The tire industry will face many challenges in sustainable development

“At the beginning of 2014, the CEOs of tire companies had reminded the industry to prepare for the hard times, and the current situation verified the original inference. Since this year, the tire industry has encountered a series of serious problems, and the contradiction of structural overgrowth of products has become increasingly prominent. The anti-dumping investigations initiated by the United States against the "double reverse" and "Russian White Harbin"; under the circumstance that the high tariffs on imports of natural rubber are neither cancelled nor reduced, the relevant departments have persisted in modifying the standards for compounded rubber, despite the resolute opposition of the tire industry. Under heavy pressure, the future competition of the tire industry will surely become more intense."

Recently, Shi Yifeng, secretary general of the tire association of China Rubber Association, told the reporter at the “Tire Industry and Related Industry Management (Export) Working Conference” held by the Tire Branch of the China Rubber Industry Association. "At the beginning of this year, the CEOs of tire companies had reminded the industry to prepare for the hard times. The current situation has verified the original inferences. Since this year, the tire industry has encountered a series of serious problems, and the contradiction of structural overgrowth of products has become increasingly prominent. The United States initiated the anti-dumping investigations of 'double reverse' and 'Russian White Harbin'; under the circumstance that high tariffs on natural rubber imports are neither cancelled nor reduced, relevant departments have persisted in modifying the standards for composite rubber despite the resolute opposition of the tire industry. Under pressure, the future competition of the tire industry will surely become more intense."

Recently, Shi Yifeng, secretary general of the tire association of China Rubber Association, told the reporter at the “Tire Industry and Related Industry Management (Export) Working Conference” held by the Tire Branch of the China Rubber Industry Association. So, what is the status of the tire companies this year? How will the tire market situation develop next year? The reporter has done a thorough understanding of this.

Overcapacity is highlighted, difficult to manage under stress

“The difficulties and problems faced by the tire industry this year are serious, but the leakage of the house is accompanied by rain, and the ship is hitting the wind once again.” Talking about the operating situation of the tire industry, the president of the China Rubber Association, Deng Yaxi, described it as such. On the one hand, natural rubber prices have continued to slump, which has reduced the cost pressures of tire companies. On the other hand, domestic and international economic adjustments and sluggish markets have caused tire sales prices to continue to decrease and inventory pressure has increased. This has brought new pressure. At the same time, the unexpected "U.S. opposition" of cars and light truck tires and the adjustment of compound rubber standards caused a sudden blow to the tire industry. According to the statistics of the association, from January to October, the tire production of member companies increased by 10.66%, and the export volume increased by 15.07%, but sales revenue dropped by 4.58%, profits dropped by 0.36%, and inventory (value) increased by 19.9%.

At the China International Rubber Technology Exhibition held in the same period, the reporter interviewed a number of frontline operators of tire companies. They generally stated that the market is not doing well this year. According to the company's report, the domestic market for car tyres is not very good this year, and car and car tyres are even less effective. Due to the economic downturn in the country, many teams have not been able to work. Construction sites, mines and other work stoppages have resulted in huge operating pressure on tire companies. At present, the polarization of tire companies began to become obvious. Some companies with strong brand and R&D capabilities and better management had a stronger premium ability. This year's profits were better. Other companies had poor unit returns, tight capital links, and fierce competition that led to a decline in unit prices. The efficiency has dropped significantly. At present, some companies have made significant layoffs.

It is understood that after years of rapid development of tire projects, the structural overcapacity problem in the tire industry has been very serious, especially in the second half of this year, market demand is low, and the general operating rate of the industry is not high, most companies are 70%- Between 80% and 90% were very few, some companies in Shandong had a operating rate of only about 50%. Due to the serious homogeneity of products and the release of a large amount of production capacity, the competition between mid-to-low-end products has become fierce. There has been a big price war among companies. From the beginning to the present, the price of tires has dropped by 15%-25%, and some specifications have low prices. To be outrageous, has seriously damaged the overall interests of the industry.

According to Ge Guorong, deputy general manager of China Strategic Rubber Group, the production capacity of car tyres will increase by approximately 150 million pieces this year, but the output will only increase by 60 million to 70 million pieces. In the past few years, the average increase in the output of all-steel tires was above 8%, but the market demand fell below 5% this year. Although this year's statements performed well, the company's inventory has risen rapidly. It is estimated that at present there are at least 10 million steel stocks in China. Article. Although the statistics of domestic natural rubber inventories declined, they have all been converted into product inventories.

Ge Guorong said that under normal circumstances, corporate stocks are generally around a month, and now average one and a half months, plus an average of one and a half months to add the dealer's inventory, so the pressure of the entire industry tire inventory is still relatively large.

Sun Huaijian, general manager of Hualin Jiatong Tire Co., Ltd. analyzed that the pressure of overcapacity will continue until next year. According to the tire branch survey data, compared with 2014, the production capacity of passenger car tires will increase by 73 million in 2015, but the demand will only increase by 28.4 million. By the end of the year, the excess production capacity will reach 167 million, accounting for 24% of the total production capacity. In 7.6 percent of the operating rate; commercial tire production capacity will increase 12.6 million, but the demand increased by only 6.53 million, with 48.42 million excess capacity, accounting for 28% of the total capacity, which is equivalent to 7.2% of the operating rate.

In addition, difficulties in the tire industry have also spread to equipment suppliers. Some tire investment projects have been suspended or terminated due to issues such as bank loans, land use, project environmental impact assessments, and the US “double reverse”, resulting in a lot of equipment being “pulled” from picking up, resulting in a large backlog of equipment in the hands of equipment suppliers. There are several large rubber machine companies that are weighing between 50 million and 80 million yuan. Destocking is expected to continue until the first half of next year. According to the company's introduction, orders from the previous year to this time in the second year are already full, but there are very few orders for rubber machinery companies in the next year.

In addition, the tire industry is also facing the pressure of the standard adjustment of composite rubber, the new national standard for composite rubber content of raw rubber below 88%. Shi Yifeng said that if the new national standard is formally implemented, it would be equivalent to closing the door of compounded rubber imports. According to last year's estimate of 1.54 million tons of compounded rubber imports, the tariff alone will increase the cost of the tire industry by about 2 billion yuan a year.

Market conversion is not easy, exports face challenges

According to Deng Yaxi, nearly 30% of the tires for cars and light trucks exported from China are exported to the United States. On November 24th, the United States established a countervailing rate of initial discretionary taxation, with a general rate of 15.69%, which is much higher than the previous general rate of less than 10%. The initial anti-dumping rate will be determined in January next year and it is estimated that it will not be too low. If according to its alleged 60.15% tax rate, then Chinese tires will be difficult to re-export to the United States.

According to customs statistics, from July to October, the monthly export volume of Chinese car exports to the United States was 50,800 tons, 67,000 tons, 52,000 tons, 50 thousand tons and 47,000 tons, respectively, an increase of -0.39%, 31.37%, and 0.14 year-on-year respectively. %, 4.17%, 4.44%. From January to October, China exported 483,000 tons of American car tires, an increase of only 3.58% year-on-year. It can be seen that since the United States proposed the "double reaction" in June, it has begun to gradually decline, in addition to a substantial increase in exports to the United States in July. It has also only slightly increased year-on-year, and the "double reverse" effect has begun to appear.

Ge Guorong said that since the US "double reverse" ruling will be issued in succession, the export to the United States before this month is still normal, but it is estimated that it will not work in the next month. After the “double reverse” ruling, half of them can go out well, and the rest can only be transferred to other foreign markets or return to the domestic market. The degree of competition in the domestic market will be even more intense. At the same time, he also believes that car tires are different from all-steel tires. They cannot occupy the market because of low prices, but they also have the recognition of channels and consumers. Therefore, it is relatively difficult to return to the domestic market from the US market. .

Deng Yaluo said that there are more than 1,000 companies involved in the "double counterattacks", of which 68 are manufacturing enterprises. The 31 companies with the greatest impact are domestic-funded enterprises. Foreign-funded enterprises can adjust their production layout and export to the United States from other sources, but domestic-funded enterprises can only turn to other countries' markets and may trigger more trade frictions. According to customs statistics, from January to October, China’s exports of passenger car tires grew by a large margin: 39.9% in Saudi Arabia, 27.3% in the United Arab Emirates, 23.5% in Germany, 19.1% in Mexico, and 12.3% in the Netherlands.

In addition, from January to October, China exported 2.597 million tons of car-car tires, a year-on-year increase of 19.85%, of which exports to the United States increased by 51%. Other countries with large increases are: 194.5 percent in Iran, 40.3 percent in Mexico, 18.5 percent in the United Kingdom, and 15.7 percent in the United Arab Emirates. In September of this year, the Russian, Belarusian and Belarusian customs union countries have already initiated anti-dumping investigations against Chinese passenger car tires. Therefore, Deng Yaxi reminded tire companies to attach great importance to the changes in the export market share, vigilance and bring new trade frictions.

Challenges and opportunities coexist, no need for innovation and transformation

Sun Huaijian believes that Chinese tire companies are repeating the development path of "white goods". For example, he said that from 2009 to 2013, the association's statistics showed that the growth rate of all-steel tire production of tire enterprises was 50.8%, of which domestic-funded enterprises increased by 64%, foreign-funded enterprises increased by 5.3%, foreign-funded enterprises continued negative growth in 2011 and 2012; foreign-funded enterprises The proportion of steel tire production also decreased continuously from 22.5% in 2009 to 15.7% in 2013.

The above data shows that the development path of all-steel tires and “white goods” is similar, that is, the share of foreign brands in the initial stage of market development is high—the price war—the market share of foreign brands has gone from being to winning—and the concentration of production has been increasing. He said that the biased tire products have already completed the above conversion in China. At present, several biased tire companies have shown a good momentum of development in terms of production concentration, market share, and profit. The next step is full steel tires. Car tires have a few years of good days, but inevitably they must go this way.

Therefore, he believes that China's tire industry has entered an important transition period, from the factor-driven, investment-driven change to innovation-driven, from quantitative growth to quality growth, without the need to upgrade the product structure, raw material structure, market structure.

Ge Guorong also said that although the market is difficult next year, but the country's investment has still existed, so the tire market will continue to grow, but the competition is getting more and more intense and the pressure is increasing. He believes that tire companies should pay attention to product quality and product development. For example, due to the development of high-speed railways in China and the advantages of trains in long-distance transportation, the impact on the car-car tire market will gradually emerge. The passenger car tire market has already had an impact. After two years, it will affect the truck tire market. The long-distance transport tire market will inevitably shrink, but it still has advantages over the high-speed rails in improving quality and functionality in short-haul products.

He believes that in the coming years, as the domestic car market will continue to grow, the demand for car tyres will naturally increase, but the natural increase in the demand for car and bicycle tires will be minimal.

Ge Guorong said that because most of the layout of Chinese tire companies is on their own doorsteps, it has caused the difficulty of mergers between companies and the merger cannot be upgraded. He believes that the current cooperation between enterprises may be more effective than mergers. For example, some of my products can help you, and some of the products you have can help me. This policy has now been adopted by China Strategic.

In addition, companies must also improve the integration of production and sales services in domestic and foreign markets. Only products that do not have services will be eliminated in both domestic and foreign markets. For companies going out, he said that the purpose of going out should not be to avoid trade frictions, but to make products localized and branded.

Chairman of China Rubber Association tires branch, party secretary and deputy general manager of Shuangqin Group Co., Ltd. Chu Zhengyu proposed that China's tire industry is currently at the typhoon of innovation and innovation. To change from a big tire country to a tire power, we must take the brand. Road, quality road and sustainable development. The traditional market positioning model based on products has been unable to continue to create demand. Now it must pay attention to the consumers' inner needs and provide the value-added services they need. The tire industry needs to change the focus of competition, from price competition to quality competition.

He believes that R&D and marketing are the top end of the smile curve, which can bring value to customers and create value for the company. To this end, it is necessary to establish an upstream and downstream integrated innovation mechanism and explore the e-commerce model suitable for tire companies.

Wang Feng, executive chairman of the China Rubber Association Bureau and chairman of Fengshen Tire Co., Ltd., said that why China's tires are sold at such a low price and frequently anti-dumped? In the final analysis, the overall competitiveness of China's tire companies is not strong, and too much focus on production capacity. The build-up, product quality fluctuations, technological innovation capability gap, marketing channels and brand building lags behind. Tire enterprises not only waged price wars in the domestic market, but also brought price warfare thinking and routines to overseas markets. In the increasingly fierce competition in the overseas market, we suddenly look back and find out that most of them are their own brothers, which has seriously affected the image of Chinese tire companies in the international market.

Wang Feng said that from the perspective of the internationalization of world-class tire companies, the following development models are generally followed: from the standard type of products to the replacement market; in the replacement market to achieve product upgrades; through the brand effect of high-end product accumulation, Standard products penetrate into the supporting market; finally, the high-end products are supported by the original factory.

Deng Yalu said that in the last month of 2014, the United States’ “double reverse”, standard adjustment of compound rubber, tariffs on natural rubber, and the newly issued “Tire Industry Access Requirements” and “Green Tire Technical Specifications” are both for the tire industry. The development of the next year has laid down the challenges and left room for opportunities. At present, China's rubber industry has entered a new normal state of shifting speeds, and the driving force for development will be mainly driven by innovation, and will change from quantitative growth to quality growth, service growth and green growth.

She believes that promoting economic growth, improving efficiency, and expanding consumption are important engines for China's economic growth, as well as potential; the development of China's automobile industry has a strong driving role for tires. Therefore, the development of the tire industry is still relatively large. opportunity. The wind has come. We are flying against the wind or relying on good winds to see how we understand and how to deal with it.

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