In the first half of 2014, China’s tire investment is in full swing. Almost all tire factories have large tire investment plans. Contrary to the first half of 2015, tire investment confidence has fallen to the lowest level in recent years, with few new tire projects. Last year, many new projects were stuck in the air due to financial and market reasons. China's tire investment environment has entered cold winter, rubber machinery and tire industries are closely related to the tire investment days are very sad.

Shortage of funds causes tire projects to come to a standstill

On May 16, 2015, Song Yongxiao, general manager of Shandong Fortune Tire Co., Ltd. introduced that although the company's products are popular, due to the failure of the loans to be completed on time, the company’s funds have encountered difficulties and demanded suppliers. Then support the business. At the same time, he announced that Tianjin Saixiang Science & Technology Co., Ltd. and Shandong Hengfeng Rubber & Plastics Co., Ltd. entered the company's bottom. Xiang Hang, general manager of Tianjin Saixiang Company, stated that after the financial review, Forteil, Saixiang Technology and Shandong Hengfeng will come up with a solution to continue to promote the Fortere tire project. "Sayxiang Technology and Shandong Hengfeng are the best ways to solve the crisis of Forteil tires project," said one equipment supplier. "The purchase of equipment for Forteil tires project is mainly conducted through financing. Our company provides a total of two groups. Equipment, the first group has been delivered, but the second group has not been mentioned.If there is a problem, the first equipment according to the financing contract must be returned, and at the same time, the first payment must be returned. This is a great loss to us. We hope that Saixiang Technology and Shandong Hengfeng will successfully settle in. We will also support Fortale and help Fortale overcome difficulties."

Tire projects that require supplier support are not the only one at Fortal Tire. Shandong Chuanghua Tire Co., Ltd. originally planned to open the production line by August of last year, but this year it barely got through the production line. The company hopes that the bank will lend to the company after examining the finished production line, so that the company may continue to pick up some equipment that has not been delivered, but the bank’s money has not been released until now. Shandong Guopeng Rubber Co., Ltd. recently received tens of millions of dollars from the bank. Manager Zhu, who is in charge of equipment procurement, said that this can only bring back key equipment such as judgments, and strive to open up the entire production line in the near future. The current funding gap is still relatively large.

The shortage of funds is a major problem that plagues current investment. As Drepro Tire announced its reorganization, banks changed their views on investment in the tire industry, arguing that there was a greater risk of investment in tires and a significant reduction in investment loans for tire projects. Even some banks have only repaid the due payments for the tire companies without loans. In this atmosphere, even if the tire company does not dare to invest even if it has money, it needs to maintain a certain amount of cash flow to prevent the bank from continuing to withdraw funds. Whether or not the tire projects currently under construction can continue is not an issue of the company’s own intentions. It mainly depends on the timing of bank lending and lending. From the current situation, it is unlikely that large-scale loosening of monetary assets will occur in the first half of this year.

Another factor that restricts tire investment is environmental assessment and land forensics. The Shandong provincial government passed a tire transformation and upgrading plan at the end of last year and adopted a restrictive policy on new tire investment. There is no EIA and land certification, companies do not dare to start tire projects easily. Shandong Yongfeng Rubber & Plastic Co., Ltd. originally planned Yongfeng All-Steel Tire Project. Since the EIA did not pass, the company explicitly cancelled the project. Shandong Zhongyi Rubber Full Tire Project has started half of the project, but due to land restrictions, the project was suspended in mid-air. Linyi had a hot investment in tires last year, but it is understood that the Ministry of Environmental Protection interviewed Linyi City this year. It is estimated that the tires project investment in Linyi will be difficult to pass.

Decline in production and sales affect corporate investment confidence

Tire investment confidence is also related to tire sales. According to statistics provided by the China Rubber Industry Association to 44 tire member companies, in the first quarter of this year, except for stocks, all the economic indicators of the tire industry declined. Tire sales are not good. Tire companies have mostly lowered their investment budget for tires this year. New tire investment projects have been reduced, and only patchwork projects have been completed.

In addition, the United States' "double opposition" has a great impact on China's tire investment. On the one hand affect China's semi-steel exports, on the other hand to combat tire investment confidence. Some tire companies in China have changed their current tire investment strategy and changed their investment destination to Southeast Asia. “In order to deal with foreign trade barriers, Shandong Province has four companies that have invested and built factories abroad, using their country’s resources, labor, and market advantages to increase Shandong Tyre’s market share in the international market and seeking breakthroughs.” Zhang Hongmin, President of Shandong Rubber Association Say, “Sailun (Vietnam) Co., Ltd., invested and set up by Saigon Co., Ltd. in Vietnam, with a total investment of US$95 million, was put into production in August 2013 and became China’s first tire company to be manufactured abroad. Co., Ltd. set up a wholly-owned tire manufacturing company in the Melody Industrial Park in Chonburi, Thailand, with an investment of nearly US$700 million, and the first phase of the project has been completed and put into production.Shandong Aougerui Tire Co., Ltd. has established a joint venture in Indonesia and the project has reached production capacity. Sales amounted to 400 million U.S. dollars. Qingdao Sen Kylin Tire Co., Ltd. has also started construction of a tire factory in Thailand and is expected to start production in the second half of this year." China's largest tire company Zhongce Rubber Group has suspended domestic tire investment projects since the second half of last year, focusing on investing in semi-steel tire projects in Thailand and plans to start production in the first half of this year.

Rubber machinery companies suffer and are forced to adjust their thinking

The reduction in tire investment, especially the tire projects under construction, has caused a huge impact on the rubber machinery industry. Several tire projects in Shandong suspended equipment delivery, and the inventory of rubber machinery companies hit a record high. Several large rubber machineries in China are piled up with unmanufactured equipment and the cash flow is difficult. In the first quarter, there was very little bidding for domestic tire equipment purchases, resulting in insufficient orders. The main job of the salesmen of rubber machines is to push tire companies to take delivery of goods. In the first half of the year, rubber-manufacturing enterprises are generally not full of production tasks. This is a rare phenomenon in recent years. It is predicted that the sales revenue of the rubber machinery industry in the first half of the year will show a negative growth, which is the most difficult time in recent years.

In view of this, a number of companies adjusted their marketing ideas and increased their international efforts. Guilin Rubber Machinery recently received more than one billion yuan in orders from India. Zhang Hongbo, executive deputy director, said that in the current situation of reduced domestic tire investment, this order is very valuable for the company's production and operation this year, requiring companies to do fine and fine, and as an opportunity to increase international efforts to strive for more Obtain orders from international tire companies such as Michelin and Bridgestone .

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