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CHINA
Shishi Zhengxin Rubber Co Ltd Battles Against Local Market Slowdown
Yang Tian Yi of Shishi Zhengxin Rubber Co Ltd
Driving in a drizzle further in the suburbs of the Jinjiang City, another retreader is fighting hard to cope with the ongoing slowdown in the Chinese retreading industry. Shishi Zhengxin Rubber Co Ltd, based at Shishi City, known for garment trading and industry, retreads between 600-700 tyres per month. “We used to retread
1,500 – 2,000 tyres every month but now the production has gone down drastically due to the very low price of new Chinese tyres, leaving us almost out of work,” said a concerned Yang Tian Yi.
The downturn in the industry began when the Chinese government banned long distance highway bus
fleets from running on retreaded tyres due to some high profile accidents. The mishaps are due to bad quality retreading by small players leading to a clamp down on the whole retreading industry. “The ban on the use of retread tyres on highway buses has affected us badly as it resulted in a steady decline in volumes in the following couple of years leading to the current situation,” rued Yang.
The second leading factor is no doubt the fact that the domestic market is flooded with cheap tyres produced at the plethora of Shandong based tyre factories. “The quality of the cheap tyres is very bad but fleet owners prefer to buy them instead of using retreaded tyres. If the situation remains like this, we will be left with no option but to shut down the plant,” said Yang.
In the last couple of years, lots of smaller factories downed their shutters in Fuzhou Province. “Now retreaded tyres are no longer popular and if we somehow find suitable casings, it is not easy to sell them as the price of cheap tyres is almost
equal to that of retreaded tyres,” Yang complained.
Commenting on the shortening gap in the price between new tyres and retreaded tyres, Yang explained, “It is hardly RMB 200 – 300 and therefore, people jump to buy low priced new tyres.” It has been known that the price difference used to be half earlier. “There was a time when new tyres were priced at RMB 2,000 and retreaded tyres were at a price of RMB 1000, when we were operating at our peak. But now it is difficult to run the plant as labour costs have also escalated,” Yang stated.
Started almost two decades ago in 1997, the plant runs on a 17 tyre chamber. The plant is buying around 6 tonnes of rubber from Jianxin to retread with the precured process. When asked if the industry had approached the government for any favourable policy, Yang added, “China is a big country, it takes some time to get noticed by the government before some policy can be framed and implemented.”
the precure process. Manufacturing with the mould cure process takes a long time, therefore we prefer precure retreading now,” Weng said.
The company also has plans to start a new retreading plant outside of Jinjiang city. “If we can find a good place, we may set-up a new plant out of Jinjiang. We have been looking for a suitable location from quite some time,” said Weng.
Quanzhou Zhenxing Retreading Factory to Expand in OTR Segment
Chinese tyre makers have created havoc in the international market and are regarded as significant competition for the global retreading industry. Interestingly, the same Shandong based tyre makers are also considered responsible for negatively affecting the domestic retreading industry. Shandong, a coastal province in the East China region, is the home of more than 100 Chinese tyre brands churning out cheap tyres almost equal to the price of retreaded tyres, affecting the fortunes of the struggling retreading industry in China.
Jinjiang based Quanzhou Zhenxing Retreading Factory started in 2000 and retreads around 1,500 tyres per month. “There is very little chance of improving production figures as suitable casings are difficult to get in China these days,” said the company’s owner, Weng Zhen Wen. The company retreads around 200 OTR tyres per month in addition to truck tyres.
It is interesting to note that Chinese retreaders are openly critical of the quality of domestically produced Chinese tyres. “Chinese tyres are not good for retreading. New Chinese tyres are very cheap with little difference compared to retreaded tyres,” Weng complained. Unless
truckers switch to good quality tyres like Bridgestone or Michelin, the casing shortage is expected to further worsen. “Low quality tyres are flooding the market and these brands are not investing in improving product quality, as production costs have been hiked drastically over the past few years. Therefore they focus on volume instead of quality,” Weng explained.
Jinjiang is a small market, having 4 retreaders including Quanzhou Zhenxing Retreading Factory. It has one 17 tyre chamber sourced from Yuhow of Shanghai. Although the company views limited growth prospects in truck tyre retreading, it is looking to expand in the OTR segment. “We are
planning to buy more equipment to strengthen our OTR retreading. We have found a big client that assures us it will buy retreaded tyres from us,” Weng stated.
The company has sourced its tread rubber from Jianxin Rubber since 2005. It buys around 15 tonnes per month and retreads by both the traditional hot and precure processes. “The majority of our production is by
Weng Zhen Weng of Quanzhou Zhenxing Retreading Factory
54 Retreading Business