In the memories of Guangrao people and businessmen, in September of previous years, tire dealers from all over the world often made it difficult to find a room in the county's hotels. However, this county famous for its tires has been a little deserted this year. Behind the desolation, due to the spread of the new crown epidemic around the world, tire companies that rely on exports have to seek changes in the crisis.
Guangrao area gathers 1/4 of domestic tire production capacity.
During the "11th China (Guangrao) International Rubber Tire and Auto Parts Online Exhibition" held from September 8 to 10, many government figures in Guangrao told the "Daily Economic News" "The reporter said that the local tire production capacity is 175 million units. In the past, exports accounted for 70%. However, since the epidemic, exports have been restricted. Guangrao's tire companies have begun to make a fuss about domestic sales, but homogeneity has always been an unavoidable problem. Hom.
While making up for shortcomings through "offshore" R&D, integration and mergers within the industry may also become another shortcut to resolve homogeneous competition. For example, based on the opinions on high-quality development of the tire industry in Shandong Province, Guangrao will cultivate 3 to 5 companies that will enter the forefront of the global tire industry by promoting industrial transformation and upgrading, corporate mergers and reorganizations, and resource integration.
As the COVID-19 epidemic spreads around the world, Chinese tire companies that rely on exports have to seek changes in the crisis.
Domestic demand fills the export gap
Under the dual impact of the epidemic and the decline of the automobile market, the global tire industry has suffered heavy losses. However, on the basis of the price reduction of raw materials, domestic tire companies have turned inward, but there are also representatives whose sales have hit new highs.
“The current industry situation faced by domestic tire companies is somewhat similar to that of 2008 and 2009.” As an executive of the top 75 global tire companies, Shandong Huasheng Rubber Co., Ltd. from Guangrao (hereinafter) Zhao Ruiqing, the general manager of Shandong Huasheng (referred to as Shandong Huasheng), analyzes the current tire market situation.
At that time (2008 and 2009), the financial crisis led to a decline in tire demand in overseas markets and the rise of international trade protection. China's tire exports were affected to a certain extent. However, the prosperity of the domestic automobile industry effectively promoted domestic tires. Demand in the consumer market is growing.
In fact, in the first half of 2020, affected by the global spread of the epidemic, China's tire exports suffered two impacts: "supply interruption in the first quarter and sharp decline in demand in the second quarter." Data from the General Administration of Customs shows that from January to July 2020, China's cumulative export volume of rubber tires was 3.21 million tons, a year-on-year decrease of 15.4%; the cumulative export value was 50.659 billion yuan, a year-on-year decrease of 18.9%.
Against the backdrop of export setbacks, Chinese tire companies have begun to tap the potential of the domestic market. A government official in Guangrao County told a reporter from the "Daily Economic News" that since the epidemic, most tire companies in Guangrao have turned to domestic sales, which has also become a trend in the domestic tire industry.
The tapping of the domestic market has also enabled tire companies to perform against the trend. "January to February were indeed affected, but March was already recovering quickly. By the second quarter, it had fully recovered. Our sales revenue increased by more than ten percentage points year-on-year." In Zhao Ruiqing's view, this year's economic situation looks the most difficult. , but for the tire industry, this year is actually a good year.
It is worth noting that while the epidemic has become a stumbling block for the profitability of A-share listed companies, the performance of the rubber sector in which tire companies are located has increased in the first half of this year.
A reporter from "Daily Economic News" found that in the first half of this year, the total operating income of 19 A-share listed rubber companies was 37.999 billion yuan, a decrease of 3.624 billion yuan compared with the same period in 2019. However, the total net profit attributable to the parent company was 2.855 billion yuan, an increase of 12% compared with the same period last year.
This trend of “increasing profits without increasing income” is related to the trend of raw material prices.
A senior executive of a local tire company in Guangrao with a production capacity of more than 3 million units told a reporter from the Daily Economic News that since the epidemic, the price of rubber, the raw material needed by the tire industry, has dropped by more than ten percentage points. However, on the demand channel, infrastructure construction Strengthening has brought about growth in demand for tires, especially truck tires.
“In the second quarter, especially since May, due to the improvement in the production and sales situation of automobile and other industries, the economic operating environment of most rubber sub-sectors has improved, and the quarter-on-quarter data has shown a positive trend, indicating that the domestic market has recovered well. "The China Rubber Industry Association made this judgment on rubber at the 2020 Secretary-General's Working Conference.
According to Shi Yifeng, secretary-general of the Tire Branch of the China Rubber Industry Association, although tire exports have still been difficult since May, the domestic demand for supporting and repair and replacement markets has improved significantly, especially for truck, bus and engineering vehicle tires. The supporting market is strong, domestic infrastructure construction has started to increase, logistics and transportation have gradually recovered, and tire companies have adjusted their product lines to the domestic market in a timely manner.
The shortcomings in R&D investment need to be solved
While the performance of domestic tire companies is growing, the production interruption and demand decline caused by the spread of overseas epidemics have seriously affected the operating conditions of international tire giants. .
"Daily Economic News" reporters found that in the first half of this year, at least five of the top ten tire companies in the world suffered large losses. Among them, the first-tier brand Bridgestone lost 22.044 billion yen (approximately 1.445 billion yuan), Michelin lost 137 million euros (approximately 1.1 billion yuan), and Goodyear suffered a huge loss of US$1.3 billion (approximately 9 billion yuan). ).
Judging from the performance in the first half of the year, when international tire companies generally suffered losses, the development of the domestic market allowed domestic tire companies to start a profit model, but this does not mean that the gap between the two parties has reversed.
“Giants such as Bridgestone and Michelin have annual sales of more than 20 billion U.S. dollars, but in the Guangrao area, where 1/4 of domestic tire production capacity is gathered, annual sales exceed 10 billion yuan. There are almost no RMB tire companies,” Zhao Ruiqing believes.
As for the gap between domestic and foreign brands, a government figure in charge of the tire industry in Guangrao admitted to the reporter of "Daily Economic News" that the gap in R&D investment is the biggest gap between domestic brands and foreign giants. .
Dongying City, where Guangrao is located, mentioned in the "Dongying City Rubber Industry Development Plan (2019~2023)" that the overall R&D investment of rubber tire companies in the city is not high, and the investment is less than 1% of sales revenue, while The global industry average R&D expenses account for 3.9% of sales revenue, and there is still a huge gap with the advanced level at home and abroad.
“Tires are a traditional industry, and R&D investment will not be as high as Huawei’s. First-tier brands 4 (R&D/revenue) are already considered the highest level.” However, according to a company that is also among the top 75 global tire companies, In the opinion of senior executives, compared with foreign giants, the proportion of local 2 in Guangrao is already considered a high proportion. This is basically a microcosm of the R&D investment of domestic tire companies.
China Rubber Network quoted data from the US "Tire Business" in September 2019, which showed that the R&D expenses of the world's top 75 tires continued to increase in 2019 compared with the previous year, and the industry average R&D expenses/sales was 4.0. An increase of 0.1 percentage points. Among them, Bridgestone, Michelin and Goodyear ranked in the top three in terms of total R&D expenses, with US$938.9 million, US$764.2 million and US$353.1 million respectively.
“Under the dual pressure of the gradual saturation of the domestic market and high trade barriers in the international market, Chinese tire companies are rapidly transitioning to equipment improvement, technology iteration, and product upgrades. In particular, the leading listed tire companies are improving their products. Quality is an inevitable choice for companies to go international.” According to an executive of a domestic A-share listed tire company, Chinese tire companies need to further increase investment in innovation and research and development.
However, when it comes to research and development, the local governments where tire companies are rooted also have their own confusions. “The emphasis on R&D is also something that confuses us. After all, counties are less attractive to talents than big cities.
"The above-mentioned Guangrao government source revealed, "Next we are going to encourage companies to engage in offshore R&D and establish R&D centers with domestic institutes."
This method of separation of R&D and production is very important in the tire industry. It has also been mentioned in the enterprise. Taking Linglong Tire (601966, SH) as an example, it mentioned in its semi-annual report that the company relies on the national technology center and uses the Beijing R&D center and the North American R&D center as its construction foundation. Research branches have been established in Shanghai and Germany, forming a "three-in-one" open R&D innovation system based in Shandong, covering the whole country, and looking at the world.
Chinese-funded enterprises plan to overtake in corners
While seeking to make up for shortcomings in research and development, the impact of the epidemic on the global tire industry has undoubtedly provided leading domestic tire companies with a good opportunity to "overtake in corners"
The US "Tire Business" published in early September. In the 2020 top 75 tire rankings, 34 Chinese tire companies were selected, of which two Chinese companies were in the top 10 and 5 were in the top 20.
However, " Statistics from Daily Economic News reporters found that among the total turnover of the top ten companies, the traditional top three Bridgestone, Michelin, and Goodyear accounted for 59.8%. The two Chinese tire companies shortlisted for the top ten - China The combined proportion of Ce Rubber and Zhengxin Rubber is only 6.35%.
Although Shandong Huasheng ranks among the top 75 tires in the world, Zhao Ruiqing said bluntly: "Compared to large foreign companies, I don't think we have the production capacity. Excess means that the competition among our companies has not reached that level. ”
The height that Zhao Ruiqing mentioned is related to the company’s market share. Since Europe and the United States “double-reverse” anti-China tires in 2015, domestic tire companies have built factories overseas, which has become a way to increase market share. .
Zhao Ruiqing, general manager of Shandong Huasheng Rubber Co., Ltd.
A report from Founder Securities shows that in recent years, mainstream Chinese tire companies, represented by Linglong Tire, have accelerated the construction of overseas factories. , rapidly increasing their global market share. The operating income and net profit of overseas factories of Linglong Tire, Sailun Tire, and Zhongce Rubber continued to grow rapidly. Taking 2018 as an example, the overseas operations of Linglong Tire, Sailun Tire, and Zhongce Rubber. Factories’ revenue share is less than 25%. However, their net profit share has reached more than 50%.
Under the impact of the epidemic, this advantage has become more obvious this year. Western Securities pointed out that overseas leaders. Tire companies all suffered substantial losses in the first half of the year. Domestic leading tire companies represented by Linglong Tire have obvious cost advantages and product performance-price ratio advantages. They will break through the fragile production organization and cost defense lines of overseas tire companies and continue to improve the global market.
It is worth noting that due to the impact of the epidemic and the decline of the domestic automobile market, the concentration of the domestic tire industry is also rapidly increasing. Soochow Securities pointed out that the domestic tire industry is currently experiencing structural excess. With the advancement of supply-side structural reform, small and medium-sized production capacity is gradually cleared, and the domestic market is in the process of concentrating on leading tire companies. Chinese tire companies are expected to grow from large to strong, and will further increase their market share in the future.
At the beginning of this year, at the Shandong Province Industrial and Information Technology Work Conference, Zhang Hongmin, president of the province’s Rubber Industry Association, mentioned that Shandong Province is encouraging qualified enterprises to implement cross-regional and cross-ownership mergers and reorganizations to become bigger and stronger. Improve industrial concentration.
Guangrao County, which has 1/4 of the country’s tire production capacity, currently has 39 rubber tire manufacturers above designated size, but Guangrao County pointed out in the 2020 Government Work Report: “We must actively Promote the integration of production capacity, focus on cultivating 3 to 5 large-scale enterprise groups that have entered the top 30 global tire companies, create a group of "specialized, special and innovative" rubber materials and accessories companies, and build a national first-class and world-renowned high-end rubber industry base. ”
In the view of the aforementioned Guangrao government officials, integration means merging local tire companies into a few, while introducing some foreign companies to enter, and using market means to accelerate the process.
Source of this article The author of Autohome Chejiahao does not represent the views and positions of Autohome