Domestic tire profits decline foreign tires overweight China

Together with the auto industry, there are also rubber tire companies that are closely related to automobile production and manufacturing at the 16th Shanghai Auto Show .

Over the past year, international brands including Ma Brand, Michelin , Bridgestone , and Dunlop have all released timetables for capacity expansion plans and launch of intensive new products in China.

Recently, the reporter learned from Sumitomo Rubber (China) Co., Ltd., the parent company of the world’s sixth-largest tire manufacturer Dunlop, that in February of this year, the company’s cumulative output in the two plants in Changshu and Hunan exceeded 100 million, and it is estimated that by 2020 Cumulative production in China will reach 200 million and will double.

The chairman and general manager of the company, Naoki Nashiro, told 21st Century Business Herald reporter that the Chinese market is one of Sumitomo Rubber's key strategic development areas. "The sales of Dunlop tires in China have exceeded RMB 5 billion. It has exceeded 50%." He said, "For this purpose, the company will expand the Hunan factory. After completion, its daily production will be 4.5 times that of the present, and the daily output of the two factories will exceed 100,000."

Dunlop, who entered China in 2004 and realized the first domestically produced tyres, was founded in England in 1888 and later acquired by Sumitomo Rubber Japan. As a representative of Japanese tires, Dunlop has gradually established a foothold in China through cooperation with FAW, GAC, Dongfeng Nissan and other large automobile groups.

According to 21st Century Business Herald reporters, Dunlop has more than 850 flagship stores in China, and non-specialty store online stores have about 4,000. The goal is to expand the end customer and tire replacement market. Hankook Tire, whose market ranking is indiscriminate, has also announced recently that it will increase its sales ratio in the retail market. "The number of stores will increase from 2,300 to 5,000 by 2020."

However, compared with the fiery layout of foreign tire companies and the short-soldering in China, domestic tires have always given people the impression of “cold walls outside the wall”. More importantly, domestic tires must now face the reality of falling profits.

At the 2015 China Rubber Annual Conference recently held, the president of the China Rubber Industry Association, Deng Yasheng, pointed out in the report “The Economic Operation of the Chinese Rubber Industry in 2014” that the overall profit of the industry was in the context of a steady increase in the output of rubber products in China. It was in a downward trend, in which the profit of tire products (car tires and tires) showed a negative growth.

According to the statistics of the China Rubber Association, the industries that achieved negative profit growth in 2014 included tires, tires, and comprehensive utilization of waste rubber. In the tire industry, the profits of domestic-funded enterprises decreased by 9.7%, that of foreign-funded enterprises increased by 16.7%, the value of tires' finished goods inventory increased by 20.41% year-on-year, and the profits of tire-powered tires dropped by 15.5%.

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