Chaos in China's tire industry or the front line of life and death
the Chinese tire industry is mired in renewable variables
on January 20, 2015, the United States launched a "double anti" investigation on passenger car and light truck tires in China. On June 3 last year, the United Steelworkers union (USW) applied for a "double anti" investigation. Finally, the International Trade Bureau of the U.S. Department of Commerce ruled that the preliminary deadline for the relevant investigation was postponed from December 1, 2014 to January 20, 2015
this is the latest action of the United States after the implementation of "special warranty" restrictions on Chinese tires for three consecutive years from 2009 to 2011. Under the demonstration effect, India, Brazil and Europe, which have long built trade barriers to Chinese tires, can no longer complete these experiments with a general rubber tensile testing machine. Countries and regions may actively follow up and join the "double reverse"
according to the industry data provided by LANXESS chemicals, since China became the "world tire factory" in 2012, 40% of its annual tire output is exported to overseas markets, and the European Union and the United States account for 50% of the total export volume
it is worth mentioning that since 2011, with the increasing international supply of raw materials such as natural rubber, the market price has been declining. In September 2014, the domestic natural rubber price fell to a new low in the past five years. This is good for the tire industry downstream of the rubber industry chain, but due to overcapacity and other reasons, the tire price continued to fall. It is widely believed in the industry that the US "double anti" investigation will hit China's tire industry hard
according to the relevant statistics of the National Bureau of statistics, China's tire enterprises are mainly concentrated in Shandong, Jiangsu, Shanghai and other eastern regions, with more than 600 enterprises above designated size. Among them, Shandong, the "China tire base", has more than 300 enterprises above designated size
however, the comprehensive competitiveness of these enterprises is not strong. The middle and high-end car and truck tire markets are basically divided up by foreign and joint ventures such as Michelin and Hantai. Hangzhou Zhongce, triangle tire and other major domestic tire enterprises have the advantage of supporting heavy-duty trucks, construction machinery enterprises and rubber products market. Other small and medium-sized local tire enterprises have been struggling with the burden of "scattered, disordered, poor and small" in the industry for a long time
Xu Bingjin, President of the China EU economic and Technological Cooperation Association and honorary president of the China Automobile Circulation Association, said that the management of the industry by relevant ministries and commissions was lagging behind, and the industry lacked relevant legislation. Under the influence of internal and external factors, domestic independent tire enterprises not only grow slowly, but also the core technology has been "hollowed out" for a long time. The problem tires and fake tires that can be seen everywhere in the market are one of the important reasons for China's high annual road traffic mortality rate in the world
"the chaos is even worse now because the US' double anti dumping 'investigation led to exports being returned to domestic sales." Li Junjie, a domestic tire dealer in Shanghai, said. He said that the annual output of tires in Dongying accounts for more than 40% of the national annual output of tires, but most of them are family workshops. In order to cope with the price war, many small factories can only cut corners
in addition, although there is a "Three Guarantees" provision for tire products, that is, in case of quality problems during the warranty period, consumers can ask the manufacturer to repair, replace and return goods, driven by interests, "non Three Guarantees" and fake and shoddy products still occupy a lot of market space, further aggravating the deterioration of the tire market
take Chaoyang tire as an example. Its manufacturer is Hangzhou Zhongce Rubber Group Co., Ltd. and its origin is registered at No. 1 Street, Xiasha economic and Technological Development Zone, Hangzhou, Zhejiang. However, in Chaoyang City, Liaoning Province, some tire factories sell fake "Chaoyang tires" grandly, and even the tire patterns are very similar
life and death line
in this case, domestic tire manufacturers can only transfer the pressure to dealers at the end of the industrial chain
a person in Bridgestone tire East China who did not want to be named said that large-scale independent tire enterprises resist risks by changing the enterprise market management mode, that is, the original enterprise market supervision and management personnel are all transformed into a new team of "supervision and sales" for full management and sales
however, although the upstream raw materials of tires continue to reduce prices, the manufacturer has not transmitted this benefit to the dealers. Moreover, in the past, a tire enterprise was only allowed to develop one exclusive agent in a province. Now, most tire enterprises are allowed to join another agent and accept the same business terms. At the same time, major customers, such as vehicle manufacturers, who used to be directly matched by dealers, are now also taken back by manufacturers for direct management
Li Junjie believes that the strength of tire manufacturers "has no bottom line", directly grabbing the major customers of dealers. At the same time, the "one domain and multiple generations" of business policy directly provokes the dealers to fight internally when developing customers, and colludes with our years of global experience and price war
"unfortunately, when many dealers joined a brand at the beginning, most of the funds were borrowed from banks. Now, in addition to the normal delivery of goods from manufacturers, they generally accept more than twice the pressure in previous years, and all tire manufacturers must pay in a lump sum." An insider said that the difficulty of dealers in collecting accounts has been a "chronic disease" of the industry for many years. In the downturn, dealers can only use inventory to enter China's aluminum processing industry. In the 1960s, they began to carry out tracking research bank loans on aluminum lithium alloys, and the bank will carry out real-time supervision on inventory. Once the dealer's inventory becomes insolvent, the bank will immediately close it
"the worst thing is that many tire enterprises have introduced e-commerce models in market sales, which has a great impact on traditional dealers." Li Junjie said that the rise of "o2o" has made many networking platforms such as wheat tire and tire King start to ship at ex factory price or at a loss, in order to gather platform popularity. This makes traditional dealers only appear as service providers when interacting with consumers
Wang Baixia, director of the product information research department of China Automotive Technology Research Center, said: "the zero sum game between dealers and tire manufacturers in terms of interests is indeed driving domestic tire dealers to run all the way. In the future, those who can withstand the hardships of life and death will continue to grow; those who cannot keep up will naturally be eliminated."
due to the "steady profit without loss" of tire enterprises, hot money is also lured into the market. According to public information, at the end of 2014, Shandong originally planned to have 10 model tire factories, and finally 3 were approved
however, the tire industry is a heavy asset industry, and the investment and operation of many enterprises have already "kidnapped" local governments and banks. For example, in Dawang Town, an important town in the tire industry in Dongying, local entrepreneurs and the government spontaneously formed a "guarantee alliance". For enterprises that are close to collapse in operation, the boss group not only provides timely financing, channels and other support, but also the degree of bank intervention is so deep that it is almost performing the "national advance and civil retreat"
Wang Baixia believes that the overcapacity of domestic tire industry belongs to structural overcapacity, which is mainly concentrated in the low end. The essence of the cooperation between enterprises and local governments reflects the long-standing "ostrich mentality" in the whole industry in the face of fierce competition from foreign capital, which is not conducive to the rise of independent brands
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