Industrial policy challenged tire industry transformation defeated

Since the beginning of this year, the price of natural rubber has been on a downward trend, and the benefits of tire companies are getting worse. Industry insiders explained that this is because the price of tires is also falling. As long as there is a price cut, other companies must follow the price cuts. When raw materials are rising, whoever first increases prices will die first; when the raw materials fall, who will lower prices will be unlucky.

In stark contrast, the tire products of multinational companies have increased rapidly in overseas markets, while at the same time accelerating the expansion of tire production capacity in China and smashing the country's market. It is predicted that following the promotion of the world’s largest auto-production and sales country, China is expected to become the world’s largest tire market in 2014.

Industry analysis pointed out that since the implementation of the “Tire Industry Policy” last year, China’s tire industry is still on the original track, and product quality, brand, technology, technology, market structure, and enterprise scale have lagged behind multinational companies. Stay on the slogan.

Helpless prices and falling industry data show that since the beginning of this year, the price of domestic natural rubber has been fluctuating and falling at a high level. The average price of natural rubber in the first quarter was 37,000 yuan / ton; the average price in the second quarter was 3.5-3.6 yuan / ton; the price changes in the third quarter was relatively large, the average price in the first two months was 34,000 yuan / ton, but since September Rapid decline has now dropped to 28,000 yuan / ton.

The efficiency of domestic tire companies has not improved as a result. According to statistics of Wind, the total operating income of the second and third quarters of the Shenwan Industrial Group's tire companies after the elimination of the lack of historical data was both increased month-on-month, but the total operating profit and total are attributed to the parent company. The net profit of the shareholders of the company has not changed simultaneously, and it is relatively common to increase income without increasing profits or increasing income and reducing profits.

In explaining the decline in performance, many companies have made raw material prices high as an important reason. Combined with the trend of the price of natural rubber in the same period, the explanation can not make sense, at least not exhaustive. As the price of raw materials rises, if the price of tires also rises, the profits of enterprises may not necessarily deteriorate. When the prices of raw materials fall, if the price of tires has not changed, the efficiency of enterprises should be improved.

According to industry sources, due to the slowdown in the growth of car sales, the downstream demand is not buoyant, and the price of tires is also quite unreliable and can only follow the downward trend. Tire price reduction is for promotion, as long as the price of a company's products declines, the price of other companies' products must be adjusted at the same time, otherwise it means the loss of market share.

It is understood that at the beginning of June, domestic tire manufacturers once held a meeting and agreed to insist on not lowering prices. The reason is that the cost of raw materials in the previous period has remained high, the entire industry is in a loss, the price stability of the products after the price reduction of raw materials just can make up for the loss in the previous period to a certain extent.

However, this unwritten agreement has not been effectively implemented. Hangzhou Zhongce Rubber Co., Ltd. took the lead in cutting prices, followed by many tire manufacturers. This wave of price reductions manifests itself through "rebate". Tire manufacturers' rebates to dealers range from a minimum of 5% to 6%, with a maximum of 15%. In September, the price of natural rubber plummeted, and industry insiders said that a new round of product price reduction has begun.

In addition to the decline in the price of raw materials caused by the tire company's efficiency is difficult to get better, the relevant person of the China Rubber Industry Association also said that some tire companies optimistic about the price trend of natural rubber at the beginning of the year, hoarding a lot of natural rubber, and now the price of natural rubber fell, inventory price drop The loss of asset impairments caused tire companies to face greater difficulties.

Difficult to survive in the cracks In the view of domestic tire companies, the weak ability to pass on costs is a major problem faced by the industry, and the key reason is that demand is not strong. If the demand is as good as in 2009, companies can hold on without lowering prices. The agreement. However, the real situation is far more than this.

The so-called lack of demand is another scenario in the eyes of foreign brands. Cao Kechang, vice president of Cooper Tire Global and general manager of the Asia-Pacific region, publicly stated this year that in 2014 China will either replace the United States or climb into the world's largest consumer of car tires. The major multinational tire companies have reached a consensus on this.

According to statistics, foreign tire companies have rapidly expanded in China in recent years. Foreign brands have occupied a dominant position in China's tire market. 50% of local state-owned key tire companies have been merged by foreign companies, and more than 80% of the domestic radial tire market is occupied by foreign tire manufacturers.

The expansion of production capacity of foreign tire companies in China continues. It is understood that the joint venture set up by Italy Pirelli and Luzhou Lutong Tire Co., Ltd. will invest 300 million euros in the next three years, reach an annual production capacity of 10 million sets of car tires, 100,000 tons of steel cords, etc., and it is expected that annual sales revenue will be It reached 10 billion yuan. Cooper Tire will be fully open to the Chinese market starting in 2012, in which car tyres will be used as much as possible to meet the needs of the Chinese market. In addition, Continental Group and Japan Bridgestone plan to expand tire production capacity in China.

In fact, global tyre production capacity is rapidly expanding due to the overweight investment of major brands worldwide. Data show that since the beginning of this year, the global tire industry has invested a total of 9.7 billion U.S. dollars to set a new record. The global tire industry has built at least 16 tire factories (excluding China), and increased its production capacity by 370,000/day, of which 325,000 were used for passenger and SUV tires. Investment is mainly concentrated in the Asia-Pacific region, accounting for about two-thirds of the total, of which investment in China is more than US$3.5 billion.

Chinese tire companies are obviously in a weak position in the domestic market, and the situation encountered in overseas markets is not good. The person in charge of a listed company complained that the Chinese tire industry has become one of the industries with the highest frequency and the highest frequency of anti-dumping in international trade. Tyre exports basically do not make money, but they also frequently encounter anti-dumping. Products from export to domestic sales intensify competition in the domestic market.

Industrial policy challenge When judging the future trend of China's tire industry, a brokerage researcher pessimistically stated that regardless of the rising or falling prices of raw materials, the tire industry will be in a meager profit operating condition for a long time.

When looking for the cause of the industry's difficulties, the researcher pointed out that about 80% of the tire industry's products are sold to the replacement of the tire market, which determines that companies in the industry cannot accept orders in advance and can only make production decisions based on the company’s own judgments about the market. plan. The post-production and post-production model allows companies to effectively pass on cost pressures when the price of natural rubber rises. When natural rubber prices decline, they do not dare to increase their inventory.

There are also industry insiders who point the finger at the fierce competition in the market, raw material prices, and anti-dumping, but they rarely mention the industry's own problems. The aforementioned person in charge of the listed company frankly stated that the production of the original supporting tires requires strict certification by the vehicle manufacturer, which is relatively difficult. In addition, tires produced by Chinese companies are big road goods. Just like the things that small vendors sell, they are simply not comparable to the products of multinational corporations. They are far from brand and quality, so they can only take the low-price route as replacement tires.

The "Tire Industry Policy" released in September 2010 proposes that "through mergers and reorganizations, optimization of layout, total control, elimination of backwardness, technological innovation, energy conservation, and emission reduction measures, we will actively promote the adjustment of the industrial structure of the tires and realize a greater change in strength". , "Encourage tire manufacturers to increase their independent R & D capabilities, increase R & D investment, carry out technological innovations, implement brand strategies, improve product technology, and increase the company's core competitiveness."

Contrast with policy objectives, Chinese tire companies have a long way to go. However, in the end how to achieve this goal, companies are very upset. Industry analysis pointed out that China's becoming the world's largest tire market should have been a good thing, but it has brought disaster to Chinese tire companies. Due to the large-scale entry of multinational corporations, the Chinese tire companies actually face a shrinking market.

The release and implementation of the “Tire Industry Policy” should also be a good thing, but it does not change the status of the domestic tire industry. Due to the chaotic management of the industry and the use of industrial policies, many of the measures have not been effectively implemented, and companies that are busy with price competition can hardly pay attention to R&D. If the industry is still on the old road, then "from big to strong" can only stay at the level of desire.