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Tire firms searching for fresh pastures

By Ma Zhenhuan and Li Xinzhu (China Daily)
Updated: 2009-11-12 08:55

Small and medium-sized tiremakers in China are now shifting their marketing focus to other countries to alleviate the losses due to the punitive tariffs imposed by the US on Chinese-made tires in September.

"From September, our tire exports to the US shrank nearly 40 percent due to the punitive tariffs," Jiang Wenchang, sales manager of Beijing-based China National Tire & Rubber Corp, told China Daily at the 3rd Asian Essen Tire Show, which opened yesterday in Shanghai.

"We are altering our marketing priority to European countries now, as they have a similar product standard as that of the US," he said.

Jiang said he expects his company to make $10 million from tire exports to the European markets by the end of this year.

Liu, a manager from Qingdao Fulin Tires, said his company's exports to the US were frozen in September, compared with exports of $27 million from January to August.

Liu's words are echoed by Li, a salesperson from the smaller Guangzhou Xindi Tire Co, who said his company's US business has come to a halt and it is now shifting business to central and southern American markets.

"We are adopting a 'wait-and-see' strategy and regard (halting US exports) as a temporary market reaction. However, we won't abandon the US market. It's something we can never give up (due to its massive market capacity)," she said.

A survey of 44 tire makers from the tire department of China Rubber Industry Association (CRIA) shows that due to sluggish global demand and increasing protective and punitive measures, between January and August, tire exports accounted for just 40 percent of the total output, the lowest in the past several years, with export volumes falling 7.1 percent year-on-year.

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"In the long run, Chinese tiremakers should rejig their low-price export strategy and scout for more international markets," said Cai Weiming, secretary-general of the Tire department of CRIA.

"Chinese tires exported to the US have long been categorized as low-priced with little added-value. Now it is time for tire makers to adjust their product line to produce high-end products with more technology inputs," he said.

Liu Hongpeng, deputy manger of Shandong Taishan Tire Co, said his company is working on a new production line to produce high-end tires.

"In this way, we will be immune to the punitive measures from the US, which primarily target low-cost products."

The US in September this year imposed a 35-percent special tariff on tire imports from China, on concerns that the products were affecting local tire markets.