Shandong provincial government ‘eliminating’ outdated tyre production capacity

The recent publication of Shandong provincial government’s 2022 six department work plan states that the authorities are promoting the elimination of outdated production capacity. Within that, it is worth noting that the tyre industry is described as a regulatory priority. Specifically, if a tyre manufacturer’s annual output cannot reach 1.2 million all-steel radial tyres (excluding engineering tyres, aviation tyres and wide-section tubeless tyres) or 5 million semi-steel radial tyres (excluding run-flat tyres, high-end racing tyres, and ultra-low profile tyres), it is highly likely to be forced to integrate or exit.

The work plan shows that relevant departments will include information on enterprises that fail to shut down inefficient and outdated production capacity on time into the national credit information sharing platform. In this case, the government will implement collective punishment and credit constraints regarding land supply, financial support, tax management, production licenses, security licenses, bond issuance and government procurement.

The work plan for 2022 is a continuation of the work to eliminate older production capacity in 2021. As early as April 2021, Shandong issued a document stating its position against outdated production capacity. In 2021, Shandong eliminated several outdated tyre production capacities, including the Shenzhou Rubber Factory in Dongying City, Taishan Tyre in Tai’an City, and 27 bias tyre companies in Weifang City. The work plan for 2022 indicates that Shandong’s tyre production capacity still has room for further closures.

While Shandong is one of the biggest tyre-producing areas in China, some firms manufacture according to relatively rough production models, relying on lower product prices to sustain market share. In recent years, the Shandong provincial government has followed a “high-quality development” concept put forward by the Chinese government to express its determination to eliminate low-end manufacturing, and has listed the tyre industry as a high-polluting and high-energy-consuming production for strict supervision.

Tyrepress learned that the relevant departments requested to re-check Shandong’s high-pollution and high-energy-consuming industries not long ago. On 6 July, the Shandong Provincial Government established a joint tyre industry inspection team consisting of 27 people to conduct a comprehensive inspection of tyre enterprises. The examination includes the latest information such as enterprise production capacity, energy consumption, equipment, and facilities.