China's tyre industry enters high cost era

ERJ staff report (DS)

Guiyang, China - China's tyre and rubber industry has entered the high cost era, and faces a situation of three shortages and two high costs, according to speakers at a meeting organised by the China Rubber Industry Association on 27 October in Guiyang, China.

The three shortages are people, Capital and power. The two high costs are materials and taxes. As a result, suggested speakers, continued growth of China's tyre industry may be restricted.

As a result, the tyre industry has already seen significant losses at certain tyre makers and as a result complete or partial shut-downs of factories. Although revenues increased due to hgher prices, the average net margin at the top tyre makers in China fell to just 1.5 percent.

A speaker from Qingdao Doublestar said the company is having to restrict output due to labour shortages. This has reduced output by some 10 percent this year, he said.

Ma Shichun Executive Chairman of enterprise, Guizhou Tyre Co., Ltd. Said the priorities are to continue with scientific development; and also the industry needs to consolidate more, as there are too many small factories producing a range of tyres.

He suggested that Chinese companies should not attempt to compete on low cost, but on high technology.

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Report on CRIA website

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Above story auto-translated into English (from Chinese)