◎ Yang Honghui

I. Changes in tire enterprises participating in the ranking

In 2020, a total of 54 domestic and foreign-funded tire enterprises participated in the ranking activities. In 2019, there were 53 tire enterprises participating in the ranking, 60 in 2018, 57 in 2017, and 54 in 2016.

There were 7 enterprises newly joining the ranking this year: Shanghai Hankook Tire Sales Co., Ltd., Shandong Changfeng Tyres Co., Ltd., Shouguang Firemax Tyre Co., Ltd, WEIFANG SHUNFUCHANG RUBBER AND PLASTIC PRODUCTS CO., LTD., Shandong Mirage Tyres Co., Ltd., Fujian Haian Rubber Co., Ltd. and QINGDAO WANGYU RUBBER CO., LTD.

Six enterprises have exited from the ranking this year: Shandong Hengfeng Rubber & Plastic Co., Ltd., Xingyuan Tires Group Co., Ltd., Jiangsu Risingsun Tire Co., Ltd., Shandong Haoyu Rubber Co., Ltd., Zhaoqing Junhong Corporation Limited, and Tongli Tire Co., Ltd.

Shandong Hengfeng and Xingyuan Tires’ exited from the ranking this year is both affected by the interconnection and mutual insurance of tire enterprises in Dongying. Among them, Shandong Hengfeng ranked 6th in 2019, whose sales revenue included three factories, Changfeng, Wosen and Mirage. This year, Hengfeng was split into two enterprises, Shandong Changfeng and Mirage, to participate in the ranking and the sales revenue of Shandong Changfeng included Hengfeng and Wosen. Xingyuan Tires also had troubles in 2019 due to guarantee issues.

Shandong Haoyu has been listed as a dishonest person subjected to execution for many times due to inter-enterprise guarantees and loan disputes, its bad debts were auctioned off through pubic bidding by China Orient Asset Management Co., Ltd. Shandong Branch in August this year.

Jiangsu Risingsun Tire did not participate in the ranking this year temporarily because it was related to military products.

Seen from the changes in the Chinese Tire Enterprise Ranking in the past five years, Chinese tire enterprises are in an active period of mergers and reorganizations, especially Shandong tire enterprises, whose business conditions change frequently.

The main reasons are analyzed as follows: Firstly, Shandong tire enterprises, especially those in Dongying and other regions, are generally involved in interconnection and mutual insurance, with a domino effect in the capital chain, therefore some enterprises fall into debt crisis; secondly, the reason of usury, private enterprises borrow from private financing companies, small loan companies, etc., which has caused high operating costs for many private enterprises and increased the risk of credit default; thirdly, the main export market carries out “double anti” on Chinese tires, and the market environment is getting worse; fourthly, the domestic automobile production and sales both declined for the first time in 2018, which continued negative growth in 2019, with the declined expanded, there was great downward pressure on the market; fifthly, the increasingly stringent requirements of safety, environmental protection, energy saving, etc. have brought huge pressure to the enterprises.

II. Changes in Chinese Tire Enterprise Ranking

1. 2020 Chinese Tire Enterprise Ranking

Taking the top 25 enterprises as an example, compared with that in 2019, the ranking changes of 2020 Chinese Tire Enterprise Ranking are shown in Table 1.

Table 1: Ranking of Chinese tire enterprises in 2020 (TOP 25)

Unit: 100 million Yuan

(1) Changes

Seen from Table 1, the ranking of top 3 enterprises remained unchanged, which were still ZC Rubber, Linglong Tire and Sailun Group; Shandong Haohua and Xiamen CST have switched positions, ranking 4th and 5th. As Shandong Hengfeng, Xingyuan Tires, Tongli Tire and Risingsun Tire (ranked 6th, 7th, 15th and 17th last year) exited from this year’s ranking, therefore, except for Guizhou Tire, Shandong Wanda Boto, Jiangsu General Science Technology and Wanli Tire, the ranking of top 25 enterprises have been improved or remained flat.

Among them, the sales revenue of Linglong Tire, Haohua Tire, Double Coin Tire, Shandong Huasheng, Sichuan Haida, Tianjin Wanda, Fangxing Rubber, and Weifang Yuelong had a year-on-year (the same below) increase of more than double digits, and Qingdao Sentury also increased by nearly 10%.

(2) Reasons for changes

The reasons for these changes can be attributed to “mergers and reorganizations, overseas factory building and capacity expansion”.

Linglong Tire's sales revenue from overseas factories in 2019 increased by 1.511Billion Yuan compared with that in the previous year, with a significant increase of 39.85%; sales revenue from mainland factories increased by 3%. In addition, in recent years, Linglong Tire has frequently laid out at home and abroad, changing from the initial “3+3” strategy to the “6+6” strategy. At present, Linglong has 5 domestic production bases in Zhaoyuan, Dezhou, Liuzhou, Jingmen and Changchun; its fourth Jingmen base in China started construction in July 2018, with a planned annual production capacity of 14.46 million high-performance radial tires, and it was put into production in December, 2019 and is expected to reach production in 2023; its fifth Changchun base started construction in June 2020, with a planned annual production capacity of 14 million high-performance radial tires and 200,000 retread tires, which is expected to reach production in 2025. It has two overseas bases currently. The annual production capacity of Thailand Linglong has reached 17 million high-performance radial tires; the annual production capacity of European Serbia base is planned to be 13.62 million high-performance radial tires, which is expected to reach production in 2025. From then on, Linglong Tire will select opportunities to build new domestic and overseas production bases according to market conditions.

Continuous mergers and reorganizations of Shandong Haohua in recent years makes its ranking rise sharply. In 2017, it reorganized Huadong Rubber; in 2018, it acquired Shandong Longyue (now ZODO Tire); and its sales revenue in this year includes Huadong, ZODO and Jindun brands, therefore its ranking rose from 23rd to 12th in 2018, from 12th to 5th in 2019, and from 5th to 4th in 2020. In addition, Haohua Tire plans to invest USD 500 Million in 2020 to build a project with an annual output of 3.3 million all-steel tires and 16.7 million semi-steel tires in Sri Lanka, which is expected to put into production in 2022.
Double Coin Tire's Thailand Factory has constantly released its production capacity; in 2019, its sales revenue reached 900 Million Yuan, which increased by nearly 700 Million Yuan compared with that in 2018, with a substantial increase of 336%; the sales revenue of its domestic factory increased by 2.1%. In addition, Double Coin Tire (Xinjiang) Company invested 50 Million Yuan to build a new 10,000-ton OTR project in Urumqi, which started in June 2020, with a construction period of 1 year.

Shandong Huasheng has also made major movements frequently in recent years. It has previously acquired the creditor’s right of two enterprises, Hengyu Technology and Guofeng Rubber Plastic, and then completed the acquisition of Yongtai Group; in 2019, it signed a cooperation agreement with Zhejiang Materials Industry to jointly establish Shandong Linghang Tire Co., Ltd., whose main business is trusteeship of tire business projects, acquisition of tire assets, centralized procurement and tire sales, etc.

The sales revenue of Qingdao Sentury's overseas factories has increased year after year. In 2019, the sales revenue of its overseas factory increased by 526 Million Yuan, with an increase of 22.5%. Its ranking rose from 26th to 21st in 2018, from 21st to 16th in 2019, and then rose to 13th again in 2020. In addition, Qingdao Sentury invested 3.2 Billion Yuan to build a project with an annual output of 2 million all-steel tires and 6 million semi-steel tires in Rayong, Thailand, which started in August 2019, with the construction period as 2 years.

In addition, in 2019, Sichuan Haida’s radial tire output increased by 800,000 units compared with that in the previous year, Tianjin Wanda’s semi-steel tire output increased by 853,000 units, and Weifang Yuelong’s all-steel tire output increased by 580,000 units, and their sales revenue increased accordingly.

2. 2020 Chinese Domestic Tire Enterprise Ranking

Taking the top 25 enterprises as an example, compared with that in 2019, the ranking changes of 2020 Chinese Domestic Tire Enterprise Ranking are shown in Table 2.

Table 2: Ranking of China Domestic Tire Enterprise in 2020

Unit: 100 Million Yuan

Table 2 is based on the tire sales revenue of the factories of all tire enterprises (including foreign-funded enterprises) setting up factories in mainland China in 2019, therefore, the ranking can better reflect the conditions of the tire market in mainland China in 2019.

It can be seen from Table 2 that among the top 25 tire enterprises, the sales revenue of 13 enterprises has increased while that of 9 enterprises has fallen, and 3 enterprises have no comparative data.

III. Conclusion

In 2019, affected by factors such as the Sino-US trade war, “double anti” on tire export, decline in domestic automobile industry and economic structural adjustment, China's tire export, supporting and replacement markets encountered resistance at the same time, and the profits and taxes of 50 enterprises counted fell by 5.43%, but the profits and taxes of some advantageous enterprises have increased sharply, indicating that the industry continues the trend that the strong will be always strong.

For this purpose, it indicates that the development trend of China's tire industry is as follows:

Firstly, industry integration will accelerate, the pace of enterprise mergers and reorganizations and elimination of backward production capacity will quicken, the gap between the brands will expand, and resources will flow into advantageous enterprises;

Secondly, tire enterprises will continue to quicken their pace of going global;

Thirdly, the enterprises must innovate in all aspects such as thinking, management, technology, products, marketing and channels to enhance core competitiveness and achieve high-quality development;

Fourthly, safety, environmental protection and energy saving are the foundation for the survival of an enterprise as well as an important driving force for enterprise innovation;

Fifthly, intelligentization and industrial Internet will be more promoted in the tire industry.