Marangoni Assesses Chinese Market: Concrete Moves to Come

As previously reported in Retreading Business, the Marangoni Group made its first tentative steps into the Chinese market in early 2007 with the establishment of a sales office in Shanghai under the management of Marcelo Gambarini. However, the Italian Group is in no hurry to develop market share in China and is currently assessing its options before making the decisions it needs to make in order to establish a solid foundation in the market. This was revealed by Managing Director Ing. Giuseppe Ferrari during an interview held during the Reifen China exhibition in November 2007.

According to Ferrari the new subsidiary will be responsible for promoting the full range of products sold by the Marangoni Group including new tyres, retreads, industrial tyres, retreading and new tyre manufacturing equipment and retreading technologies. However, as retreading makes up the lion’s share of Marangoni’s turnover, it follows that the company’s key focus in China will be on the retreading sector.

Says Ferrari; “Our initial task is to understand the fundamentals on which the retreading industry will develop in China. We believe that if we can fully understand the process by which China can become the largest world market for retreading, then we will be in the best position to participate in the market and eventually to gain a leadership position. The market may develop differently to elsewhere in the world so we need to understand our best options”.

According to Ferrari, the future of retreading in China will depend on a number of factors. Primary among these will be legislation. “The proliferation of small workshops with no consideration of quality promises to make things difficult”, he said. Ferrari also pointed out that the development of new tyre pricing would play a crucial role in the prospects for retreads. “Overcapacity in the new tyre sector is a cause of non-competitiveness in this country”, he added. Marangoni, added Ferrari, is also monitoring the retreadability of Chinese tyres, which he says, are improving although not yet sufficiently quickly. The rate of radialisation was less of an issue. “This has accelerated and radials will substitute bias tyres in the developed part of China very quickly”, he said.

Ferrari confirmed that Marangoni’s eventual aim will be to produce tread rubber locally, but that it had not yet been decided at what point in the company’s development this would occur. He also added that the company would initially focus on traditional retreading with precured tread strips. The RingTread System, he said, had been identified as being premature for the Chinese market.

Marangoni is currently working with a number of larger players in the Chinese market and is assessing its options. “We need to make sure we are making the right noises”, said Ferrari. We are making our initial decisions right now and next year you will see some concrete moves being made”.

Issue 2008/1