Since 2001, with the warming of the world economy and auto market demand for a substantial increase in the world tire industry entered the period of rapid growth, 5 years, sales grew by 47.55 percent. At the same time, the world's tire industry giants control not only the world tire market share of more than 80%, and China accounted for half of the territory of the tire market.
China has become the world's largest consumer market and the automotive tire market is expected that by 2010, China's total demand of about tire 300,000,000. This is for the development of China's tire industry has created a favorable market environment. As of the end of 2006, China's tire business has reached 360, but in 2006 China's tire sales in the Triangle's largest group with annual sales equal to only 4.66 percent of the Michelin tires. As soon as possible in order to improve the international competitiveness of China's tire manufacturers have to integrate, which is China's tire industry is an inevitable trend.
Tire market competition
At present, three of the world tire industry giants --- Michelin, Bridgestone and Goodyear tire market in the world to occupy a total of more than 50% market share. The world's top 10 tire companies occupy more than 80% of world market share.
The world's top 10 tire companies have entered the Chinese tire market, the Chinese tire market in control of more than 50% market share. Michelin's Shanghai Tire & Rubber Company holding 70% stake in Shenyang in the formation of a joint venture factory to produce steel radial truck tire, the South China also plans to build a tire factory to be completed in our country from its north to south The layout. Bridgestone Corporation in China, Shenyang, Tianjin, Wuxi and three tire plant, to occupy China's passenger car radial tire with a market share of about 10%, to occupy our country radial truck tire market share of 15%. Goodyear in China there are nearly 100 dealers, 300 authorized service network and more than 1,600 retail stores Goodyear signed. South Korea's Hankook in China, Jiangsu and Zhejiang has two tire plants and two R & D centers, China's car tires to occupy 25% market share.
Since 2002, Chinese tire industry to profitability, the emergence of a large number of excellent tire manufacturers. From 2001-2005, the global tire industry in the top 75, top Chinese enterprises to grow and accounted for in the world tire market share has been increasing.
As of the end of 2006, there were more than 360 tire manufacturers, but only 45 enterprises in the country after a mandatory qualification tire (CCC), other technical equipment are of poor small business. At present, the world tire market has been completed from the "tire" to "tire" of the transition, Europe and the United States of the tire, "Meridian rate of" close to 100% of the world tire market, "Meridian rate" for an average of more than 90% China's tire and "meridian of the rate of" only 50%. As of the end of 2006, foreign-controlled enterprises and the radial tire production in the country for more than 75% of the total output of radial tire, the tire Chinese enterprises both from a technical or production are at a disadvantage.
Tire industry's consolidation trend
Tire manufacturing is a traditional high-polluting industries, the production of tires in the process of curing would have a lot of smoke, pollutants such as carbon black dust. Only the-art technical equipment of large tire manufacturers have sufficient financial strength to carry out pollution control, to achieve "clean production." Technical equipment behind a small tire manufacturer has become a major source of pollution.
According to China's environmental protection policy, our government will sooner or later shut down heavily polluting small-scale tire manufacturers. From the point of view of environmental protection, China's large number of small and medium-sized tire manufacturers, there are only two options: One is forced to close, one through mergers and acquisitions, the development of advanced technology and equipment to become a large-scale tire manufacturers.
According to statistics, 70% of car accidents are caused by tire quality. The high profile car at home and abroad choose to install high-quality well-known international brand tires. Foreign brand tires to occupy half of China's tire market, mainly because of China's tire manufacturer Michelin has yet to take shape with world giants such as high-quality product against an internationally renowned brand tires. To create high-quality well-known international brand tires, the key lies in the tire production process and quality control of the quality of the tire uniformity. China's tire exports have emerged the quality of the individual tire incident has seriously affected China's tire reputation in the international market and international competitiveness. This individual's quality of the tire accidents due to tire production quality control and product quality are less homogeneous.
According to the current domestic and foreign tire market competition, China's tire manufacturers can not tire as quickly as possible to improve the quality of uniformity, to create high-quality well-known international brand tires, the tire industry in China is difficult to reverse the international competition in the inferior status. In this regard, China's tire industry is only one choice: the development of internationally competitive large enterprise groups, tire manufacturing.
Tire is the main raw material of natural rubber and synthetic rubber (tires account for the cost of 45-50 percent), Steel Cord (accounting for 15% of the cost of tires), tire cord and carbon black, together accounting for about 70% of the cost of tires. Since 2005, the beginning of a substantial price increases of raw materials, natural rubber prices in 2006 rose by about 47%. China's tire industry due to the concentration of low tire manufacturer's ability to negotiate lower prices, the prices of raw materials can not be transferred to the lower reaches of the replacement tire market, or support. According to the domestic industry experience, raw materials prices rose 20 percent, finished tire prices rose only 4%, which seriously undermine the domestic tire manufacturer's profitability.
Shows that the tire industry's pollution control policies; to improve the quality of tire uniformity, the expansion of the international tire market share; as well as improve the profitability and survival of these factors have determined the tire industry of China's imminent consolidation trend.
China's tire industry consolidation strategy
There are more than 300 tire manufacturers, including one-third of the enterprises located in Shandong Province. In Shandong Province, more than 100 tire manufacturers, the four state-owned enterprises, most of the enterprises are private enterprises. Shandong Province's total output of tires in the world's tire production by 12%. Shandong Province, there are six tire manufacturers on the list of "2006 Global Tire 75", are the Triangle Group (Weihai), Linglong Group (Yantai), West Water Group (Dongying), Chengshan (Weihai), Double Star (Qingdao) and Yellow Sea (Qingdao). Shandong Province, will assume that the tire manufacturers all together, annual sales income will reach 2,300,000,000 U.S. dollars (based on 2006 sales), ranked eighth in the world.
Tire according to the types of products can be divided into eight types: car tires, light truck tires, truck and bus tires, tires for agricultural vehicles, vehicles tires, industrial vehicle tires, aircraft tires, motorcycle tires and so on. In accordance with the principle of comparative advantage, a franchise of the tire companies have low-cost high-quality and competitive advantage.
Dongying City in Shandong Province are dozens of tire manufacturers, almost all small and medium-sized private enterprises, the main production truck tires, primarily for export products, particularly in the Middle East export market. Is to Dongying City, Shandong Province Truck tire production of small and medium-sized enterprises, for example, investigate the tire industry of China's integration strategy.
China's tire industry should be integrated in the same area of the tire manufacturers to integrate the same types of products and tire manufacturers began to integrate. In theory, in addition to some of the technical equipment behind a small tire manufacturers will gradually withdraw from the market, in Dongying City, Shandong Province, the number of truck tire manufacturers may eventually form a large truck tire manufacturing enterprise groups.
According to China's national conditions and traditional Chinese cultural background, and in accordance with the type of product integration can not be a tire industry and kick on, the tire industry, the integration must be carried out step by step and in stages. Dongying City of Shandong Province Truck Tire manufacturers can be integrated from the beginning of the integration of procurement of raw materials.
Tire manufacturers need large quantities of energy and one-time procurement of raw materials, rubber accounted for 50% of the cost of raw materials, rubber prices are rising, making the tire industry's high production costs. It is estimated that by 2010 Chinese natural rubber production to 750,000 tons, can only meet the domestic demand of less than one-third, will face a serious shortage of rubber and prices. The rising prices of raw materials will be swallowed up more and more tire manufacturer's profit, or even threaten the survival of enterprises. At present, any large-scale tire manufacturing enterprises are not adequate to support the scale of the enterprise to negotiate the price advantage, small and medium enterprises do not have the ability to negotiate prices, can only passively accept the offer of raw materials suppliers. Reduce the purchasing price of raw materials is the city of Dongying, Shandong Province Truck Tire manufacturers of common requirements.
Lower procurement costs for raw materials, the common interests of the city of Dongying, Shandong Province Truck Tire manufacturers can be co-financed the procurement of raw materials to form a joint-stock companies, unified procurement of raw materials for various companies. Due to rapid expansion of the size of the procurement of raw materials, in Dongying City, Shandong Province Truck Tire procurement of raw materials companies to significantly improve the status of price negotiations, the purchase prices of raw materials will be significantly lower than the purchase price of a single enterprise. Procurement of raw materials, as the company's shares to shareholders, each truck tire manufacturers can work together to strictly monitor the company's raw materials procurement activities, to prevent against the interests of shareholders.
As a traditional product, a tire manufacturing plant to complete a full tire production, each production must have sufficient technical quality inspector, will be able to guarantee the quality of the tire uniformity. Even with advanced technology and equipment, small and medium-sized tire manufacturers may not have enough inspectors of the quality of the technical staff, or even better quality control procedures. The lack of uniformity for quality tire that the tire manufacturer is difficult to expand market share, grow and may even occur as a result tire individual quality, enterprise-wide disaster victims. To improve the quality of the tire uniformity is the city of Dongying, Shandong Province Truck Tire manufacturers wish too.
A large enterprise groups have quality management. To improve the quality of tires for uniformity of the common wish of Dongying City of Shandong Province Truck Tire manufacturers can be co-funded the formation of a tire quality management joint-stock companies, each responsible for the tire business quality management. The quality of the management company to recruit professional managers and a large number of quality inspectors technical staff to develop uniform tire quality control procedures, the quality of inspectors assigned to technical staff responsible for each individual enterprise's production quality control. In general improve the quality of tire uniformity on the premise of production in Dongying City of Shandong Province Truck tires will be improved reputation in the international market, each truck tire manufacturers will benefit from various enterprises contribute to the expansion of international Market share.
Against the closure of high-polluting small and medium-sized enterprises tires tire industry is an inevitable trend and sewage costs will be higher. In a strong environmental policy, the instinct for survival, pollution control ability of small and medium-sized enterprises will take the initiative to produce tires with other industry enterprises or merging to reduce pollution control costs. In the formation of co-financing the procurement of raw materials, raw materials procurement to reduce costs, as well as the formation of a common quality control, improve the quality of tire uniformity on the basis of the irresistible pressure of environmental protection policies, in Dongying City of Shandong Province Truck Tire manufacturers Will be formed by a truck tire manufacturing enterprise groups, each enterprise will become a subsidiary of the Group of independent legal person.
In accordance with the above steps to complete the integration of the tire industry, largely due to changes in Dongying City, Shandong Province, each truck tire manufacturing enterprises and shareholding structure, and so on, but the common interests of the various enterprises based on the implementation of a phased and carried out step by step Integration, so that industry consolidation is basically not likely to encounter much resistance and obstacles. To a regional small and medium-sized manufacturing enterprises based tire implementation of the integrated tire industry, to avoid repeated investment and repeated construction.
In the tire manufacturer to integrate the region on the basis of Shandong Province, the area tire manufacturing enterprise groups will be further integrated to form a larger group of tire manufacturers, tire industry into the world top 10 enterprises.
China's large-scale merger between the tire business, there are two basic ways: First, a friendly merger, the voluntary merger of two companies; Second, the mandatory merger, the combined strength of the disadvantaged business enterprise. The major tire companies adopt merger which means, depending on business conditions and prospects for development. China's major tire manufacturers operating conditions and development prospects of the enterprise depends on the research and development capabilities and brands. At present, the radial tire production technology is the introduction of foreign technology 10 years ago, China's tire business must have a strong R & D capability, foreign-funded enterprises in order to break the blockade on our country's technology in order to hold onto the domestic market and international market. China's major tire companies in the process of integration with R & D capabilities and brand strengths of the business will become the final winner.
Tire industry consolidation in the investment opportunities
China's tire industry consolidation driven by the need for external force, or the need for investment banks and investors to promote. Dongying City in Shandong Province in the Truck tire manufacturers in the integration, investment banks can advance research in Dongying City, the tire industry, the integration of the program, each organization tire manufacturers discussions and consultations, to promote the city of Dongying, Shandong Province Truck Tire Manufacturing Enterprise integration. It can be said that if they do not have the driving force behind investment banks, in Dongying City of Shandong Province Truck tire manufacturers to integrate the quality and speed will be seriously affected. The first to participate in China's tire industry to integrate the investment banking business will receive the largest share in the field.
In order to ensure the safety of the investment and improve the return on investment in China's tire industry in the process of integration, investment banks are required to choose an accurate starting point accurately determine which companies may be active merger, which may be the corporate mergers are passive. Integration between the private enterprises are the biggest obstacle to the integration between entrepreneurs, so the design of China's tire industry consolidation program, the investment banking business must be based on the common interests of the various stand for.
At present, China is the world's largest tire market. China's tire industry after the completion of the integration, China will form internationally competitive large enterprise groups, tire manufacturers, these enterprises have the ability to create a better investment income. China's tire industry's need for integration of strategic investors and financial investors to participate in and support of a lack of investor participation and support, it will be difficult to complete the integration between the tire business, particularly in large-scale tire manufacturing enterprises between integration. China's tire industry consolidation to provide investors with valuable investment opportunities.
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