Friday Focus: China industry leader charts problems facing hard-hit tire sector

Qingdao, China – China’s tire exports in 2015 fell by 4 percent in volume to 5.4 million tonnes and 16 percent in value to $13.7 billion (€12 billion), compared with a 13-percent rise in volume and a 2-percent rise in value in 2014.

The difference in volume and value change rates indicates a continued price war, said China Rubber Industry Association’s secretary general Xu Wenying during her speech at the 2016 China Rubber Conference in Qingdao this March.

On the US front, factors such as the anti-dumping tariffs almost halved China’s passenger car tire export last year in both volume and value to 314,000 tonnes and $874 million.

Truck and bus tire export to the US also decreased by 10 percent in volume to 590,000 tonnes and 21 percent in value to $1.5 billion.

China has been shifting part of its passenger-car tire exports to areas such as Europe, Australia and Mexico – the latter two, the third and fourth largest single-country markets for such exports from China. Both export regions saw double-digit volume growth and single-digit value growth last year.

Indeed, the EU has overtaken the US as China’s largest passenger car tire export market, accounting for 24 percent of China’s total such exports last year.

“A looming anti-dumping investigation by the EU worries the industry,” said Xu.

Most European countries had single-digit volume growth but negative value growth for such exports. For example, the UK – the second largest single-country market – last year, saw a 2-percent gain in volume but a 12-percent drop in value.

“We hope to come up with a black-list this year for companies that export at [unreasonably] low prices,” Xu added, “and to tighten control over the issuance of certificate of origin if the company has been keeping its prices below industry-average costs.”

Xu will provide further perspectives on both the Chinese and European tire industries at the ERJ Future Tire Conference 2016 (FTC16), 25-25 May in Essen, Germany.

In a written interview for FTC16, the CIRA leader listed the main challenges facing the Chinese tire industry as:

“Firstly, more and more trade friction from abroad, such as USW petitions in the US for the imposition of anti-dumping and countervailing duties on imports of truck and bus tires from China, just after the PCR case finished last year.

“Secondly, Chinese labours cost increased sharply, duties are heavy. This will influence the competitiveness of Chinese tire factories.

“Thirdly, China has overcapacity on low level tire products.

“Fourthly, the Chinese economy has slowed down, the automotive industry has slowed down, and this will have bad effect on the tire industry.”

She went to identify tire-technology innovation and tire branding as the most important factors for the future success of the Chinese tire industry.

“Most of Chinese consumers do not know Chinese brand tires [or] about tire technology,” Xu explained. “We are on the way, but it is far behind developed countries such as Germany, USA and Japan.”

We will report further on these issues in the May/June edition of the ERJ magazine. Email the editor with your comments or insights on the Chinese tire sector.