From May 25th to 26th, “Analytical Forum on Cross-border Development of Automobiles and Tyres—Analysis of the Economic Trend of 2018 and the Environmental Impact of Industrial Development†was held in Beijing.
At the meeting, Hong Qunlian, deputy director of the Institute of Industrial Economics, Technology and Economics of the National Development and Reform Commission, analyzed the current industrial economic situation and policy trends.
Representatives of the participating auto and tire companies told Tire World Net that he pointed out various problems in the development of the industry and helped the company grasp the development trend.
Prominent industrial development issues
Hong Qunlian believes that currently, the external development environment facing China's manufacturing industry is very severe.
He said that the temporary "truce" between the Sino-US trade war does not mean that trade frictions have disappeared. As a major industry for foreign trade, the tire industry needs to be alert to trade friction risks.
At the same time, the structural contradiction between supply and demand in the domestic market remains prominent.
According to Hong Qunlian's analysis, the problem of overcapacity in some traditional industries is still serious, some low-end product inventories are under pressure, and even production costs are higher than the ex-factory price.
A tire company CEO said that the domestic tire industry also has such a problem. The elimination of low-end tire production capacity is in a critical period, and there will be a number of companies going bankrupt in the future.
Tireworld.com learned from the person familiar with the matter that, in the near future, mergers and consolidations of some tire companies in Shandong have changed again, and at least three mergers, acquisitions, and capital injections have occurred.
In addition, Hong Qunlian said that there were periodical and temporary supply shortages in some areas, with seasonal seasonal power supply, tight gas supply, and some chemical raw material prices soaring in the short term.
It is understood that the above problems have caused great trouble for tire companies, in which the rise in raw material prices has greatly reduced the profitability of the entire industry.
Various risks follow
At the meeting, Hong Qunlian passed a series of data to conclude that the development of the domestic real economy is still difficult.
From the macro data, in the first quarter, the loan demand index rose by 5.2 percentage points to 70.9%, and the bank loan approval index fell 1.8 percentage points to 44.6%, and the financing gap continued to expand.
It is reported that the tire industry as a capital-intensive industry, many companies are living on loans. Loan difficulties are becoming a problem for most tire companies.
In 2017, among the top 500 Chinese companies, the net profit of 245 manufacturing companies accounted for only 19.42%. In comparison, the top five state-owned banks accounted for 32.74% of the total.
In 41 industrial sectors, profits increased by only 12 compared to the same period of last year, and there were many energy companies. In 29 industries, including the automotive industry, profits dropped significantly.
Among them, industries where profits have been substantially reduced include tire manufacturing.
In addition, Hong Qunlian said that there are still many hidden risks in the domestic financial and financial sectors.
These hidden concerns include: the hidden danger of local government debt risks; the high leverage of state-owned enterprises, state-owned enterprise debt exceeded 100 trillion yuan; the risk of other leverage increased rapidly.
In addition, the global quantitative easing tide gradually withdraws, and geopolitical risks follow, which will also have a certain impact on domestic economic development.
The conference was sponsored by the Automotive Industry Development Research Branch of the China Automotive Engineering Society, undertook by the Tire World Network, and co-organized by Shandong Linglong Tire Co., Ltd.
Triangle Tire Co., Ltd., Qingdao Double Star Marketing Co., Ltd., Shandong Hengfeng Rubber & Plastics Co., Ltd., Tigers Cars, Shandong Haidewei Tire Co., Ltd. provided support for this forum.
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