"Two Conferences" Policy Brings New Pattern to Tire Industry

Recently, at the first meeting of the 13th National People's Congress, the “Government Work Report” made by the Prime Minister included all aspects, and it was a guiding light for the tire industry that we care about.

I. Private enterprises usher in new developments

The "Government Work Report" shows that in 2018, the government will support the development of private enterprises, insist on equal rights, equality of opportunity, equality of rules, conscientiously resolve outstanding problems reflected by private enterprises, and resolutely eliminate various hidden barriers. The situation in which private enterprises and state-owned enterprises “do not dare to fight” or “contend” is changing. The prime minister stressed: "Encourage and protect entrepreneurial spirit, enhance entrepreneur confidence, and let private enterprises demonstrate their skills in the wave of market economy."

Judging from the Chinese tire industry, state-owned tire companies represented by China Strategic, Advance , and Fengshen have always played an important role in the Chinese tire market. However, private tire companies still occupy the majority, and most of the private tire companies have gone through difficult roads. Some companies have even become fixed at a certain point in time and become history. This is undoubtedly a lot of private tire companies, like the "winter", even if they reluctantly survived, are also warmly alive, compared with the state-owned tire companies, the development is still relatively limited.

Tire industry will welcome a new pattern Tire industry will welcome a new pattern

Second, breaking the ineffective supply becomes the key

In 2018, one of the tasks of the government was to further promote structural reforms on the supply side. Continuing to eliminate invalid supply has become a key factor in this work. The Prime Minister stated: "We must adhere to market-oriented and legalized measures, strictly implement regulations and standards for environmental protection, quality, and safety, resolve excess production capacity, and eliminate backward production capacity."

According to this series of standards, a large number of "shop-style" tire factories may not be able to escape the fate of being eliminated. At the same time, "zombie enterprises" have also become the goal of government governance. The "Government Work Report" shows that it is necessary to intensify the bankruptcy liquidation and reorganization of "zombie enterprises" and do a good job of employee settlement and debt disposal. In the very period when China's tire industry is “big wave”, a group of small and weak companies will soon be eliminated and lay the foundation for the new birth of the tire industry.

Third, environmental inspectors are the norm

The "Government Work Report" shows that in 2018, the government will make greater progress in promoting pollution prevention. The goal is to reduce sulfur dioxide and nitrogen oxide emissions by 3%, and the concentration of fine particulate matter (PM2.5) continues to decline in key areas. At the same time, the government began to implement the ecological damage compensation system and improve the ecological compensation mechanism. All this has made the strict enforcement of environmental protection laws a necessity and has had a significant impact on tire companies.

This year, environmental protection has achieved initial results. Among the reforms, the tire industry is the most severely affected by the environmental protection reform. Not only is the company's sewage treatment and production equipment requirements more stringent during the production process, but also the amount of environmental taxes has increased. Tire companies that are subject to environmental regulations will be ordered to stop production and the fine will increase. Under the strict state of the country, the tire industry is expected to improve its overall competitiveness through major changes and major reshuffles.

The world's largest tire market is in China. The tires of the world are concentrated here. Many famous large-scale tire companies have all settled in China, causing great impact on Chinese tire companies. Although our local tire companies started late and there is a big gap, we are expected to break through the existing bottlenecks, both in terms of technological performance and brand competitiveness. In particular, with the strong support of the country, we are more likely to develop distinctive features. The national tire industry, in the future, is a little longer with the world-renowned tire brands.

Readings:

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