In latest anti-subsidy investigation, the US commerce department named two Chinese tire producers as mandatory respondents and requested them to answer its questionnaires on anti-subsidy & anti-dunping investigation.
The anti-dumping and countervailing rates of the two firms, once fixed, will directly affect the average tax rate for other Chinese tire corporations in the United States.
Market observers say the latest anti-dumping and countervailing case targeting Chinese tire brands, no matter what the final ruling might be, will lead to excessively high tax costs of Chinese companies in US and probably prompt some of them to turn to other markets for growth, taking European, South American, or the Russian markets for example.
GROWING REGULATORY BARRIOR IN EUROPE
Europe accounted for a fifth of tire production around the globe and is the second largest tire market, with the volume and value of tire trade constantly expanding.
The tire industry is one of the segments subject to the strictest supervision from the government, which has set clear-cut requirements on tire labeling, REACH, and the use of new material, making the European market basically the toughest one for a tire firm to gain access to.
“We have two years at most to get prepared, as the first stage of the “labeling law” isn’t that hard,” Li Qiang (assumed name) from a Shandong-based tire firm told Tireworld.
“As for the second phase, which will take effective in 2016, will no longer be an easy one,” he added, maintaining a wait-and-see attitude towards the forthcoming tougher rules.
Experts from the European Tyre & Rubber Manufacturers’ Association noted that tire makers would have to shift from the “economical mode” to the “sustainable mode” if they ever want to survive in the European market in the long term, by way of offering safer and more environmentally friendly products.
Chinese tire brands have to date already snatched a sound market share in the European market. However, they still have a long way to go to improve their brand image and maintain their hard-won success, industry insiders say.
“MADE-IN-CHINA" EQUALS TO LOW QUALITY?
To date, no single Chinese tire brand has gained trust and confidence from European consumers, said a tire expert from the European market at a recent industrial meeting held by China Rubber Industry Association.
At some time, Chinese firms would simply resort to low price mechanism to ensure their sales in the European market, making “cheapness” sometimes the first description the local consumers would think of when talking about Chinese products, said the expert.
While the mindset has led to encouraging sales volume in European market, it makes it quite hard for Chinese firms to win equally good reputations among the local buyers, let along establishing brands and realizing sustainable development.
In the meantime, some European corporations and institutions often take advantage of the “cheapness” of Chinese tires, casting aspersions on the performance of the tire products and reputations of Chinese firms.
Some even fabricate testing data to deliberately shut the door on Chinese competitors.
The Allgemeiner Deutscher Automobil Club is one example, who has been reported as counterfeiting testing data on Chinese tire brands and caused huge trouble for Chinese tire companies in European market.
HUGE POTENTIALS IN EUROPEAN MARKET
With car ownership constantly increasing in European region, the market demand for tires will continue to grow and remain strong in the years to 2019 at least, according to a recent report by Canadian consultancy TechSci Research.
Another report from the British Imported Tyre Manufacturers' Association showed that the all-steel truck radial tire market would witness a record-high annual growth this year, up from the 6 percent growth in 2013 thanks to a recovering national economy.
All-steel truck radial tire happens to be one of the major export items of China in Europe. In the past two years, all-steel truck radial tires made by Chinese firms have gained a bigger market share in the European market, with the share in the all-steel truck radial tire segment in the European Union at some 14.7 percent in 2013.
Market observers say the recovering auto industry in Europe will make tire making the top beneficiary. It’s projected that the tire market in Europe will maintain a compound annual growth of 5 percent in the years between 2014 and 2019.
In addition to the all-steel truck radial tire segment, the passenger car tire division will also witness explosive growth in the European market in the next few years. It’s estimated that sales of passenger cars and light commercial vehicles in Western Europe will reach 16.90 million units by 2020, and that in Central Europe and Eastern Europe are projected at 3.7 million units and 4.6 million units, respectively.
(Edited by Olivia, olivia@tireworld.com.cn)
