Wanli Tireannounced last Thursday to invest $1 billion on a smart radial tire plant in South Carolina, United States. In the meantime, Wanda Baotong Tire has signed a memorandum with Malaysia's Malacca state government on investment of building a new factory.
The frequent moves of China’s tire enterprises in less than a week may indicate another wave of factory-building moves overseas.
Up to March 2017, Chinese overseas tire companies have developed more production capacities, equaling about ten percent of annual China’s domestic capacities. And the proportion is still rising.
The overseas moves of Chinese tire companies have two characters, strong investments and relatively concentrated destinations.
Strong investments and growing capacities
Semi-steel radial tire is the main product of China’s oversea tire investments. In 2016, the overseas semi-steel radial tire production capacities of China were about 50.3 million pieces, which amounted to 11 percent of China’s domestic capacities.
China’s overseas makers can produce 8.7 million pieces of all-steel radial tires per year, about 7.2 percent of is domestic production, and 59 million pieces of all-steel and semi-steel radial tires, equaling to 10.44 percent of domestic production.
China exported 151.7 million pieces of radial tires in 2016. Its overseas factories have the ability to cover 38.9 percent of the volume.
China’s land and labor costs have been rising and there have been more and more international trade barriers. As a result, more companies chose to build factories in foreign countries. Qingdao Fullrun Tire, Wanda Baotong Tire and Pulinchengshan Tire are among those who have “going out” plans in 2017.
Concentrated destinations
The Southeastern Asian countries are the main destinations for Chinese tire companies to set up branches overseas. Thailand is one of the hottest destinations.
China has an annual production capacity of 30 million pieces of semi-steel radial tires in Thailand, 60 percent of its total overseas volume of 50.3 million pieces.
The relatively concentrated destinations may become a key factor to restrict the development of China's tire industry in the future.
