"Special Security Case" ruling immediately facing the Chinese tire test

“The result will come out.” On the morning of August 29, Shen Weijia, executive director of Giti Tire (China) Investment Co., Ltd. (hereinafter referred to as “Jiatong Tire”) told the CBN reporter on the phone.

The result he pointed out was the verdict on the “special security case” of Chinese tires exported to the United States that lasted for about five months.

On September 2, the Office of the U.S. Trade Representative will recommend to U.S. President Barack Obama whether he will impose high tariffs on Chinese-made tires that are exported to the United States and restrict the number of imported Chinese tires. The Obama administration will formally rule on September 17.

Once the final rule is imposed on tax increases or restrictions on imports, the Chinese tire industry will be hit hard.

"Special Protection Case" has a far-reaching impact

Shen Wei’s family learned about the situation from the personnel of the China Rubber Industry Association at an industry conference in late April this year.

On April 20, the American Iron and Steel Workers Federation applied to the US International Trade Commission for a "special safeguard measure" investigation procedure for Chinese-made tires: China's quota restrictions on tire imports from the United States (from 46 million imports to 25 million annually) . On June 29th, the US International Trade Commission once again recommended that Obama impose tariffs ranging from 55%, 45%, and 35% on Chinese-made tires in the next one to three years.

This is also the first investigation of special safeguards since Obama took office. During Bush’s administration in the United States, the U.S. Association submitted a total of six special security investigation applications for Chinese products, but it was ultimately rejected by Bush.

The reason for the United Steelworkers’ Federation is that the number of tires imported from the United States from China increased by 215% from 2004 to 2008 and the amount increased by 295%, which caused damage to the US domestic industry.

China is a big country for tire production and export. The total amount of exports to the United States is about US$1.7 billion.

Shen Weijia told CBN reporter that Chinese-made tires are mainly used in the low-end market in the United States. “The reason why a product is competitive is because of low prices. After increasing taxes, China’s products will be substantially reduced, and the industry will be severely hit. Production capacity may be The reduction will affect the employment of 100,000 workers."

“Assume that a tire's FOB price is US$30, plus a 55% tariff, ocean freight, etc., the US dealer’s purchase price is more than US$50, which is more expensive than US-made tires. It may take 60~70 US dollars, and consumers will definitely refuse to purchase. This way, US dealers will stop ordering from China, which will lead to a sharp drop in Chinese tire production," Shen Weijia added.

Another person in the sales department of Shandong Linglong Group, another tire company, told reporters that Chinese-made tires are about 30% cheaper than American-made tires.

"The United States has more than 200 million cars. Tyres are an ordinary consumer product rather than a luxury for Americans. Most car owners must definitely want to buy cheap products. It should not have been the focus of tax increases. Shen Weijia thinks.

Let Shen Weijia and many tire companies worry that more than 40 million export tires can hardly find a new alternative market. Taking Jiatong Tire as an example, it exports about 7 million tires each year in the United States, with a total amount of US$300 million.

Moreover, such a large number of products will not be easily digested in the Chinese domestic market. Cing Dingkun, a researcher at China Investment Securities, said that overall, China’s tire surplus is not particularly serious. “In 2008, China accumulatively produced 546 million tires, while actual demand and supply were basically the same. However, more than 40 million US exports were exported. If it is relatively large, if all of this part of production is transferred back to the domestic market, it will be equal to the market’s increase of nearly 8.4% of the supply, and the figure is not small. Therefore, once the United States imposes high tariffs, the products cannot be exported and the company must Close the capacity."

The company stepped up shipments

In order to be able to sell more tires before the September 17 ruling, it will not allow US dealers to return the tires. Each tire company will be forced to ship as soon as possible.

Zhejiang Customs said that in July this year, Zhejiang exported 3.462 million tires, valued at 70 million US dollars, an increase of 3% and 4.3% over the same period of last year. It was the first time since 2009 that the monthly export volume had fallen for the sixth consecutive month.

According to the sales person of the above-mentioned Shandong Linglong Group, the company’s tire exports to the United States from January to August this year were about 50 million U.S. dollars, of which shipments in August reached more than 10 million U.S. dollars. "The factories are now operating at full capacity. ."

Expanding sales to other regions is also a road. Jiatong Tire is studying the market conditions in other countries such as Europe and Southeast Asia, not only in the original 180 exporting countries (or regions) to expand sales, but also to find new distributors in other regions of the company's products.

The “Wanli” brand gas-free tire developed independently by Guangzhou Huanan Rubber Tyre Co., Ltd. passed the European ECE certification in April and has been put into mass production. In June, it began to supply the European market.

Shen Weijia emphasized: "Since the special security investigation has a short investigation time, unlike anti-dumping investigations that can last for one to two years, it is not easy for companies to make large-scale conversion or reselling in the short term."

He said that although the European local market is also very large, but the European countries on the tire product model, performance requirements are not as consistent as the US market, it takes some time to carefully study the market conditions and adjust the production line. In addition, if the volume of exports to Europe soars, it will trigger EU anti-dumping investigations on tires in China.

Moreover, the demand for tires in various countries during the financial crisis has been reduced. In the first half of this year, China’s exports to the EU, Africa, and Latin America fell by 18.2%, 9.7%, and 26.7% year-on-year.

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