Making the Right Impression
All ten of the world’s top ten tyre manufacturers were present in China in some shape or form by 2005, and each of these global giants has its own big plans for this market. Michelin intends to increase its car and light commercial tyre market share to 4 per cent of its worldwide sales by 2010 and to double this share again within another decade, and Bridgestone’s mid-term target in China is to grab a 20 per cent market share in 2008.
So the obvious question for local tyre manufacturers in China is what place do they have in this huge and growing market? The OE market is dominated by the international brands that have a long history of cooperation with global vehicle manufacturers, making it a market that local tyremakers have difficulty penetrating. This leaves the aftermarket as the main avenue for pursuing sales, and this sector poses its own set of problems for Chinese manufacturers.
Statistics published in China’s Economic Daily indicate that while only 18.5 per cent of consumers care about the brand of tyre a new vehicle comes fitted with from the showroom, but this figure rockets to 88.6 per cent for replacement tyres. When it comes to replacing worn or damaged tyres the strong pull of brand recognition is sufficient to influence the buying habits of Chinese motorists, and in the brand recognition stakes the long established and cleverly marketed international brands win hands down. Therefore brand building, in conjunction with greater industry regulation, appears to be the key factor in determining the future success of China’s indigenous tyre industry.
The export sales of numerous Chinese tyremakers are nothing to be ashamed of. Take South China Tire & Rubber as an example; export sales volume increased by more than 70 per cent in the first half of the year, states the Economic Daily, and the company’s export sales have maintained more than 20 per cent growth for nine successive years. But in their domestic market the improvement of product quality has taken priority over the improvement of brand image, and therefore many a company’s overseas performance is not reflected in its brand influence at home. The advantage Chinese made tyres enjoy overseas – their low price – does not hold as much weight with status conscious Chinese consumers.
There is no short cut to fostering strong and positive brand recognition, however some manufacturers, along with groups such as the China Rubber Industry Association, are taking steps to raise the profile and image of local brands by a number of means, including the sponsorship and promotion of motorsport in China. If and when Chinese manufacturers manage to convince their own consumers that their tyres are good, as opposed to just good value, then they will enjoy the same success at home as they currently do in other markets.