China’s tire producers need to change, foreign expert

On the way of international development, there are many aspects for China’s tire producers to change, said David Shaw, Chief Executive of Tire Industry Research during the 8th China (Guangrao) International Rubber Tire & Auto Accessory Exhibition.

He expressed his opinion on China’s tire industry as a westerner.

（David Shaw，Chief Executive of Tire Industry Research)

Existing models to follow

Although many of China’s leading tire companies possess advanced technologies, their market shares and product prices in the international market have been small due to low brand visibility and acceptance.

According to Shaw, the average price of Chinese tires in the international market is only around 40% of that of the world’s leading brands, such as Michelin, and there are plenty rooms for them to adjust up the prices.

He said there are models for the Chinese producers to follow.

At their early ages of development, Japanese and Korean tire producers had similar experiences as their Chinese peers.

25 years ago, the prices of Korean tires were relatively low in the international market, but those of some products are about 80% - 90% of similar products of Michelin today.

While ensuring the quality, Korean tire producers did well in marketing and they lifted prices year by year, said Shaw.

Among Chinese tire producers, passenger car tire producers, including Sailun Jinyu Group, Sentury, and Giti, as well as truck and bus tire producers, including Triangle Group and Hangzhou Zhongce Rubber, have adopted similar strategies in oversea markets.

Shaw also said that as there are more means of advertising, such as the Internet and social media, it will take shorter time for Chinese tire producers to raise their product prices in the international market.

Chinese pronunciation hampers overseas promotion

Some renowned Chinese tire brands haven’t adapted to overseas markets yet.

For instance, the name “Chao Yang” is very good in Chinese, meaning the rise of the sun. However, the pronunciation of the brand is weird for overseas consumers.

That’s why the brand is not famous in the international market with low market share, said Shaw.

In contrast, Linglong Tire and Sentury  have rolled out brands special for overseas markets.

Linglong purchased renowned U.S. brand ATLAS, and Sentury’s new brand in the U.S. gave up the name.

Impressive “Chinese-style relationship”

Over the past five years, Shaw became increasingly interested in China’s tire industry and he came to China four to five times each year.

He said most of Chinese tire producers adopted the “Chinese-way” of management and neglected market forces.

He was worried when he knew these tire producers had plans to build overseas plants.

He said there are great differences between China and the West in culture, political system and their way of dealing with personal relationship. Some Chinese tire producers may confront difficulties in adapting to overseas business environment.

He disclosed that Wanli Tire and Prinx Chengshan are the few who have flexible management system and strong market awareness.

Over the past three years, Wanli Tire reformed its way of management to adapt to present market environment and made great improvement in quality, brand visibility and distribution mode.

Shaw said because of the existence of “Chinese-style relationship”, many tire producers who know little about the market won’t go bankruptcy, but there are a lot for them to change.

He added that current, I can’t see such changes in most tire producers in Shandong.