China’s Tyre-makers Facing Tougher Competition – From Majors
China's tyre-makers are facing tougher – and growing – competition from major industry names, says Tire Review, as companies like Groupe Michelin, Bridgestone Corp and others are boosting their investment in China. According to the People’s Daily, “Booming domestic market made foreign companies more confident in their expansion in China, and will lead to more fierce competition,” said a manager from an unnamed Chinese tyre-maker located in Shandong province.
Michelin recently announced a $1 billion investment to build a tyre plant in Shenyang in southeast China; that facility is slated to open in 2012. Continental AG started construction of a new plant in China last September with investment of 600 million euros and annual capacity of 18 million tyres, including a new research and development facility in Shanghai. Bridgestone is expanding its factories in China, and Yokohama Rubber Corp said it was expanding its Hangzhou factory to achieve annual output of 5 million tyres. Toyo Tire & Rubber Co. is investing $9.8 million in Jiangsu to build a plant.
The China Association of Automobile Manufacturers has reported that China’s tyre industry faced overcapacity of around 10 to 15 per cent. “Compared with foreign-funded tyre-makers, products of domestic companies mainly go to the low-end market, where tough competition continues,” said the manager. “In the coming couple of years, China’s demand for autos will remain as high as 15 to 20 per cent. With the growing auto industry, alternative tyre market will also expand,” said Chen Aihua, an analyst with Guoxin Securities.