China Tires U.S. Re-road Agents Come to China in Advance
The implementation of the three-year special tire protection measure for the United States to China expired on September 26, 2012.
This is undoubtedly good news for the tire industry, which has seen a decline in sales volume and a slowdown in growth since 2012. Guo Jinlong, an overseas sales manager of Shandong Hengyu Rubber Co., Ltd., told reporters that since the beginning of the year, several US agents have foreseen this result and came to China in advance to seek cooperation.
Customs data proves that this is not a case. According to Ningbo Customs statistics, in September, the Ningbo port exported 283,000 U.S. tires, an increase of 3.2 times over the same period of 2011, reaching a record high since 2009. Analysis of Ningbo Customs, which is related to the expiration of the United States on China tire special security measures.
Mr. Yu, sales director of Shandong Duochichi Rubber Co., Ltd., analyzed that the United States is the largest export market for Chinese tires, and that the United States has expired on China’s tires. This is the top priority for the tire industry in the near future. In a sense, this is even an industry reshuffle.
However, industry analysts believe that Japan and South Korea’s tires have dominated the U.S. market in the past three years, and it is not easy for Chinese tires to regain lost ground.
Special security measures expire
Tyre protection measures began in 2009. On September 11, 1999, U.S. President Barack Obama decided to impose a tariff on China's tire special protection case for a period of three years. In the first year, tires imported from China will be subject to a 35% tariff, and the second year will be increased by 30%. Add 25%.
On September 26, 2012, the tire special security measures expired. This means that starting from September 26, China’s export tariffs on passenger and light truck tires to the United States will return to 4% of most-favored-nation treatment.
Guo Jinlong stated that the tires' special security measures were terminated on schedule, which is a major advantage for domestic tire companies. Analyst Liu Bo of Analyst Securities said that after the implementation of the tire-insurance measures, the share of Chinese tires in the U.S. market has fallen from 30% in 2009 to the current 10%; after this measure is terminated, the share of Chinese tires in the U.S. market is expected to rebound. To 26%, the half-steel radial tires benefit the most.
According to statistics from Qingdao Customs, in the first three quarters of 2012, the Shandong port exported 18.41 million tires to the United States, an increase of 12.4%.
Liu Ye, deputy general manager of Jiangsu Dongyang Solid Tire Co., Ltd., also confirmed that the US tire market has grown very rapidly since 2012. In 2011, they shipped about 4 containers per week to the United States. In 2012, this number increased to 7.
A timely rain
Since 2012, the economic growth rate has slowed down and the degree of trade activity has decreased. The logistics industry has gradually entered the “driving laneâ€. Affected by this, heavy truck sales, which are closely related to logistics, also show a downward trend.
In the past few years, the growth rate of China's rubber industry has remained at between 20% and 30%, but in 2012, this figure has dropped below 10%. According to the “2013-2017 China Tire Tyre Industry Market Survey and Investment Advisory Report†published by China Business Intelligence Network, the figures show that: in August 2012, China produced 76.619 million rubber tire tires, a year-on-year decrease of 1.78%.
Panjin Heyun New Material Co., Ltd. mainly deals in rubber, and it faces downstream tire manufacturers. Assistant Minister of Sales, Han Baoxu, told reporters that due to the declining tire sales, the company’s rubber sales in 2012 were also much lower than in previous years.
Ma Jian, sales manager of Qingdao Yunding International Trading Co., Ltd., said that another major reason for the reduction in tire sales was the large fluctuations in the prices of raw materials, which made the customer wait and see mood increased and the sales rate of the company slowed down.
In this context, the U.S. market has once again opened its doors to Chinese companies, making it particularly "a rare opportunity." Mr. Yu also said that in a sense, this is even an industry reshuffle.
Waiting to regain lost ground
Although special protection measures have had a great impact on Chinese tires, tire companies in the United States have not clearly benefited from special safeguard measures.
According to a report from the Peterson Institute for International Economics, the employment of the US tire industry increased from 50,800 in September 2009 to 5,200 in September 2011, and the number of jobs increased was only 1200. The price of these jobs is very high, because the special insurance measures make the price of domestic tires in the United States rise. From the third quarter of 2009 to the third quarter of 2011, the US consumer extra expenditure costs more than 1.1 billion US dollars, which is equivalent to creating each one. Tire industry jobs are paid more than $900,000.
Not only that, after the threshold of Chinese tire exports to the United States rose, its remaining market gap was soon occupied by Japanese, Korean and Southeast Asian companies. Su Peng, a tire analyst at Zhuo Chuang Information Technology, told reporters that compared to Chinese tires, Japanese and Korean tires cost an average of 25 US dollars each, and American consumers have not benefited from special safeguard measures.
Although the door to the U.S. market has reopened, it remains to be seen whether Chinese tire companies can regain lost ground. Su Peng said that the market that once belonged to China has now been occupied by Japanese and South Korean companies. Even if it can recover, it will take some time.
Wang Jun, deputy director of the consulting and research department of the China International Economic Exchange Center, believes that the "special security case" warns Chinese companies that in order to enhance their core competitiveness, they cannot rely solely on price wars. In the past, Chinese companies could win with cheap labor costs. However, after three years, the labor cost advantages of Chinese companies are not so great. The future way out depends on industrial upgrading, product transformation, and upgrading the brand's gold content to win with quality.
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