Chinese Pioneer Still Going Strong

Double Coin tyres are produced by Shanghai Tyre & Rubber Co. Ltd., the oldest tyre manufacturer in China – the company was established in Shanghai in the early 1930s as a manufacturer of rubber products and tyres. In its current form the company was established in 1992 when two tyre factories based in Shanghai were merged (Shanghai Ta Chung Hua Rubber Factory and Shanghai Tsen Tai Rubber Factory). This 75 per cent state-owned company, located on the outskirts of Shanghai, mainly manufactures all-steel radial truck tyres, bias-ply truck tyres, radial as well as diagonal light truck tyres and agricultural tyres.

According to the manufacturer approximately 350 different tyre specifications are available. Products are marketed in 80 different countries and are DOT- and E-marked for export markets; they also carry a CCC mark (China Compulsory Certification) for the local market. The two brands the tyre manufacturer is primarily known for are Double Coin and Warrior. These brands are well received on both European and Chinese tyre markets.

Today, Shanghai Tyre & Rubber operates four tyre factories, three of which are in the Shanghai area; another new greenfield factory commenced operation in Rugao (Jiangsu province) in 2005. In this factory alone the company produces about 1 million radial truck tyres. Within the course of this year Shanghai Tyre & Rubber will increase production capacity up to 3 million truck and bus (TBR) units, and according to chairman Xian Fan this factory will eventually become the biggest truck tyre factory in the world. Furthermore, about 50,000 radial OTR tyres are produced in Rugao for both the Chinese and export markets. For the latter, Shanghai Tyre & Rubber operates its own distribution subsidiary (China Manufacturers Alliance (CMA) LLC) in the United States, its most important export market where about 20 per cent of the company’s turnover is generated. In total, about 30 per cent of the company’s turnover stems from export markets.

Shanghai Tyre & Rubber produced about 3.5 million TBR tyres last year in its four production facilities, about 1.6 million bias-ply truck tyres plus 50,000 radial OTR tyres. According to the company’s plans, next year this will be 3.8 million, 1.6 million and 100,000 respectively.

This June the company released details of its plans to establish a joint venture factory in the direct-controlled municipality city of Chongqing in central China. At this location Shanghai Tyre & Rubber, as a majority owner of the company, will also produce radial tyres.

Last year the company generated a turnover of 614 million euros (2005: 483 million) representing a growth of 26 per cent. At the same time net profits fell to 4.9 million euros. A year before this figure was 11.6 million euros and in 2004 31.7 million euros. The figures show that this company, which is partly listed on the Shanghai Stock Exchange, is, like many others, suffering from high raw material costs.

However the company is not only committed to producing tyres; machinery and equipment for rubber processing companies as well as soap is also produced. In March Shanghai Tyre & Rubber Co. Ltd. took over the Shanghai Rubber Machinery Factory, paying about 2 million euros for it. According to the company this business field will also become a future focus.

Until 2001 Shanghai Tyre & Rubber also operated a passenger car tyre factory in the Shanghai area. When the company found itself in financial problems it sold a majority share in that factory to Michelin. Today, Michelin produces the Warrior passenger car brand at the factory, a brand that belongs amongst the top-sellers on the Chinese tyre market. Michelin also produces Michelin brand PC tyres there. The former owner of Michelin’s Warrior factory still continues to hold 30 per cent of the assets. Furthermore, Michelin also operates another joint venture: the Michelin Shenyang Tire Co. Ltd, which developed from the merger of three different and separate Michelin joint ventures under one roof. The Warrior factory has an annual production capacity of about 5 million units. Michelin also runs a R&D facility in Shanghai as well as its regional headquarters.