CITExpo Can Celebrate Successful Breakthrough
When the China International Tire Expo (CITExpo) opened its gates for the second time in 2004, it was already considered to be the potential Chinese tyre show of the future. It appears these estimations were well founded now that the third show in December has reached a size, which makes it the biggest show of its kind in East and South-East Asia. CITExpo even had to move into a different venue in order to accommodate its 150 exhibitors. Overall more than 5,800 visitors have registered with the organisers; two thirds came from abroad and the growing number of foreign exhibitors emphasises the increasingly open Chinese tyre market.
To the organisers of the China International Tire Expo the positive developments of the show have been much more than just good luck. “Most industry experts know our exhibition by now,” says Wilko Fong. The managing director of Reliable International Exhibition Services Co., Ltd., the organising company from Beijing, firmly believes that many of the current exhibitors have already taken part in earlier shows as visitors in order to find out how the land lies. Only now this wait-and-see-approach has actually paid off for the Shanghai CITExpo, with the latest event taking place in the Everbright Convention & Exhibition Center in downtown Shanghai.
The total of 80 exhibitors that was officially given to the media in the aftermath of the second CITExpo in September 2004 was regarded as an over-generous estimate, but this years’ total of 150 exhibitors was accurate and tallied with the number of stands at the show. The December show covered about 7,000 square metres. Chief organiser Wilko Fong believes that this excellent result for a comparatively new show can be attributed mainly to the extensive marketing efforts that were made worldwide in the months leading up to December. For example Reliable had entered into media partnerships with many internationally renowned tyre magazines such as Tyres & Accessories, Tire Review (USA) and Rubber Asia (India).
The third CITExpo also saw some strong developments on the visitors’ side. When in 2004 there were about 5,000 special visitors attending the show in the former venue – which even then seemed to be too crowded – last December about 5,800 visitors attended the exhibition, an increase of some 16 per cent.
Of this number some 2,000 visitors came from abroad; Reliable have counted 86 countries of origin on the registration lists. This also shows that the CITExpo is steadily developing into the biggest show of its kind in East and South-East Asia, says Wilko Fong. According to the organisers, a glance at this year’s visitor registration list shows a healthy number of attendees from many different tyre majors around the globe. This is said to be a good sign that they might even sign up as exhibitors for the coming show in September. That will be the forth CITExpo in Shanghai and the organisers hope to firmly establish the show as the leading tyre exhibition in China, where there are several competing events. Also the first bookings for the 2006 show were quite promising, says Mr Fong in an interview with T&A. Two thirds of all the exhibiting companies from 2005 as well as 15 new companies have already booked more than 120 per cent of last year’s floor space. The organisers expect that the upcoming show will again double the number of exhibitors as well as the floor space.
However, the third CITExpo was more a trading than an industry show. The profile of all exhibitors, among which international and some Chinese tyre majors were again missing, supported this impression. Also the general sentiment expressed by some visitors was that it was sometimes more like being at an oriental bazaar than a tyre exhibition: CITExpo is definitely a meeting place for traders.
However, some of the bigger Chinese tyre manufacturers tried to benefit from participation at the recent CITExpo in Shanghai by presenting their products to the international audience. Among these domestic tyre majors was for example Shandong Chengshan Tire Co., Ltd. who recently founded a joint venture company with Cooper Tire & Rubber from the USA. Shandong Linglong Rubber Co., Ltd. also participated at the 2005 show.
Linglong Rubber, based in the flourishing coastal province of Shandong, has an annual production capacity of about 9 million passenger car and truck tyres and thus is one of the biggest Chinese tyre manufacturers. Internationally Linglong attracts attention because two thirds of its production is sold in export markets. Apart from the main brand Linglong, the company’s 8,000 workers also produce two other tyre brands called Shanling and Leao. But outside China it is mainly Linglong brand tyres that are sold. The company was put into the position of selling tyres on the European replacement markets since it started to operate a second tyre factory next to the first one. The new factory only produces radial tyres, explains export manager Merry Wang.
Currently, the privately owned company (owned by Wang Xicheng) manufactures about 2 million truck and about 5 million passenger car tyres every year; furthermore, Linglong still produces some 2 million diagonal tyres (truck, light truck, OTR). From this annual production, about 4 million PC tyres (80 per cent), 500,000 truck tyres (25 per cent) and 1 million diagonal tyres (50 per cent) are sold on export markets, says Merry Wang in an interview with Tyres & Accessories. “Our exports will grow when more sizes become available that suit these markets,” she continues. This is where Linglong meets the general market trend in China because domestic competitors also target important export markets. For example, Linglong has recently introduced new winter patterns and in the near future the manufacturer is going to launch high performance tyres, Mrs Wang reveals.
In order to meet the expected growing demand from the domestic as well as export markets, Linglong is currently building its third tyre factory on the same site in Shandong province. After the commissioning of the two production lines, an annual output of about 2 million radial truck tyres is expected. Later on a third production line will be added and, in 2008, passenger car tyres will be manufactured in the new facility although the export manager did not want to see the details of this investment published yet. All in all, Linglong says that it is going to invest £220 million in its third tyre factory, according to Merry Wang. If industry sources are accurate, Shandong Linglong has an annual turnover of £225 million.
Even in the future such investments will be made under Linglong’s own leadership, says the export manager. There have been some negotiations in the past with potential Western co-operation partners such as Pirelli or Continental. But all talks failed because “they wanted to cooperate but have the majority.” Linglong does not want to give up control over its three tyre factories, Merry Wang makes plain.
If Linglong has its way there will not be any take-over through a Western manufacturer. However, the Chinese manufacturer is currently holding co-operation talks with two other potential partners who would allow Linglong to hold the majority stake.
However: “With regards to technical agreements everything can be discussed.”
Attending the CITExpo for the first time as an exhibitor was Giti Tire (China) Investment Comp. Ltd. which belongs to the international GT group, as does the Indonesian manufacturer Gajah Tunggal; the group is owned by the Chinese businessman Sjamsul Nursalim. Giti Tire does not only supply renowned car manufacturers such as GM, Jeep, Mazda, Dongfeng and FAW with OE tyres, but also operates its own retail chain with currently up to 45 outlets, not to speak of all the other distribution channels.
Through these different channels Giti Tire is said to supply major parts of the Chinese replacement market (in 2003 the company had a domestic passenger car tyre market share of 15 per cent). An exclusive interview with Giti’s executive director Huai Chin Lei also address the issue of the creation of a proprietary retail chain.
The Giti Tire’s stand featured mainly the latest passenger car products; products that are also sold through various wholesalers on the European replacement markets (Stapleton’s in the UK, Reifen Gundlach in Germany, etc.).
Among the group of tyre manufacturers that were exhibiting at the Shanghai show in December also was Chaoyang Long March Tyre Co., Ltd. (from Liaoning province in China’s North-Eastern corner). The truck tyre specialist Long March (LM) currently has an annual production capacity of 800,000 pieces.
Long March was among the first Chinese manufacturers to produce all-steel radial truck tyres and, at that time, the company benefited from technical support of Dunlop UK. Currently, the whole facility’ together with the equipment’ is said to be up-to-date and was imported from European and Japanese manufacturers. Long March exports its truck tyres to more than 40 countries, mostly in North and South America.
Apart from the major brand Long March, the company also produces the truck tyre brand Roadlux that mostly has the same tread patterns as Long March. Roadlux is distributed by the Singaporean wholesaler Omni United and is also sold in Europe.
The Tianjin Normandy Rubber Co., Ltd. brought most of its product portfolio, consisting of truck, ATV, cart and passenger car tyres of different brands to the China International Tire Expo. However, the company is mainly known for its Kingstire brand , which consists mainly of bias-ply tyres.
Normandy Rubber operates three tyre factories, of which two are located in the Chinese province of Tianjin East of Beijing; the third based in Taiwan where the company was founded in 1988. Although Normandy Rubber still is regarded as a bias-ply manufacturer, the company’s 2,200 workers now produce a growing number of radial tyres. According to the manufacturer, about 250 containers are shipped around the world every month.
A company that also belongs to the group of mid-sized but aspiring Chinese tyre manufacturers is the Tire Group of Factories Ltd., Inc. which is based in the coastal province of Shandong, where it runs three factories. Until recently the company only built bias-ply tyres that were sold under the brand name Riverstone. More recently, the Tire Group has also manufactured radial tyres for Western markets, said sales representative Lily Sun.
These tyres are currently produced in only a small number of sizes such as 175/50 R13; more sizes are to be launched soon, the sales representative told T&A at the show. The new radial passenger car tyres are also sold under the Riverstone brand name and are said to give a push to the company’s sales figures. The Tire Group also produces and sells the Durun tyre brand.
Qingdao Odyking Tyre Co., Ltd. has not yet really appeared on international replacement tyre markets with radial tyres. Nevertheless the company has some radial tyres with Western tread patterns in its product portfolio, as was shown in Shanghai in December. Odyking has just started to sell these “Super King” brand tyres in Europe and natural export markets are Africa, South and North America.
Among the rather promising group of Chinese tyre manufacturers there also is Qingdao Etyre International Trade Co., Ltd. The company from Shandong province was founded in 2004. Etyre does not operate its own production facilities but has its tyre brand Techking produced for it in the central Chinese Sichuan province. Etyre even holds a share in the factory but does not want the name of the company published.Etyre was founded by Tech Wang who served Triangle Tire (annual capacity 6.5 million) as an engineer for about 15 years.
The three Techking tread pattern have been available since last summer, Mr Wang told T&A during an interview. Two of these patterns are directed at markets in the Middle East. The third tread pattern which is called ET757 (currently available in three sizes) was first of all “made for the American market,” Tech Wang explains.
All Etyre tyres are only sold abroad; distribution on the domestic market has not yet started, according to Mr Wang. “In China there are too many tyre brands,” he comments and points out the present situation of over-capacities in Chinese passenger car tyre production facilities. These over-capacities cause falling prices on the domestic market. “We don’t want to be the cheap supplier,” the engineer says, voicing what would be the sensible approach to the domestic tyre market.
Qingdao Etyre also distributes its own Techking truck tyres and during this year a new OTR tyre line will be launched.
Because it is difficult for the young company to promote a new tyre brand, Tech Wang is currently looking for potential partners. Such a partner could benefit from Etyre’s good contacts with other Chinese tyre manufacturers in order to have private brands produced. Furthermore, such a partner could help in distributing the Techking brand in its own markets. At the moment Etyre does not sell its tyres on the European market but obviously Mr Wang is also aiming at this mature and lucrative market. The owner of the company expects its first orders from Europe soon. In order to help with finding the right partner in Europe Etyre is going to exhibit at this year’s Reifen show in Essen, Germany.
Among the most experienced Chinese market players obviously is the Federal Corporation. The renowned Taiwanese manufacturer has operated a tyre factory in the People’s Republic of China since 1997. Back then Federal bought the Hero Tire factory in Nanchang (Jingxi province) and now runs it as Federal Tire Jiangxi.
That the company, with its two equal brands Federal and Hero, is widely regarded as a local hero was apparent from the very first day of the CITExpo: No other new tyre manufacturer exhibiting at the China International Tire Expo had to deal with such a strong run on catalogues, brochures and give-aways as did the Federal Corp.
However, Federal also had quite a lot of new products on display which can be attributed to a domestic benchmark character. For example Federal’s new UHP tyre with integrated motor sports technology for the “most demanding cars and drivers”, the Hero Milanza HZ1.
The new Milanza is for road use, it is only produced in the Jingxi province and is available in 26 sizes with aspect ratios between 40 and 55 and for wheel rims between 14 and 17 inches. The applications of the Milanza HZ1 are like those of the Federal SS-595, although this tyre is clearly directed at the international replacement markets. The new Hero flagship tyre is attractive, with its aggressive, directional and V-shaped tread design as well as its rim protector on the sidewall. Although the Milanza HZ1 appears to be more aggressive than the SS-595, at the same time it generates less noise while offering better performance criteria, says Momo Tseng from Federal.
At the moment the Milanza HZ1 is only distributed in China and in Taiwan, according to Mrs Tseng who works for FederEx, a subsidiary of Federal that imports tyres to Taiwan. In Europe, the new Hero tyre could be launched this year. In the People’s Republic of China the Hero brand still is more important than the Federal brand. Consequently both tyre brands are generally regarded as equal, according to Momo Tseng.
Also the Federal Corp. exhibited its new Federal Formoza FD2 in Shanghai which was officially launched during the SEMA show last November. The FD2 is the successor of the Formoza FD1 and is said to be sold from the end of this year. It will be manufactured in Taiwan. Right now it has not been fixed what dimensions and sizes will be available.
Also represented in China with its own production facilities for several years now is Kyoto Japan Tire Corp. Ltd.
The company used to have a factory in Japan, where it was founded, but changed its production site in 1999. However, the company started to sell its tyres on what it now calls its “domestic market” during 2004. The products are made in two plants in Shanghai and Qingdao. Since Kyoto Japan has entered the Chinese market, the increase of sales figures in this market has the highest priority, says Dagmar Ochmann-Klimkowski, who is responsible for the company’s European office in Germany.
Of the annual production of about 4 million tyres that Kyoto Japan produces in its two China factories (2.5 million are PC tyres), 70 per cent are sold on export markets. The remaining 1.2 million tyres are distributed in China.
Roughly two thirds of these tyres sold in Kyoto’s domestic market are passenger car tyres. They are sold under a product line called Maxima. Internationally only every second tyre sold is a passenger car tyre; the other Kyoto brand tyres exported are mainly truck tyres.
In order to encourage domestic demand in China – Mrs Ochmann-Klimkowski: “we have all the capacity we need” – Kyoto Japan is currently running an intensive marketing campaign. For instance the company had booked advertising on busses and taxis in China’s boom-town Shanghai recently. Early this year TV commercials were broadcast. According to the manufacturer there have already been first signs of success due to these campaigns, says Pervez Aslam Khan who works as export manager in Kyoto Japan’s international marketing office in Beijing. The company also has an office in Shanghai.
Among the growing group of trading companies that have close links to Chinese tyre manufacturers there is also the Qingdao Antyre Trade Co., Ltd. For example the company, which is based in Shandong province, successfully sells its three tyre brands Antyre, Clear and Fullrun in Europe.
Antyre does not manufacture these tyres but operates on a contract manufacturing basis and just owns these brands as private brands. Furthermore, according to vice general manager Liu Zijin, Antyre thus operates as an agent for about 100 (alien) tyre brands from more than 50 Chinese tyre factories.
Antyre sold 1.5 million tyres in 2004 and the company expects to sell about 4 million tyres this year. In order to produce the three tyre brands (the tread patterns are generally alike) Qingdao Antyre is co-operating with two Chinese tyre manufacturers. But because the company does not only want to supply export markets like it did until last year, in 2006 Antyre is tying up a new contract manufacturing deal with a third manufacturer that offers additional capacities for the production of Antyre, Clear and Fullrun brand tyres. From April, even a 24 inch SUV tyre will be available, the vice general manager promises.
Recently, distribution of the Antyre brand began in the major markets of Europe through the Dutch wholesaler Tyre Trading International. In the UK it is Treadsetters that has the rights on the Antyre brand. Clear is sold in the whole of Europe by Dutch wholesaler Van Den Ban and Fullrun by Intersprint.
Shanghai Durotyre International Trading Co., Ltd. is another international trading company with excellent contacts with the Chinese new tyre industry.
Since the late 1990s the company has distributed Chinese tyre brands and private brands such as Chengshan, Austone, Longmarch, Wanli, West Lake, Jintong, Double Happiness, Linglong, Feichi, Durotyre (private brands) and many others. Just recently Durotyre has launched yet another private brand called Tian Fu, according to operation director Yaya Ni.
This new passenger car and truck tyre brand was especially designed to suit European demands, Yaya Ni adds. The trading company, which is based in Shanghai, sells about 1 million tyres every year, of which a good deal is sold abroad. This includes skid steer and other industrial tyres.
Among the group of smaller Chinese tyre wholesalers there also is Qingdao Banghao International Trade Co., Ltd. The company is based in the coastal town Qingdao (Shandong province) and identifies its business rather as a wholesaler for raw materials that are used in the tyre production, says Wei Lei. “On the side,” points out the manager, “our company exports all kinds of tyres and tubes, including bias and radial tyres.” For instance Banghao International distributes radial tyres between 13 and 15 inches; available brands are Jintong or Durun, among others.
Also Best Choice International Trade Co., Ltd. can be found in the same group of small wholesaling companies. Apart from a rather diverse mixture of different Chinese tyre brands, Best Choice is going to launch a new proprietary brand called “Rubberman”, explains export manager Tim Yan.
In order to produce this high performance brand the wholesaler has already concluded an agreement with the potential contract manufacturer in China. However, Best Choice is still looking for a potential and potent European or American partner that would share some of the early investments for moulds, etc. This partner, says Tim Yan, should have an adequate distribution network at hand in order to promote the new tyre brand on its exclusive to-be markets. Annually Best Choice has a turnover of about US$40 million.
Another among the same group of professional do-it-all companies is A.H.A. International Co., Ltd. However, this company is playing in a completely different league, having an annual turnover of some US$200 million. A.H.A. belongs to the Anhui Chemicals Import & Export Co., Ltd. and distributes, together with tyres and accessories, many other products from the chemical and raw material industries. Even toys are listed in the mother company’s portfolio. Regardless of the impressive figures the company from the city of Hefei in Anhui province is producing, A.H.A. mainly trades with bias-ply commercial and agricultural tyres. Only some PCR tyres are distributed by the wholesaler.