2020 is shaping up as a year of resurgence by leading Chinese tire makers in the U.S. marketplace — albeit with tires sourced from Thailand, Vietnam and/or Malaysia.
Based on conversations with a number of Chinese companies that exhibited at the 2019 SEMA Show, at least five Chinese tire makers have begun production in the past several months at new plants in these nations or are about to do so.
They join a half-dozen Chinese companies that already have built manufacturing capacities outside of China, predominantly in Thailand. Among companies preparing to recharge their U.S. sales efforts because of new capacities are: Jiangsu General Science Technology Co. Ltd. (JGST), which has opened a plant in Thailand; Qingdao NAMA Industrial Co. Ltd., which has secured production at plants in Thailand and Vietnam; and Prinx Chengshan Tire Co. Ltd., which anticipates bringing on stream a plant in Thailand in 2020. These companies — and others — promoted their new manufacturing assets during the recent SEMA Show in Las Vegas, where they were exhibitors.
Like many other Chinese tire companies, JGST's and Qingdao NAMA's sale efforts in the U.S. had been affected greatly by both antidumping and countervailing import duties related to a United Steelworkers petition for trade relief from 2017 as well as the President Trump administration's sweeping import tariffs levied in early 2019 on a range of Chinese products, including tires.
The impact of these two events prompted Prinx Chengshan to put on hold in early 2019 its plans for U.S. distribution in the wake of the Trump administration's imposition of elevated import duties on Chinese products.
The company now plans to start marketing truck tires in the U.S. as soon as sufficient tires in the appropriate sizes are available, according to John Aben, president of Prinx Chengshan U.S. The company plans to use the Fortune brand name in the U.S.
Wuxi, China-based JGST — which is represented in the U.S. by TBB Tires Inc. of Los Angeles — was preparing to start production in December at a plant in Rayong Province, Thailand, dedicated to truck and bus tires.
The plant, built at a cost of $300 million over just 12 months, is designed with capacities of 6 million passenger tires and 1 million truck/bus tires annually.
Qingdao NAMA — a privately held tire distribution company that traces its roots to a state-run company — began offering tires in late 2018 from a commercial tire plant in Vietnam and a consumer tire plant in Thailand.NAMA (the name derives from an Arabic word for growth or growing) offers tires under a number of brands, including Transking, Firelion, Milever, Haida and Mileking.
The company has been advertising the establishment of Nama Tires Inc. (USA), a U.S. sales office, since late 2018, but as yet hasn't set up a physical presence in the U.S., instead routing all sales inquiries back through China.
As such, the firm's business is 100% container-load only.
These shifts in sourcing will skew the import scenario further in Thailand's favor and away from China. Thailand already is the No. 1 source of imported passenger tires into the U.S., shipping nearly 34 million car tires to the U.S. in 2018, a 12.6% jump over 2017.
China, by contrast, has faded in this respect, dropping to sixth in 2018 with 8.5 million units and more than likely out of the top 10 in 2019, with projected shipments of just 3 million units, according to estimates based on data for the January-July time frame.
At the same time, Cooper Tire & Rubber Co. expects to start importing truck tires from Vietnam this year as its joint venture tire plant in Vietnam, A.C.T.R., comes on stream and begins to ramp up production. That plant is a joint venture Cooper established in December 2018 with China's Sailun Group Co. Ltd. for producing radial truck and bus tires for global markets.
The plant — located at Sailun's existing site in Phuoc Dong Industrial Park in Tay Ninh Province near Ho Chi Minh City — is rated at approximately 2 million truck/bus tires annually, Cooper said.
To compensate for the elevated import duties levied by the U.S. government, Cooper raised prices on its Cooper- and Roadmaster-brand truck tires in April/May by undisclosed amounts to compensate.
The Vietnam joint venture is an extension of Cooper's relationship with Sailun Group, which also involves an offtake production agreement covering production of Cooper's Roadmaster-brand truck/bus tires at Sailun's existing Vietnam plant and Sailun's purchase in late 2018 of a 35% stake in Cooper's Qingdao Ge Rui Da Rubber Co. Ltd. (GRT) joint venture in Qingdao.
Among Chinese tire companies with off-shore production are:
Double Coin Holdings Ltd. — truck and OTR tires in Thailand since 2017;
Guizhou Tyre — building a truck/bus tire plant in Vietnam;
Qingdao FullRun Tyre Corp. — car/LT tire plant in Port Klang, Malaysia, since May 2019;
Qingdao Sentury — car/light truck tires in Thailand since 2015;
Sailun Jinyu Group — car, truck and OTR tires in Vietnam since 2013; building a JV plant with Cooper Tire in Vietnam;Shandong Linglong — car/light truck tires in Thailand since 2018; building a plant in Serbia;
Zhaoqing Junhong Corp. Ltd. (d.b.a. Maxtrek Tyres) — broke ground June 15 on a car and truck tire plant in the Malaysia-China Kuantan Industrial Park in Kuantan, Malaysia; and Zhongce Rubber Group — car/LT and truck/bus tires in Thailand since 2015.
