Technologically backward?

If you think of the Chinese tire industry as technologically backward, uncompetitive with the West, and focused on making bargain-basement tires, think again, according to Robert Sherkin, founder and CEO of Toronto-based Dynamic Tire Corp.

"The Chinese tire industry has taken tremendous strides in the last decade," Mr. Sherkin told the audience at the 27th Annual Clemson University Tire Industry Conference, held April 6-8 in Hilton Head. "Several players in the Chinese industry are well-positioned to become major brands."

A lot of myths persist about Chinese tire manufacturing, Mr. Sherkin said, and while most of them used to have some basis in truth, they no longer do. One, he said, is the idea that there are thousands of Chinese tire plants, most of them small and backward.

"In total, it's hard to say, but there are probably 600 tire facilities in China today," he said. "There used to be over a thousand, and the number is slated to go down further over the years."

Mr. Sherkin's Dynamic Tire calls itself one of the largest independent distributors of tires from China. He has worked with the tire industry in China for more than 25 years and, according to his resume, has "witnessed the growth in China not only from the perspective of the tire industry but from a time when cars on the road were a rarity."

Not all manufacturers in China are local, Mr. Sherkin pointed out. "The multinational corporations all manufacture tires in China, and all of them import globally from there."

There will be no more than 50 tire factories in China by 2015, he predicted. Factories will consolidate under China's Five-Year Plan of 2011-2015, he said, and tire makers will have further impetus to consolidate because of rising raw materials prices, investments in new technology and quality control, improved capacity and the closing of low-tech foundries.

Another persistent myth is that Chinese tire makers don't invest in research and development or innovation, Mr. Sherkin said, and focus strictly on the low end of the market.

"Contrary to what people like to believe, the products coming out of China are improving rapidly," he said. "If your perception is based on information that's 24 months old, it's probably already been eclipsed."

Only 32 percent of China's tire output was radial in 2001, Mr. Sherkin said, but that grew to 78 percent in 2009 and 84 percent-or 336 million tires out of 385 million total—in 2010. Total Chinese tire production in 2011 will be about 500 million units, he said.

The idea that Chinese tire makers don’t invest much in engineering or design also is a canard.

"In North America, you can count the centers of learning for tire and rubber technology on one hand," he said. "In China, they have more than 50 institutes graduating more than 5,000 tire and rubber engineers every year."

The growth of Chinese tire production parallels the rapid growth in Chinese vehicle manufacturing, according to Mr. Sherkin. Automobile production in China increased ninefold between 2000 and 2010, from 2 million to 18.5 million units, while medium and heavy truck production rose nearly 13-fold in the same period from 82,000 to 1 million.

By 2013, China will produce more than 25 million passenger cars and 1.5 million medium and heavy trucks annually, he said.

China's reputation as a tire manufacturer has lagged behind its achievement, largely because so far Chinese tire makers have done no significant branding or marketing, Mr. Sherkin said, noting that situation will change soon as Chinese manufacturers position themselves to seek original equipment fitments.

In his presentation, Mr. Sherkin included a slide giving the results of track testing of six different tire brands undertaken in September 2010 by an independent Canadian testing company. Sailun-brand tires from China placed second in the testing, behind only Sumitomo and ahead of Hankook, Continental, Cooper and Kumho, he said.


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