A "Twin Venture" for a Tire Export Trader

“I went to the United States on one hand to visit long-term tire dealerships. Another important purpose was to specifically examine the business model of American tire chain stores. I have decided to start my second venture!” when the Xinhua News Agency research team arrived a few days ago. In an interview with the Qingdao Koon Group, Liang Ziqiang, president of the group, was busy preparing for the next US visit.

The Keang Group is a privately owned company that exports large tires in Qingdao. Liang Ziqiang’s visit to the United States is a pave for companies to move to the domestic market.

Difficult decision - "multiple attack" caused by the sudden increase in pressure The international financial crisis two years ago spread to many foreign trade companies in China, and the Koyn Group, which is mainly engaged in the export of tires, has also suffered a severe blow.

“The external demand has been frustrated. Domestic and foreign tire manufacturers have cut production, and the market situation is grim. We have changed our minds in adversity, adjusted the structure of export products and market structure, and shifted middle and low-end truck tires and agricultural vehicle tire products to export high-end cars. With high-performance tire products, while adhering to the European and American traditional markets, we have actively explored emerging markets in Southeast Asia, Africa, Latin America and other countries, and companies have weathered difficulties." Liang Ziqiang said.

In fact, because of its own brand of high-end tire products, Koon's tire exports have continued to rise against the trend in the crisis, in 2009 exports 70 million US dollars, this year is expected to reach 120 million US dollars. However, the risk behind the high growth has caused Liang Ziqiang to worry.

"In the long run, international traders have become increasingly difficult to walk along the road." Liang Ziqiang told reporters that in September last year, the United States took China's export of tires to the United States domestic tire industry as a result of the impact of unemployment, will China's exports to the United States The tariffs on cars and light truck tires rose from 4% to 39%, which caused many domestic tire manufacturers to fall into a state of collapse or semi-discontinuity at the time, and the export of tires to the U.S. market was suspended. Although sales to the U.S. market have recovered somewhat, a professional U.S. magazine has reported that China’s exports of U.S. passenger car tires have declined 40.6% since the end of August this year since the U.S. imposed special protection on Chinese-produced tires in September 2009. , while South Korea, Indonesia, Thailand and other countries have grown by more than 60%.

In addition to trade protection, domestic export companies and tire manufacturing companies do not have the right to pricing important raw materials is also one of the risks of export trade. Taking the raw rubber of tires as an example, China is the largest user of natural rubber, but the pricing power is in the hands of foreign trade brokers and hot money.

“The price of natural rubber in the world rose to a historic high of US$3,200 per ton in 2007. Although the price fell to US$1,200 in 2008 due to the financial crisis, with the rapid recovery of economic recovery prices and the continued depreciation of the US dollar, natural rubber Prices have hit record highs successively, rising more than 25% in the most recent period from November to November, and spot prices are approaching US$4,500 a ton. Tire manufacturers and tire distributors are under considerable pressure, Liang Ziqiang said.

The upstream tire manufacturing industry does not grasp the pricing power of raw materials and suffers from rising costs. The average gross profit margin is less than 5%; intermediate traders frequently encounter export barriers and market risks continue to increase. What is the way out for international trade? Liang Ziqiang and his young team stood at the crossroads.

Actively transforming between the dilemmas of the Nuggets domestic automotive service market, Liang Ziqiang turned his attention to the domestic market. The Koon Group decided to continue to strengthen its foreign trade business while moving to the domestic automotive aftermarket.

“It is very difficult and hard to do domestic chain business, but now we have to adapt to changes in the situation, on the one hand to cope with the challenges, on the other hand we must seize the opportunity!” Liang Ziqiang said, “Although exports have become increasingly difficult, However, the rapidly growing domestic auto market is undoubtedly a huge business opportunity for tire companies."

In 2009, China surpassed the United States and Japan as the world’s largest automotive producer. As of the end of 2009, the number of motor vehicles in China was 186 million, of which private cars were 23.73 million, an increase of 31.46% year-on-year.

The large-scale entry of cars into Chinese families will undoubtedly lead to the birth of the “gold market” for tires. Liang Ziqiang estimates that this year China's car tire replacement market is expected to reach about 55 million, becoming the fastest growing market in the world. At present, the growth rate of replacement tires for passenger cars in China is about 20% to 25%, and it will reach 150 million in the next five years.

At the same time, the policy environment for China’s expansion of domestic demand will also bring opportunities to Koon’s move to the domestic consumer market. “The state clearly clarified that during the 12th Five-Year Plan period, we should further expand domestic demand, adjust the economic structure, and propose a new situation in which consumption, investment, and export coordination should be spurred to stimulate economic growth. This further strengthens our determination to transform.” Liang Ziqiang said with confidence.

Long-term dealings with European and American distributors allowed Liang Ziqiang to capture new business opportunities in the domestic automotive tire service market. In October 2008, he established the Rotary Automobile Co., Ltd., and built the first professional tire retail and automobile service chain store in Qingdao, embarking on a transformation road.

The Second Entrepreneurship - Creating "Guo Suning" in Tire Retail Business

From an international trader who has already established a foothold in the domestic and foreign markets, to a domestic tire retailer, it is no different from Liang Ziqiang and his team that they are starting their own businesses. However, Liang Ziqiang is very confident in the unique business model of the company in the country.

“The developed automobile service market in developed countries in Europe and America mainly uses tire rim replacement services and tire retail chain stores to extend vehicle maintenance and repair services, while domestic auto repair and quick repair and beauty are the mainstay. “Wukuku” should learn from European and American markets. The maturity model, and then it is rooted in the country through innovation, making it grow.”

In the “Ruanku” chain store in downtown Qingdao, the reporter saw more than a dozen domestic and foreign brands of tires such as Michelin and Bridgestone placed on the exhibition hall and the same shelf for consumers to choose from, as well as car maintenance. Repair the necessary filters, lubricants, and interior accessories. From time to time outside the door, vehicles come in for maintenance.

“The automotive service market is increasingly subdivided and we are confident that we will become a professional tire retailer and service provider.” Liang Ziqiang told reporters that the first “wheel bank” opened in Qingdao the previous year achieved a 120% increase in sales, and he was in Qingdao again. Newly opened four chain stores.

Liang Ziqiang said that at present, nearly 90% of domestic auto tire market services are occupied by foreign brands, of which the market share of domestic brands in the most important tire replacement market is less than 20%, and foreign brands are increasing their domestic channel construction, such as abroad. Tire giant Michelin has more than 1,000 franchised retail stores in China, and Bridgestone’s “Wings of Cars” has also developed rapidly in recent years. “If the independent brands do not quickly intervene in the domestic automotive service market, it will be too late for foreign brands to divide the market and we will intervene.” Liang Ziqiang said.

Liang Ziqiang is laying out his "Round Kingdom" on the national map. On December 18th, the Keang Group will open a flagship chain store in the Wangjing area of ​​Beijing and relocate the headquarters of “Rokuto” ​​to Beijing. At the same time, two new "Rukukaku" stores in Qingdao will also be opened at the same time. In the next ten years, Liang Ziqiang plans to build 100 stores in the first and second tier cities.

“Our goal is Nuggets China's auto aftermarket, which will make “Rotanus” the first brand in China's tire retail chain industry, providing more professional and convenient services for the domestic fast-growing auto aftermarket market.” Liang Ziqiang said .