View from the Chairman’s Seat

(Rubber Asia) The China Rubber Industry Association (CRIA) acts as an advocate for more than 800 companies operating in the fast growing Chinese market. Recently the organisation’s chairman, Ju Hongzhen, spoke about the current state of China’s rubber industry and what contribution the CRIA hopes to make towards guaranteeing its long-term future.

What is your assessment of the rubber industry’s performance during 2006?

The rubber industry registered healthy and orderly growth in 2006. Rubber production received a boost and large companies as well as large groups emerged as unmistakable winners out of the stiff market competition.
In recent years rubber consumption in China has been on the rise annually. In 2006, it touched 4.5 million tonnes. Natural rubber consumption was 2.1 million tonnes and synthetic rubber 2.4 million tonnes. As for the rubber industry in terms of tyres, in 2006 Chinese radial tyre output grew by 60 per cent, registering a 5 per cent increase over the previous year. Passenger radials and light truck radials produced by foreign manufacturers continued to lead the market, with their market share reaching 70 per cent. Chinese tyre manufacturers are also gradually expanding their market share through the launching new products.
Low profile and high-performance passenger car radials are becoming the main products of a number of companies including South China Tyre, Triangle, Shandong Linglong and Hangzhou Zhongce. The TBR sector also maintained steady growth trends. The technology for large and medium sized OTR radial tyres improved significantly, and is becoming a new growth point for Shanghai Tyre & Rubber, Triangle, Guizhou Tyre Factory and Aeolus. Total output for bias tyres fell by 3 per cent to 5 per cent during 2006, the first incidence of negative growth since the government gave the green light for the development of radials.

What factors hindered the industry’s development last year? How were they overcome?

The greatest impediment was the high cost of natural rubber and other main raw materials. The volatility of prices was a real test for the industry. As a result, the production cost of rubber goods shot up. To counter this trend, manufacturers adopted steps aimed at saving energy and bringing down the cost of production. Also, new and high-value products were developed, all of which enabled the industry to increase both domestic and export prices of products.
Another factor that hit the industry was the international trade barriers, which badly affected the export of Chinese rubber products. However, when the global anti-dumping protests pointed an accusing finger at China, the country took it in its stride. China was able to convince her detractors about the high quality and reasonable pricing of her products. Though priced lower there is no compromise when it comes to performance.

Can you comment on the country’s rubber product exports in 2006?

The value of exports accounted for over 30 per cent of total sales. About 120 million tyres were exported. Exports produced by CRIA members accounted for 42.4 per cent of the total amount. Exports from domestic tyre plants grew by 19.9 per cent and exports from foreign-owned tyre plants grew by 12.6 per cent.

What were the CRIA’s initiatives in 2006?

Thanks to the CRIA’s relentless efforts in 2006, the tax on bias tyres was reduced from 10 per cent to 3 per cent. This has helped in cutting production costs. The Association has also called on the government to ban the importation of scrap tyres, and to protect the environment from waste rubber processing.
In 2006, the CRIA took steps towards the protection of rubber product property rights, and faced the anti-dumping issues surrounding Chinese rubber products. The CRIA has set up an engineering college in association with Qingdao Mesnac. The Quingdao Rubber & Tyre Engineering College will train professionals to meet the needs of the rubber industry. A rubber materials testing centre is also planned.

How do you plan to improve the country’s rubber policies?

The first priority is to look into natural rubber import tariff concessions. In early March, the State Department Tariff Commission made a preliminary study with the CRIA to prepare negotiations on natural rubber tariff concessions. Secondly, the CRIA has framed rules for scrap rubber utilisation for the National Development and Reform Commission. This will benefit tyre production and the recycling industry. Thirdly, as per the demands of China’s Commerce Ministry, the CRIA will prepare technical standards for tyre dealers and also regulate market behaviour.