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Two tire giants in Guangrao to merge

Xingyuan Group and Shengtai Group, two large tire producers in Guangrao, Shandong province, is merging. 

News being confirmed

Some scaled tire producers in Guangrao stopped production for months due to capital chain issue. The all-steel tire program of Shengtai Group hadn’t resume production since this year’s Spring Festival.

Shengtai Group said in a written statement for distributors that the merge with Xingyuan Group is initiated by local government, in a bid to activate the assets and re-allocate resources.

Local government will coordinate banks and other institutions to offer financial and policy support to the incorporation, re-start all-steel tire production of Shengtai Group by pouring in industrial fund.

Shengtai Group promised to be independent legal entity after the merger, and to protect existing consumers from impacts and losses.

A tire distributor of Shengtai Group has confirmed the news.

Significant impacts

Both Shengtai Group and Xingyuan Group locate in the Xishui Industrial Zone of Guangrao, with frequent financial dealings.

Market hearsay went that when Shengtai Group had financial trouble, Xingyuan Group was also affected.

The annual capacity of Shengtai Group is 3 million sets of all-steel tires, and that of Xingyuan Group is 5.8 million sets.

Once a producer of such size closes down, the impact on local tire industry will be significant. Therefore, local government led the merger.

Shengtai Group believes the merger will enhance the enterprise’s resilience and help it realize healthy, sustainable development. After the merger, the product structure will be improved and the supply will be on time.

However, an industry insider commented that whether it is a rebirth of Shengtai Group, or the omen of its bankruptcy is unknown.