On March 11, a 150 million yuan tire export order was signed in Qingdao. The two parties are Qingdao Race Wheels and North American's largest car tire retailer, the American TBC Corporation. At this time, it was only half a year before the tire special protection program implemented by the United States for the tire industry in the United States. Domestic tire companies did not passively respond to the adverse impact of the “special security case†but instead actively sought a response strategy.
It is reported that the key to fostering this cooperation is the brand awareness cultivated by the racing team for many years. Song Jun, deputy general manager of the company, stated that “Since the distributor has cultivated our brand up to now, he cannot easily give up.†For this reason, both parties tried New cooperation model. In order to ease the pressure of distribution costs brought about by the “special security caseâ€, TBC abandoned traditional multi-level distribution methods and adopted vertical distribution.
According to industry insiders, in the international tire industry, the profit that can be obtained in the middle sales segment is 40% or even 45%, while the profit for the terminal manufacturer is only 2%-5%. Prior to the Sino-U.S. tire premium protection case, U.S. distributors adopted a multi-level distribution approach. In the past, this 150 million U.S. dollar trade order was the biggest beneficiary was the middle layer superimposed distributors. With the vertical distribution approach, after the reduction phase, U.S. companies have greater profit margins than before, and Qingdao Race Wheel will also receive approximately 7% of profits.
In addition to Qingdao Saiwan Stock Co., Ltd., a number of tire companies in the province are trying to respond to the “special protection†controversy in various ways such as improving quality and expanding sales channels. For example, in Shandong Linglong Group, it started five construction projects with an annual output of 12 million sets of high-performance passenger car radial tires. The Double Star Group, one of the top five tire giants in China, also launched an annual production of 1 million sets of all-steel radial tires. According to industry sources, in the international market, Chinese tires are changing the “low-grade goods†impression that was left to the world, changing the image of cost-effective products, and moving from price competition to quality competition. This is the way out for the company in the future.
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