Now one of the largest tyre-producing countries in the world, China has an indisputable influence on the direction of global tyre trade. The home of both fast-growing up-and-coming brands as well as a burgeoning domestic market, this tag chronicles China’s involvement with the tyre business.
Reifen 2008 was lucky enough to be chosen as the stage for the exciting conclusion of the B&J Rocket Pro Team Competition, which saw retreading professionals using B&J products submit photographs of their teams in action. As if this wasn’t enough, the company also took the time to present their latest innovation, named Rocket Tyre New – a colour refresher for old and used tyres.
The South China Tire & Rubber Co. spent its time in Hall Six, Booth 300A promoting their “SUNNY” brand. The company aimed – with some success – to find new distributors in the European market.
Representatives of The South China Tire & Rubber Co. stated that the organisation has “identified cooperative intentions or even concluded transactions with some dealers in western, northern and eastern European market. Besides, we also availed ourselves of this opportunity to establish business relationship with dealers outside Europe and now we are discussing the further details.”
Beijing based Best Choice International Trade Co. has a presence in more than a hundred countries, and in its 13 years of business has grown into a company with an annual turnover exceeding US$40 million. At the Reifen Essen show T&A met with BCIT’s European representative, Andro Yan.
“One of the major events for us at the Reifen show is promoting our new Sunew brand,” he commented. The Sunew line-up, manufactured by the Qingdao Rubber (Group) Co., Ltd and first released last year, has initially been made available as a UHP range; 29 sizes for rim diameters between 16 and 21-inch have to date been released. According to Mr. Yan, this line-up will soon be joined by 4×4 and winter tyre ranges, and BCIT is eager to increase the brand’s profile in this part of the world. At present the company is looking for European partners, in all regions, for the Sunew product. “An introduction date for the new brand is dependent on partners, but a 2008 launch is possible,” he says.
On 1 May, Nexen Tire Corporation opened a branch office in Germany (Nexen Tyre Europe GmbH) and is reportedly in the process of scouting tyre specialists with more than 20 years experience to enhance the company’s marketing in Germany. In addition to the company’s existing UK branch, Nexen plans to open more offices in Spain, Italy, and France to expand its European sales network. Nexen Tyre Europe GmbH is being described as “the centre of Europe” for the Korean manufacturer. From here the company plans to execute localised marketing strategies in order to support European customer service.
Shandong Linglong will soon be exporting high performance tyres from its new factory, commented company representatives at the Reifen exhibition. Work started on the £100 million 40,000 square metre facility last year and progress is said to be at an advanced stage. Full capacity at the plant should be reached by 2010, at which time it will have an annual output of 10 million tyres, bringing the company’s total capacity to 30 million pieces.
In its more than three decades of operation Triangle Tire has grown to become one of China’s top tyre manufacturers in terms of output. Annually the company produces, says Triangle, around 20 million units. Of this figure, radials account for as much as 16.5 million units, and the company claims to be the largest tyre manufacturer and exporter in China.
At the Reifen show sales manager Victor Wang spoke with Tyres & Accessories about numerous recent developments at Triangle Tire. Of particular significance, commented Mr. Wang, is a new product line introduced by the company. Called Diamond Back, the passenger car and SUV range is available in four distinct patterns, including the UHP TR968. Boasting some 20 sizes between 17 and 24-inches, the W and V speed rated range offers, says Mr. Wang, low rolling resistance, a high grip tread compound and rim protection flange on the sidewall.
The 6th CITEXPO will be again held at Shanghai Everbright Convention and Exhibition Center September 17-19, with nearly 300 exhibitors showcasing their latest products and technology including radial tyres, bias tyres, wheels/rims, tyre maintenance equipments, retread materials and equipments, tyre production material and equipment and other related products.
According to the organiser of CITEXPO, Reliable International Exhibition Services Co., the two original exhibition halls have already been fully occupied by new and rebooking exhibitors at this early stage. In order to fulfill the overwhelming demand by the exhibitors, a new hall has been opened for accommodating more exhibitors and their products.
A survey of 8,000 motorists Conducted on behalf of Continental in eight major international markets indicates that electric and hybrid drive vehicles are currently the subject of “remarkable” interest amongst motorists. At the start of 2008 the market research company TNS/Infratest surveyed approximately 1,000 motorists each in China, Germany, France, UK, Japan, Austria, Switzerland and the USA, asking a series of questions focused upon their current knowledge and opinions of hybrid drive systems, driving styles and battery powered cars. The feedback received showed that 36.0 per cent of those surveyed were willing to buy a hybrid drive car and a surprising 45.8 per cent expressed an interest in purchasing an electric car. “This trend holds great potential for us as an automotive supplier and provider of environmentally-friendly drive technologies,” said Dr. Karl-Thomas Neumann, Conti Executive Board member and chief technology officer, at a press conference in Austria.
Canada-based worldwide wholesale operation, Hercules International, had long considered how to develop its ‘global’ position. Then, at the end of 2007, Corporate Business Development Officer, Joe Recchia announced plans to maintain a presence in all the major tyre trading routes by opening offices in Latin America, South East Asia, the Middle East, China and Europe. Then Hercules was aiming to grow “from international to global player in 2008.” Seven months later, those offices are all either running or near opening. Tyres & Accessories spoke to Joe Recchia and Hercules vice president sales and marketing Josh Simpson and found out how the plans are progressing.
Hercules International took the decision to move from an international to global business in 2007. Throughout the process the company’s intention has always been twofold: to develop the position of its key Hercules brand in the global marketplace; and to support rather than compete with local customers. From Recchia’s point of the view, the driving force behind the global move is to be present in each area with people who know that specific market in order to develop appropriate product lines and therefore better serve customers.
From T&A’s perspective the biggest news is that Hercules’ plans are progressing rapidly in Europe. The wholesaler has already made the necessary arrangements (through a third-party logistic company) to run a warehousing operation in Rotterdam. This move is being described as a relatively temporary action and is therefore expected to last around three years, as the company’s is continuing towards its long-term goal of acquiring a “strategically placed presence in the European market.” Recchia wouldn’t be drawn into giving further details on what that might mean, but the company is definitely considering acquisition options. In addition, the company will be ready to open a new office in Barcelona in the next 60 days.
But its not just about getting people on the ground. It’s also about product development. According to marketing vice president, Josh Simpson, one of the reasons the Hercules team attended May’s Essen Show was in order to identify which particular product offerings are suitable to which markets – with a view to adapting the Hercules range as required. “It is clear to us that the EU sets the standard [in terms of product development and design] and the US follows within a certain period of time,” Simpson commented.
Currently European business only represents around 10 per cent of Hercules’ overall sales, but it clear that executives want to increase this in ways that support its model of offering geographical exclusivity to customers who buy the Hercules brand. Hercules International is also continually reviewing which markets have particularly strong wholesale influence and would therefore make a good European base. Simpson was reluctant to give specific details about exactly what this might mean in terms of acquisitions. He did, however, agree that the Germany and the UK are both examples of wholesale-strong markets.
The first ‘global’ office to get underway was Hercules Latin America earlier in 2007. Founded by virtue of the company’s acquisition of TDI, the Latin America regional office is based in Miami, USA, but seeks to take advantage of its strong geographical position in relation to both the Latin American and Caribbean markets. This warehouse is now fully manned, with an additional seven representatives generating sales on the road.
Next up were offices in the Middle East, South East Asia and Europe. The Singapore office, which covers the Far Eastern markets with the exception of China, is already up and running. More recently Hercules gave Anirudh Rathore responsibility for the new Dubai office. According to Recchia, he has been training in the Ontario, Canada head office for the last months and is now fully prepared for his new assignment. Rathore is due to enter the marketplace in July.
And finally, for now, there is the Qingdao, China office that T&A reported on earlier this year. This operation is poised to expand into the company’s global distribution centre shortly – company representatives out there are already staffing the new warehouse, while they finalise the location.
Production pressures
Hercules International describes itself as a wholesaler to wholesaler business. However, with the amount of tyres the company produces across its various private brand labels and across a number of different factories – you may as well call them a tyre manufacturer. And with the responsibility of producing come the pressures – which are particularly sever at the moment. Everyone has heard about China’s decision to up VAT rates on tyre production and the recent difficulties associated with securing shipping, but were you aware of the effects of the Olympic games on production capacity? When you add in the fact that demand for steel, oil and rubber and fillers is all “far outstripping supply”, you can see that it is not as easy as it once was to get tyres in China.
As a result, Hercules’ plans for to enter China in a bigger way via the OE route are currently said to be on ice. Hercules representatives first mentioned the OE concept at the end of 2007, were the programme was expected to be well underway by the middle of 2008. However, the Olympics, increasing raw material price pressures and the lack of supply on some product fronts mean these plans are well and truly on-hold for the time being.
Hercules dealing with challenges on the home from, as the whole North American market faces relatively a tough time. However, despite these pressures, company represents are confident of Hercules’s ability to ride the storm. “Hercules remains stable with growth… and [we] predict further incremental growth,” vice president for marketing, Josh Simpson commented. Looking forward, the company is on-track for an even more optimistic outcome: “We are looking at programmes that will double the size of the business in the next three to five years,” Joe Recchia commented.
There are no plans to bring in any more additional brands to the Hercules stable, which currently includes brands such as Hercules, Ironman and Merit, so this means the company’s ambitious targets rest heavily on the success of the success Hercules marketing programme and the geographic exclusivity the company offers with it.
Established in 1966 by Mans Heuver, Heuver Bandengroothandel has expanded from a small business (for which Mr. Heuver personally made tyre deliveries on his motorcycle) into a global organisation with a wholesale business for industry clients and a number of outlets – the Profile Tyrecenters – for both business and retail customers. Today the Netherlands based business is run by Mr. Heuver senior’s two sons, Bertus and Jan, and the growth continues.
To facilitate an expanding business base, two years ago the company opened a new 12,000 square metre facility in its hometown of Hardenberg. Now, reports Bertus Heuver, the company is looking at the need to build another 12,000 square metre premises. “Since we completed the new buildings in 2006, we’ve seen that the choices we make today enable us to accelerate our expansion plans,” he said. “In other words, we’re ahead of our goals. At the end of this year, we’ll be taking the next step in our development strategy and doubling our warehouse inventory.”
RFID-maker Advanced ID Corporation has gained approval for the incorporation of a subsidiary in Hong Kong, Advanced ID Asia Pacific Company Limited. The decision took effect on 20 June 2008, meaning Advanced ID has already opened its offices in Hong Kong led by its newly appointed managing director Cherry Lim.
Lim, 42, has spent her entire career working with companies that have innovative technology applications. With positions as chief executive officer and other executive management roles, she has concentrated in the fields of information technology, wireless technologies and integrated circuits. A Hong Kong native fluent in three dialects of Chinese and English, Lim was educated in the United States and received a Bachelors of Science from the University of South Florida, which was followed by an Executive MBA received from the Chinese University of Hong Kong.
Following Goodyear’s announcements yesterday concerning the company’s closure of its Melbourne plant and its plans to invest further in Brazil and China and to refurbish four of its American facilities, NYSE shares in the organisation fell by a steep 11.2 per cent. The drop sees the company’s stocks fall to their lowest value since December 2006.
Reports suggest that the dip has been caused by a variety of factors compounded by the manufacturer’s strategic announcements. The decline in the market for replacement tyres, especially within the heavy vehicle sector, and perpetually rising fuel and raw material costs have led both to Goodyear’s aggressive – and developing-market regarding – approach and the company’s slump in the stock market.
OTR tyre specialist Techking Tires came to the Reifen Essen show armed not only with new products, such as the 335/80R20 MPT (Multiple Purpose Tire) – the Chinese company brought news of impressive growth and numerous new programmes it is introducing. Techking marketing specialist Benjamin Zhang reported the latest developments to T&A.
“We have set up six private meeting rooms for existing and new customers at our stand,” he said. “For the whole week they are always busy.” This is hardly surprising considering Techking’s explosive growth during the past few years. Evidence of this can be seen from the fact that in 2006 Techking had 5 tyre specifications. Today it has 140, in 20 individual patterns. All tyres are manufactured at the company’s 35,000 square metre Dongying, Shandong Province factory, which was built in 1994.
Amongst Techking’s new offerings for 2008 are combined tyre and rim combination packages. “This has come as a result of customer feedback,” explains Mr. Zhang. “Customers asked for a tyre/rim package. It is easier for us to choose the right rim for a particular tyre.” The Techking marketing specialist reported that the building of a new 330,000 square metre factory for manufacturing OTR and TBR rims is currently in progress, The facility is due to be completed at the start of 2009 and within three years a capacity of 50,000 to 70,000 pieces per annum is planned.
Also new is Tire Watch, Techking’s TPMS project initiated last year. Testing for the Tire Watch project will continue until July and its market introduction is not far off. Tire Watch, Mr. Zhang explains, offers real time monitoring of tyre pressure. A third new product from Techking, introduced this year, is Tire Armor, protective chains for loader tyres, that can be easily damaged on rocks. “New items such as Tire Armor show we not only provide products; we also provide solutions,” said Mr. Zhang.
Yet another significant development for Techking is the introduction of the TSC – the Techking Service Center – Techking is building showrooms in conjunction with local partners in key markets and will provide training to local dealers. The TSCs will offer maintenance services and advice on correct tyre choice, while enhancing the Techking brand image in various local markets. “We have chosen Europe, Africa and Australia as the markets in which to begin rolling out the TSC concept, as in these regions we have stronger partnerships with local dealers,” Mr. Zhang added. The first TSC is scheduled to open in July 2008, and in addition to these centres the company continues to visit its global partners on site. In 2007 Techking representatives visited 50 such partners in various countries.
Techking tyres are sold in approximately 55 markets around the world, with Europe, South Africa and Australia the strongest. European sales account for 25 per cent of the total, Mr. Zhang comments, and currently South Africa is the market undergoing the fastest growth. A new market for Techking is Russia, and it is one that, says Mr. Zhang, presents its own challenges: “It is a different situation from our traditional key customers. The market in Russia is mostly for bias tyres, radials are only being introduced. In Russia we provide potential customers with our ‘Fuel Save Technology’ programme, which includes statistics on the fuel saving benefits of radial tyres.”
On the topic of world markets, much has been said recently about the US decision to impose duties upon Chinese manufactured OTR tyres. While Mr. Zhang confirms the duties charged on Techking products are not as high as for some other Chinese based manufacturers, he admits the US remains a smaller market for the company.
After conquering numerous world markets, Techking is now making itself at home, in its home market. In a situation that is completely in reverse to most Chinese manufacturers, Techking, a traditionally strong exporter of radial products, has only very recently launched its products onto the domestic Chinese market. “Most Chinese mining companies still use bias tyres,” Benjamin Zhang explains. “Most sales in China are for overseas brand equipment. We hope this situation will change soon but realise it takes time to adopt radial technology.” Even more amazingly, in April 2008 the company that has for so long embraced radial technology launched a range of bias OTR tyres. “The first tyres produced after heavy involvement from Techking will serve OE manufacturers in the domestic market,” stated company president Tech Wang in a Techking newsletter. A company representative further comments on the decision to introduce this older technology. “We are not in pursuit of high volume. We feel that giant bias OTR is a necessary supplement to the market at the moment.”
The testing of such new giant OTR tyres, like all the Techking range, can be performed on the company’s drum test machine, which can test up to 63-inch tyres; Techking is the only Chinese manufacturer to have such a machine. And in terms of tyre development, the process at Techking is very customer centred, adds Mr. Zhang: “Techking collects research and development feedback from different markets, and develops custom products for key markets, such as the 29.5R29 ETNT for Canada or 35/65R33 ETNT for Australia.”
American news sources have reported that following its closure of a tyre plant in Australia, Goodyear intends to refurbish four plants in the USA, while making further investments in China and Brazil.
Chief Executive Officer Robert Keegan is quoted as saying “We anticipate capital investments totalling between $1 billion and $1.3 billion per year from 2008 to 2010.” While the US manufacturing plants due for refurbishment were not yet specified, it is reported that the company will look to invest around $700 million over five years in an effort to modernise the facilities.
Despite an absence of specific festivities, Hangzhou Zhongce Rubber marked a significant milestone during the Reifen Essen show – this year the Chinese company has been in existence for half a century. Established in 1958 in Hangzhou city, in China’s east coast Zhejiang Province, the former state owned enterprise produces a range of rubber related products. The company’s first tyre (for bicycles) was manufactured ten years ago, and since then Hangzhou Zhongce has increased its range substantially.
A company representative reported that Hangzhou Zhongce now produces more than one thousand sizes of automotive tyre, with annual output for this segment an impressive 27 million pieces, of which 22 million are radials. The representative added the company aims to achieve sales (for all products) of US$2.7 billion by 2010. Amongst the products on display at the exhibition were familiar brand names, including Goodride and Westlake. Truck and bus tyre products, an important market for Hangzhou Zhongce, featured prominently.
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