Tire Makers Face Challenges    

By Zhong Weike    

On September 12th, US President Barack Obama decided to impose a 3-year tariff on imported China-made tire. In the first year, it will be set at 35%, the second year 30% and the final year 25%. The US International Trade Commission (ITC) proposed a tariff of 55%, 45% and 35% respectively. The US media judges that Obama strikes a middle ground between satisfying his influential labor constituency while signaling to much-needed China that the U.S. values the bilateral relationship. And US President Obama is attempting to hold together the Democratic majority in Congress in order to pass his health care reform.
    As a response, China Rubber Industry Association (CRIA), China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC), CRIA Tire Branch, CCCMC Tire Branch and Chinese Tire Companies Involved sent a letter of complaint to the US President Mr. Obama on September 12th. The open letter stated that exports of China-made tires to the US in 2008 increased only 2.2% compared with the previous year, whilst in the first half of 2009, the exports fell 16% than one year earlier. The imposition of duties on Chinese tire imports is not only helpless to solve the problems claimed by the United Steelworkers union, but also harmful for US tire producers, wholesalers, retailers, after-sale servers, retreading and recycling companies, and end users as well. Now the US has over 200 dealers and 43 100 retailers selling China-made tires, then they have to get re-employed.
   Twelve Chinese tire companies including South China Tire & Rubber Co., Ltd., Hangzhou Zhongce Rubber Co., Ltd., Aeolus Tyre Co., Ltd., Shandong Linglong Rubber Co., Ltd., Nanjing Kumho Tire CO., Ltd., GITI Tire (China) Investment Company Ltd. and Hankook Tire China Co., Ltd. signed on the letter.
   The United Steelworker union documented a tripling of Chinese tire imports from 2004 to 2008 that it said threatened thousands of jobs at U.S. tire factories. Most major U.S. tire makers like Goodyear manufacture tires in China.
   According to official statistics, China manufactured 546 million tires in 2008 and exported around 180 million tires for motor cars, buses, lorries and off-road trucks. Of that, around 46 million tires was exported to the US.
    The Ministry of Commerce of China (MOC) announced its official objection to Obama's decision and is applying for the rule of the World Trade Organization.
   On September 14th, MOC announced to start an investigation on imported automobiles and chickens from the US. MOC has also started to prepare support measures to help tire makers addressing difficulties. China's tire makers were required to upgrade their competitive edge through improving product portfolio and updating technologies.
   China's listed tire makers Aeolus Tyre Co., Ltd., Gui Zhou Tyre Co., Ltd., Double Coin Holding Ltd. and Qingdao Doublestar Co., Ltd. stated publicly on September 15th that they will not impacted directly by this case because their exports to the US accounted for less than 3% in the total sale. Goodyear's tire factories in China, targeting to Asia-Pacific markets, will not be affected too.  
   South China Tire & Rubber Co., Ltd., Hangzhou Zhongce Rubber Co., Ltd., Shandong Linglong Rubber Co., Ltd., and GITI Tire (China) Investment Company Ltd. will be impacted directly.
   Shandong Linglong exported 3 million tires to the US in 2008. The company now is seeking opportunity in Africa. South China Tire & Rubber Co., Ltd., China's largest tire exporter to the US market, has already increased its sales in European, African and Asia-Pacific markets by around 20% in the first half of 2009. It made 8.5 million tires in 2008. China's largest tire maker Hangzhou Zhongce Rubber Co., Ltd. will hence lose more than US$100 million sales per year. GITI Tire (China) Investment Company Ltd. announced the sales in the US market accounted for one quarter of its total sales in 2008.
   Followed the US, India also started a protecting case on imported China-made tire on August 21st.