"Zombie" warning as China’s rubber sector rebounds

Guangzhou, China – China’s tire & rubber products sector reported €141 billion (1.03 trillion yuan) revenue in 2016, at a growth rate of 2.6% compared with 2.1% in 2015, according to information released at the 2017 China Rubber Conference held in Guangzhou this week.

The sector’s profit rose by 6% to €8.8 billion, compared with a 3% drop in 2015, while investment in the sector increased 8% to €25 billion - though a senior industry official added a note of concern to the positive figures.

“The year 2016 was a good start for the rubber sector’s 13^th Five Year Plan,” said chairman of China Rubber Industry Association Deng Yali in her speech at the event.

An exception is the tire segment’s investment, which fell by 2% to €8 billion following two years of decrease.

“Last year was a ‘policy year,’” said Deng. Driven by China’s automobile sales boosted by various government policies, CRIA member tire makers reported a 2% rise in revenue, although profit was down 1%.

Deng warned that when the market goes upwards, there might be a disruptive comeback of “zombie companies,” the low-end companies that suspended production or closed during the previous downturn. Deng pointed out several new tire projects in Shandong have already started up this month.