Guangzhou South China Rubber Tire Addresses the US Special Protectionist Tariff on Tires       

Guangzhou South China Rubber Tire Co., Ltd., (SCRT) is a state-owned company established in 1992. It owns three production bases in Panyu, Conghua, and Huadu of Guangdong province and is capable of producing 11 million sets of radial tires annually. Its product Wanli radial tire is named as "China's Famous Brand" by AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine of China). Currently, SCRT produces more than 1 200 sizes and patterns of tires. More than 70% of its products are exported to more than 120 countries and regions, including Europe, the USA, and Australia.
    SCRT has maintained over 20% annual revenue growth rate in the last nine years. In 2008, the company made 8.5437 million sets of tires, realizing a sales revenue of RMB2.76 billion.

Emphasis on the R&D of new products    

SCRT now possesses the independent intellectual property rights on a number of core tire technology. In 2007, the company declared it developed the "26 inch" high-performance radial tire, being China's first company capable of make this type and world's seventh. It has also developed run-flat tires, also the first in China and No.10 worldwide. On this basis, in 2008, SCRT developed the "28 inch" high-performance car radial tire (No.5 worldwide, No.1 in China). In recent years, the company has filled the gaps of about 20 types of tire products for China.

Addresses the US Special Protectionist Tariff on Tires   

The US decided to levy a 35% tariff on Chinese-made tires imported into the United States. A SCRT manager admitted that the company's annual export to the US is above US$150 million. In the Obama administration's special protectionist tariff storm, SCRT will be one of the Chinese tires exporters that suffer most losses. The head of SCRT said, as a response, the company will try all means to expand its shares in domestic market. In fact, they had made such a decision before the decline of exports. SCRT now has reached agreements with Guangzhou Yiqi Bus and become the main tires supplier for Yiqi Bus. Meanwhile, the company is trying to win the supply and original equipment businesses of Guangzhou public traffic companies and local passenger cars companies. SCRT has also developed a used-tire renewal production line with Guangzhou Yiqi Bus, which can in large extent reduce the public transport companies' operational cost. "In 2009, our company's monthly sales volume in domestic market has kept increasing at 15% to 20% a year-on-year base."
   While maintaining its traditional export market share, SCRT plans to develop new products to explore the emerging markets of high-performance tires. SCRT has begun to adjust its export market structure to reduce its dependency on the US market. Mr. Zou, a SCRT manager, said, the company has raised the proportion of tires exported to Germany, Britain, and other European countries. And it is exploring the emerging markets such as the Middle East.
   Currently, the export to the US market accounts for more than half of SCRT's total sales volume. After the US disclosed its special protectionist tariff on tires, SCRT announced at the first time that they will raise the price of their products exported to the US by 35%. "We will not quit the US market. Our brand is a household name in America and we have our own sound. SCRT have begun the negotiation with dealers to together make up for the losses by the high tariffs."
    Mr. Zou said, every year, SCRT sells about 3 million sets of tires to the US, accounting for 10% of the total export volume of all Chinese companies to the US. Among the 3 million sets of tires, most are half-steel car radial tires and SUV tires. This 35% price rise will inevitably reduce its share in the US market. In the first six months this year, SCRT exported 1.57 million sets of half-steel car radial tires to the US, whereas according to preliminary calculation, the monthly export volume after the price rise will drop a half or so. The company's quick price rise was due to following considerations. First, since the US started the investigation for special protection in April, SCRT has increased its efforts in expanding the emerging markets in Europe, Middle East, and Africa. And its sales volume in domestic market has experienced fast growth during January and September. Second, the company estimated that even if the export price to the US has risen by 35%, the sales income from other region can make up the company's loss resulted from fewer sales in the US market.
     "Of cause, SCRT also hope the Chinese government may increase the export rebate rate, and reduce the import tax rate of raw materials for tire production, so as to help tire companies go through the tough period."

Currently, SCRT is actively making use of its technology advantage to enter motorcycle tires, special tires, renew tires fields to extend and establish a more completed industry chain. According the company's developing plan, in the coming five to eight years, SCRT will grow into an internationalized and large scale tires manufacturer with an annual production capacity of over 30 million sets of tires and RMB15 billion of annual revenue.