Linglong Sets Itself Ambitious Goals
For a company like Shandong Linglong Rubber Co., Ltd. presence at the CITExpo is obligatory. In the past other major Chinese manufacturers like Giti Tire or Chengshan used the CITExpo for their purposes. This year Linglong was by far the biggest manufacturer exhibiting at the Shanghai tyre show with all the other tyre majors missing. For export manager Merry Wang this doens’t mean that Linglong has to act like its competitors. On the contrary: “We want to build a brand,” she says with self-confidence.
Mrs Wang is equally candid about the fact that there has been something of backlog in this respect because Linglong wants to play in the premier league of international tyre manufacturers. In order to achieve this the company which is based in the city of Zhaoyuan (Shandong province) will most likely invest an enormous sum. We don’t know the about the amount that Linglong is going to invest. But the announcement during the CITExpo that Linglong is going to triple its annual PC tyre output with the construction of a new factory. This factory will have an eventual production capacity of 16 million pieces and will be in operation from the end of 2008, says Merry Wang. Construction works will start this year.
In the course of next year Linglong is going to produce about 8 million radial PC tyres in total. In addition the company will produce 2.6 to 3 million truck and bus radial tyres. With the new production capacities in place in 2008, the number of produced PC tyres will reach an annual level of 24 million units promoting Linglong into the small group of PC tyre manufacturers in China that do “20 million-plus” tyres. This tripled output will also serve the Chinese market. At the moment, Linglong sells about 97 per cent of its PC tyres on foreign markets, also in Europe. This ratio will definitely change in near future with the new 16 million units factory ready and running.
Apart from export markets which are going to be further strengthened, Shandong Linglong will particularly look after customers in its domestic Chinese tyre market. Right now, says Merry Wang, the company isn’t represented as well as it should be with passenger cars at home. So Linglong is not only looking to develop export business but also the growing domestic OE business. Right now Linglong sells even less tyres to OE customers than it does to the domestic replacement market. This is not because Linglong wouldn’t want to supply tyres to car manufacturers in China. The problem is Linglong is simply lacking enough capacity at the moment.
In an interview with Tyres & Accessories, Merry Wang acknowledges China has an over-production problem specific to the PC tyre segment. Not even double-digit growth rates on the Chinese automobile market are strong enough to help absorb the over-production internally. However, Linglong’s export manager is confident about the quality of its products for sale in China and abroad.
Product and production quality has been certified now at different times, according to different standards and by different institutions – all this will most likely help the manufacturer to place a new PC tyre brand on the international tyre markets. This tyre brand will probably be launched at the time when the new tyre factory starts its operations in about two years time. Mrs Wang didn’t want to see the “English sounding name” of this brand in print. But this statement alone shows in what direction Linglong will push forward with such a PC tyre brand. It is probably too early to draw conclusion as to which export markets the company will aim the tyre brand at first, but the export manager confirms that Linglong will continue producing tyres under its traditional tyre brand.
It seems that Shandong Linglong’s product portfolio doesn’t leave much room for extension. The manufacturer for example has 38 radial truck tyre patterns listed in its catalogue most of which are available in numerous specifications and dimensions. At the same time Linglong can offer about 23 different PC tyre patterns including, for example, the “Linglong L688” which is available in 265/35 ZR18 W. The PC tyre range goes from 13 to 24-inches in diameter (255/30 R24) and also offers three winter tread patters. It is remarkable that all passenger car winter tyres are H-rated.
Like many other tyre manufacturers also Linglong currently works on the enlargement of its OTR tyre range because this is where easy money is earned at the moment. The company for example has recently invested about RMB200 million (£13 million) into the development of a radial OTR tyre which is produced since August. According to the plan, the manufacturer will have about 10 different sizes of radial OTR tyres available – including a 49 inch tyre. Right now Linglong mainly produces bias OTR tyres in its facilities in Shandong province and sells these tyres in the whole world. All in all Linglong produces about 500 OTR tyres every day ranging up to a 40.00-57E4 tyre for mining applications. Apart from radial PC, truck and OTR tyres Linglong also produces agricultural tyres as well as bias truck tyres.
It has to be seen how this privately owned company will develop over the coming years on export as well as on its domestic markets. One thing is for sure already: The self-confidence with which Shandong Linglong presents itself and its products to the Western public barely allows room for doubts about their successful. It seems just a matter of time and not of capability that Linglong will be heading developments on the Chinese tyre market. There have been others who achieved similar success from much weaker positions.