Tire industrial integration comes close in 2016

Economic indices of China’s tire industry came all the way down in 2015, particularly the tire output that dropping continuously for the first time in 30 years. Under economic slowdown, price war among low-end tires is bound to come to an end.

In 2015, the issuance of a series of rules regulating the tire industry added pressure to struggling producers.

Moreover, U.S. Department of Commerce launched anti-dumping and anti-subsidy probe to the passenger car and light truck tires made in China, which exacerbated business condition of many Chinese tire producers.

China’s tire industry is suffering both internal and external troubles, and merger and acquisition is imminent.

At the end of 2015, Shandong Wosen Rubber was incorporated by Shandong Hengfeng Rubber&Plastic due to cash flow problem. M&A in China’s tire industry is under way.

Industry insiders hold that M&A is a must for success of the world’s first class tire companies. Bridgestone and Michelin have a number of their tire plants incorporated.

M&A in China’s tire industry is just kick off with insufficient experience. Therefore, only 40% of the M&A cases are successful.

We expect that China’s tire industry will witness the emergence of a few tire giants with international competitiveness during the course of M&A.