Asia. This is the main producing area of ​​natural rubber. While the curve circumvents the “double reverse” in the United States, it can also shorten the supply radius of raw materials and reduce transportation costs.

At the same time, some powerful tire companies are reluctant to “wash-out” in the low-end market, but step by step into high value-added and high-performance technologies by upgrading their technology and R&D capabilities and spending huge sums to build smart factories and production lines. Tire field.

Perhaps this is the road that China's tire industry should take in the future.

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