The twists and turns of the Sino-U.S. "tyre special protection case" caused the Zhou Huapeng's mentality to suddenly become complicated again.

As the head of the international trade department of Shandong Guangrao’s tire company, any news about “tire special insurance” will stir up in his mind over the past year or so.

The same was true on December 13, 2010.

"This is a difficult time," Zhou said bluntly.

"Tire Special Protection" Recycled

"Black on the 13th" unexpectedly met with Zhou Huapeng in December.

On that day, the World Trade Organization (WTO) announced that the transitional special safeguard measures taken by the United States against tires imported from China did not violate WTO rules. Such rulings also indicate that China lost the United States-sponsored tire special protection case, but also indicated that the US's "punitive tariff" fine for the Chinese tire industry will still play a role.

With regard to such a result, the person in charge of the Ministry of Commerce’s Bureau of Law and Regulations expressed regret over this ruling and pointed out that China is deeply concerned about the possible negative impact of the panel’s ruling and will carefully study the report of the panel of experts and raise an appeal in due course to maintain The legitimate rights and interests of Chinese companies.

After the "China-US Tire Special Protection Case" occurred, despite these results, Zhou Huapeng was expecting them, but "I heard the above news, I still feel a black eye."

On September 11, 2009, the Obama administration of the United States imposed a three-year punitive high tariff on all cars and light truck tires from China on the basis of 4% of the existing tariffs, of which the tax rate was 35% in the first year. It is 30% in the second year and 25% in the third year.

Regarding the above move by the United States, public opinions even considered it as a disaster to the global economy in recovery.

Just on the fourth day after Obama signed the "tire special security case," the reporter once rushed to the Guangrao field to interview. At that time, he was panicked by the psychological aspect of the potential and magnified trade war, including Shandong Guangrao tires in the storm. The industry is full of worries about its industry direction for the next three years.

One year and three months later, such worries continued with the WTO ruling. "We are paying a price for the trade ecology under the threat of trade protectionism." Zhou Huapeng said angrily.

This discourse also led to the approval of a senior executive of Shandong Jinyu Tire. He said that the tire dispute between China and the United States has received widespread concern from tire companies. “The US’s special protection measures for Chinese tires are trade protectionism measures that do not comply with the WTO. The rule, the result of such a ruling, is bad news."

More than one bad news

In 2010, the bad news seems more than one of the above. "This is a difficult day." Zhou Huapeng said blankly.

In the eyes of Zhou Huapeng, in addition to the above-mentioned Sino-US tire special protection case, the first factor is the cost factor. In the production of tires, the cost of rubber is about 60%, and the proportion of natural rubber is also about 40%. Entering this year, the rapid rise in rubber prices has forced them to accept high cost pressures.

This view is also confirmed by the data provided by Zhuo Chuang Information. According to the data, for example, the BR9000 butadiene rubber quoted at the beginning of 2010 was only 19,400 yuan/ton, and by October, the above quotation had once reached 29,300 yuan/ton.

With soaring raw materials, tire companies in Guangrao and other places have also had to frequently increase tire prices in order to pass on rising costs. Zhuo Chuang Information Rubber Analyst Song Guangzhi estimates that almost all domestic tire companies have raised their prices by 10-20% since 2010. Even so, such price increases have not kept up with the crazy increase in rubber prices. In this context, Zhou Huapeng's round of companies naturally fell into an embarrassing situation. He said that in April, August and October 2010, the company tried to raise prices three times and only succeeded twice.

Zhou said that at present, many tire companies "export to domestic sales", "there are so many porridge, eating porridge is a lot more people. This way, the price can not be mentioned." Zhou said crisply.

Unable to shake prices, naturally only self-digestion. Song Guangzhi said that according to statistics from 43 Chinese companies, the industry’s profits rose by 112.6% year-on-year from January to March, 1.7% from January to May, 1.4% from January to June, and down from January to August. 22.7%.

Similarly, the latest statistical data provided by Cai Weimin, secretary general of the China Rubber Industry Association’s tire branch, shows that in the first three quarters of the year, China’s 43 statistically registered tire companies had 11 losses, with losses exceeding 1/4. For the entire industry, the profit in the first three quarters has dropped by 20.6%.

Shadow of production capacity for "Future Battle"

The existence of various unfavorable factors allows tire companies to have no way out and only fight for the future.

Zhou Huapeng said that just in October 2010, their company had just launched a radial tire project. "Expansion can be better, no expansion, only to die." Zhou said.

The strong impulse to expand is not the same company as Zhou Huapeng. According to the data provided by Song Guangzhi, taking Guangrao in Shandong as an example, at the end of 2009, the production capacity of radial tires in Guangrao County had reached 52.7 million; this year, of the 52 industrial projects that Guangrao County focused on, 17 were occupied by rubber tire projects. Among them, there are 13 rubber tire production projects. In the meantime, 13 rubber tire production projects have been completed and production capacity will increase by 44.8 million. "The huge increase in production capacity, and such growth will inevitably lead to increased market competitiveness." Song Guangzhi worriedly said.

With more and more companies fighting for the future, the competitive landscape of tire companies in Shandong has also experienced a "fierce battle", and the fierce battle is currently based on price war as the main competitive means. “It is not a strange thing to pick up the number of tire salesmen one day.” A manager of a tire shop at Zibo Auto Parts Factory confirmed.

This is a dilemma that has caused Zhou Huapeng to suffer. Similarly, among the 285 tire companies that were counted by the China Petroleum and Chemical Industry Association, the number of Shandong tires exceeded 50% to 147, but tire production was only 35% of the national output.

“Shandong tire companies have large production capacity, are in a surplus situation, and still face many problems, including a large number of companies, small scale, and low concentration. This is an indisputable fact.” Song Guangzhi said that in addition to the above factors, Shandong wheeled enterprises’ The product structure needs to be optimized. There are also many problems such as medium and low-grade products. This situation is obviously not Zhou Huapeng their family or even a few tire companies.

In fact, while trade frictions still exist today, most small and medium-sized tire companies continue to endure tire price increases, but they also cannot avoid the fate of “high growth, low profits, or even losses”.

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