China's tire industry is set to become much more efficient, while capacity expansion will slow drastically over the next two years, according to information gleaned from a strategic policy document published recently by China's Ministry of Industry and Information Technology.
The government aims to make the industry more professional by limiting permission for new factories only to large projects using radial technology. The policy also sets forth requirements for modern tire materials and environmental constraints and guidelines for the raw materials supply and waste tire disposal industries.
In addition, the government said unrestricted growth in the sector has led to severe overcapacity in the market and will issue no new building permits before 2012.
It aims through the new policy to consolidate the industry and to ensure managements are more modern and forward-looking, paying attention to market needs, brand awareness, technological development and long-term planning.
The plan calls for eliminating bias-ply car tires by 2015 while allowing light truck and heavy truck tires to be 10- and 15-percent bias-ply, respectively. No new bias-ply capacity may be built. This policy is designed to promote the development of radial technology and tubeless technology in China.
Aircraft tires will continue to be produced in bias-ply constructions.
As part of this thrust, China will establish centers for training personnel and developing new technologies. In addition, China wishes to accelerate its acceptance of international standards in both new tires and in the retread sector.
To support this effort, China expects to establish a national testing and evaluation center.
The policy also insists that tire makers cooperate with vehicle makers to develop tires which are suited to the market. Article 14 says the government will “vigorously promote energy conservation and comprehensive utilization of resources.” It further requires tire makers to “increase variety, improve quality, energy saving, pollution reduction and technological innovation focused on safety.”
On this theme, the policy calls for a much stronger industry focused on tire recycling and disposal, including the development of recyclable rubber, cryogenic crumbing and the phasing out of tire packaging to reduce unnecessary wasting of resources.
Tire makers also will be asked to implement radio frequency identification tagging both for production and in-service applications.
Tire makers will be asked to participate in the natural rubber industry, from NR plantations to rubber-processing factories. There is a specific request in the document to establish offshore natural rubber cultivation and processing.
The policy seeks more development of synthetic rubber, with isoprene, halo-butyl, butadiene and styrene-butadiene rubber all mentioned by name. The policy seeks to increase the proportion of synthetic rubber used in the tire industry, with the necessary development of SR production capacity.
In terms of reinforcement, the policy calls for more capacity for high-performance polyester tire cord and also nylon tire cords. The document also mentions aramid fibers as a priority for high-tech development.
In terms of fillers, the policy seeks “the development of environmentally friendly rubber chemicals and carbon black, silica and other raw materials.”
On the machinery front, the policy wants to see more modern machinery such as mixers, extruders, calenders, cutters and molding and curing equipment
But it is not just production machinery; the policy goes into the need for better testing and analytical equipment.
New tire factories and expansions will have to meet a central plan for industry development, and in addition they will have to meet new environmental and pollution guidelines.
Specifically, permission will not be granted for any passenger tire project smaller than 6 million units/year capacity nor for any truck tire project smaller than 1.2 million units/year. In OTR tires, the limit is 30,000 units/year.
The document states no new tire capacity will be approved in the 2009-2011 period, but an independent analysis of available tire industry expansion announcements seems to render this point moot.
“Competent” Chinese tire makers will be encouraged to set up factories outside China, according to the document.
Any tires exported from China must exceed the requirements of the destination market and meet any relevant national standards and regulations, the document says.
In addition, the new policy specifies that Chinese tire makers must adhere to international intellectual property rules and must not copy tread patterns or use misleading logos or brand identifications.
China also sets out its intention to enforce rules on proper use and selling of tires and will strictly enforce limits on tire loading, sidewall markings and tread depth limits.
Chinese companies will be encouraged to establish their own brands, trademarks and brand management strategies.
Foreign investment projects will need a minimum value of $300 million.
In addition, foreign companies will be allowed to set up tire sales and service operations, in accordance with relevant Chinese laws.
All new China-based projects must use energy-saving equipment, and the document specifies large capacity internal mixers as opposed to open mills. Also curing presses must be nitrogen-powered.
There are limits on energy consumption of new factories and also on water consumption and recycling. All existing factories must meet the restrictions in this paragraph by 2012.
All tires must be certified as meeting minimum standards, and no tires may be sold without appropriate certification. Specifically, agricultural tires and other specialized tires must be labeled as such and may not be used on inappropriate vehicles.
The new policy insists on an effective plan for the disposal of reject tires and for the disposal of end-of-life tires. It calls for tire makers to participate in this process and develop means of recycling end-of-life tires.
Truck tires should be designed with retreading and recycling in mind, and the policy calls for an increase in the percentage of retreaded tires fitted to fleets. A system of certification and approval will be introduced, to ensure the effective use of retreads in China.