China's tire firms seek alternatives in trade tension

World
Europe

02:16

As one of the largest exporters of tires, China's tire exports to the United States have reportedly suffered a decline over the past few years. The ongoing trade tensions are driving some Chinese companies to find alternative measures, with some of them building plants overseas, most notably in Thailand.

Despite the escalating trade tensions between the US and China, tiremaker Shandong Linglong in east China's Shandong Province, produced nearly 27 million tires in the first half of 2018, witnessing a slight increase.

Tires on an assembly line at Shandong Linglong Tire in east China's Shandong Province / CGTN Photo

Asian countries accounted for 45.3 percent of global export sales in 2017, worth nearly 33.9 billion US dollars, according to data from World's Top Exports, with China ranking first.

Official figures show that European exporters shipped 41.3 percent of the global total, while 9.9 percent of the value of new rubber tire shipments came from North America, with the rest from certain Latin American and Oceania countries.

China builds tire plants in Thailand

The US is China's largest recipient of tires, accounting for nearly half of China's total tire exports. But current tariffs are believed to be causing havoc throughout the global tire industry.

"China is the largest tire manufacturer globally. It's also the largest tire exporter. When the US levies tariffs on China's tires, as well as imposes other technical barriers, the large volume of tire exports from China will flow into other markets, which will spur even stronger competition in other tire markets," said Sun Songtao, Vice President of Shandong Linglong Tire.

Nevertheless, the US tariffs on Chinese tires are considered an opportunity for manufacturers based in Thailand, as tires made in the Southeast Asian country are not subject to the same duties which China faces.

Tires being made at Shandong Linglong Tire in east China's Shandong Province /CGTN Photo

A case in point is Shandong Linglong Tire, whose plant in Thailand, built as early as in 2009, accounts for over half of the company's total revenue.

"We have taken some preemptive measures to cope with the trade frictions, including the impact generated from trade barriers. Now our plant in Thailand can meet the demands of the US market," said Sun.

Thai authorities announced last year that it would invest 100 million US dollars in building a major tire testing facility near its capital Bangkok. And Thailand, being the world's largest rubber producer, is also believed to be a prime place for tire manufacturing.

Besides, Shandong Linglong Tire has recently signed deals to build a tire manufacturing plant in Serbia, where labor costs are believed to be lower, according to staff from Shandong Linglong.

Meanwhile, the company is working on plans to build its third overseas plant in North America.

The US levied trade tariffs on China's tire exports starting 2009.

"In the short term, [the US] imports from China will decrease, but in the long run, it won't help narrow the trade deficit," said Associate Professor Liu Chunsheng with Central University of Finance and Economics.