Chinese Retread Volume to Increase by 30%

John Liu, a researcher with China Research and Intelligence holds the view that Chinese tyre retread volumes will increase by 30% to 15 million pieces in 2009 compared with 2008, and will reach to 19 million pieces in 2010. From 2009 to 2010, the Chinese government is increasing its investment in fixed assets like railways and highways so as to maintain the economic growth. With the number of automobiles in China increasing year by year, scrap tyre outputs will grow at the speed of 10 to 20 per cent annually, which has created a major source of solid waste pollution. There are many means of using the tyres cyclically, in which retreading is the most important first step.

However, the tyre retread industry is developing slowly in China. In 2008, nearly 200 million scrap tyres were produced in China, of which only 11.5 million were retreaded.

In China, many consumers misunderstand the tyre retread industry. For example, they hold that it is unsafe to use retreaded tyres; that retreaded tyres have a low wear resistance, lower mileages and are unsuitable for high temperatures etc. Besides, some areas of the Chinese media report that the tyre retread industry is uncontrolled, operating from small workshops with illegal operations, creating a time bomb alongside their own fast earned and huge profits. Under the influences of these factors, the Chinese tyre retread industry has showed a slow development tendency for the past 10 years.

In dealing with these scrap tyres, China is short of corresponding regulations and policies at present.

Although the financial crisis affects the global economy, it is an opportunity for Chinese tyre retread industry. John. Liu believes that more consumers will tend to choose economical retread tyres under the influences of the international financial crisis. Besides, the influences of the international financial crisis on the Chinese tyre retread industry will be wide ranging. Some small tyre retread enterprises will close down because of their backward technologies and poor operations. Some strong tyre retread enterprises, especially those affiliated tyre retread partners of the tyre manufacturers, however, will develop fast.

Chinese tyre retread enterprises have two major operation models: first, the tyre retread enterprises purchase the old tyres and then sell them on after retreading; secondly, the tyre retread firms treat tyres from the transport fleets and then charge them retread fees.

The enterprises of the former operation model usually lack quality tyres. Therefore, there is a new trend in the Chinese tyre retread industry, namely, many tyre manufacturers are engaged in the tyre retread industry making the most use of its tyre resources to create a real marketing advantage. Compared with the simple tyre retread enterprises, the affiliated tyre retread partners of the tyre manufacturers have huge advantages.

The world's three tyre giants Michelin, Goodyear and Bridgestone entered the Chinese tyre retread industry, in which Michelin was the earliest involved in the sector. In September 2005, the first Michelin tyre retread plant went into operation in Shanghai. In January 2009, Bridgestone (China) Investment Co., Ltd. officially set up its tyre retread development department. Chinese domestic tyre manufacturers, such as the Triangle Group, are planning to enter the retread industry and explore the profit growth points. John. Liu holds the views that tyre retread volumes will be increased by 30% to 15 million strips in 2009 compared with 2008, and will reach 19 million strips in 2010. From 2009 to 2010, the Chinese government is increasing its investment in fixed assets and infrastructure. Meanwhile, the demand for construction machinery in China has been increased. It is predicted that retreaded tyres for construction machinery will become the next hotspot for the Chinese retread industry.

Issue 2009/3