Since the beginning of this year, three domestic tire producers went bankruptcy or closed down, with their assets being auctioned online by courts.
One of them is Baili Rubber & Tire Co., Ltd. in Wenzhou, Zhejiang province, whose machineries and equipment will be auctioned publicly online soon.
It was a small joint venture, whose board chairman and legal representative is Zhang Hongjie, a patriotic overseas Chinese in Brazil.
Sell “Double Coin” in Brazil
Baili Rubber & Tire is the only passenger car tire exporter in Wenzhou. The company exported 121 batches of tires, totaling 144,800 tires valued 4.50 million U.S. dollars in 2013.
The experience of the founder, Zhaong Hongjie, is legendary.
Born in Wenzhou, Zhang had worked in a local company as a manager. He went to Brazil and started his business in 1990, becoming one of the overseas Chinese conducting import and export trade in this country after its opening up.
Zhang started to sell Double Coin tires and become the exclusive agent in Brazil in 1992.
He was the first person who introduced China’s auto tire, auto parts, and electronic components in Brazil, filling in the gap in China-Brazil trade.
Trapped in debt crisis at home
Zhang went back home to set up a tire producing company in 2015 in response to local government’s investment call.
At that time, domestic tire market was prosperous. He intended to invest 1.5 billion yuan to establish a large tire producing company with annual capacity of 10 million high-performance radial tires.
But after the establishment of the company, the project was delayed for three years and the capital was insufficient. The production capacity was forced to be reduced to 6 million yuan per year.
A few years earlier when the market was robust, the company’s tire products were exported to a dozen of countries and regions and the prospect was bright.
However, as the company expanded too quickly and encountered private loan crisis, while the output capacity kept small, the cash flow became tight, and the company was in financial disputes with some banks.
Zhang Hongjie invested in Baili Rubber & Tire with his own money and bank loans. As the loans mounted up, the interests became a heavy burden, and the company had to auction its assets to pay back the loans and interests.
An industry insider said the experiences of the entrepreneur and the company reflected the present situation of China’s small- and medium-sized enterprises, which are small, vulnerable, and short of cash.
With the closedown of Baili Rubber & Tire, Zhang’s tire manufacturing dream came to an end.
