RICHON’S expected for tire industry in China 2019


RICHON’S expected for tire industry in China 2019

    First, the tire export is difficult.


   Major tire markets such as the United States, the European Union, Brazil, Russia, and India have launched anti-dumping and countervailing sanctions against Chinese tires, making it difficult for Chinese tire exports.


    In addition, the currency of some developing countries has depreciated sharply, causing imports in these markets to be almost stagnant.


    Second, Sino-US trade frictions are repeated.


    The US tariff increase and extension changes are large, and there is still uncertainty about the anti-dumping of China's steel tires. This has caused enterprises to fail to accurately determine the business direction and increase policy risks.


    Third, corporate financing is difficult.


    The Fed’s interest rate hike has shrunk, causing global funds to continue to tighten. The problem of financing difficulties and financing for domestic enterprises has become more serious.


    Fourth, the requirements for environmental protection inspections and safety inspections are becoming stricter.


    Tire companies need to invest heavily to improve upgraded equipment and create safer and more environmentally friendly production conditions. At the same time, due to the impact of environmental protection policies, a large number of tire raw materials rose, and the production costs of enterprises continued to increase.


    Fifth, the operating costs of enterprises continue to rise sharply.


    The rising social operating costs caused by skyrocketing housing prices, the rapid rise in wage costs, and the increase in social security and tax supervision in 2019 will increase the cost of tire companies.


    Sixth, the tire industry has weak profits and the company's profitability is difficult.


    Previously, the Chinese tire industry was blindly expanding production, resulting in a serious overcapacity. So far, the price war is still prevalent in the tire industry. Most companies have low profits, and some companies are even losing money.


    RICHON believes that in 2019, in the face of such a severe market situation and business environment, the reshuffle of China's tire industry will continue, and some poorly-operated manufacturers will fall in the new year.

    As of November 2018, there are 192 existing tire manufacturing enterprises in Shandong, and the number of statistics in 2014 was 287.


    This means that in the past four years, at least 95 tire manufacturers in Shandong have been eliminated.


    At the same time, the province's triangular, exquisite, racing and other advantageous enterprises, the scale of expansion, the benefits continue to grow, the polarization phenomenon began to appear.



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