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The cold weather in the auto market is spreading to related parts and components in the automotive industry chain, and the Chinese tire industry is the first to suffer. In addition to tight funding, poor management, and the United States' "double reaction," and more importantly, the low-end competition and overcapacity over the years have long been potential "killers" for domestic tires.
Shandong is the most typical example. In the field of tire production, Shandong's production capacity has ranked first in the country for many years, with as many as hundreds of production companies and production capacity exceeding 100 million; however, its capacity utilization rate is not high. In 2012, the capacity utilization rate of Shandong tire industry was only 64.5%.
Zhang Hongmin, chairman of the Shandong Rubber Industry Association, frankly stated that the tire industry has become one of the seven industries in Shandong that resolve excess capacity.
Not only that, the tire industry has a huge overcapacity across the country.
According to the statistics of the China-Korea Coordination Survey, the average operating rate of the domestic tire industry fell from about 80% in 2012 to less than 70% in 2015.
Deng Yaxi, president of the China Rubber Industry Association, said: "The overcapacity in the domestic tire industry is essentially a structural excess, that is, there is a serious surplus of backward production capacity."
According to statistics, 65% of the radial tires and light truck radial tires of domestic cars are low-end products. These products have low technical performance, low added value, serious homogeneity, and fierce market competition.
A tire industry official said that the domestic market environment is very bad.
On the one hand, product homogeneity is serious, and low-end production capacity is excessive, resulting in a “price war†that is even more fierce than in foreign countries. Businesses are not profitable. On the other hand, domestic customers fail to make timely payments or even default, often resulting in cash for enterprises. The flow breaks and affects normal operations.
Two factors make more and more Chinese tire companies turn their attention to exports.
In fact, domestic tire companies have already regarded exports as an important means of resolving huge production capacity. However, the export of a large number of low-priced tires has also caused the world to panic.
"Chinese tire companies should focus more on the domestic market and continue to improve the technology and brands to take the high-end route. Do not lose the overseas market and lose the domestic market, both can not grasp." The industry figures said.