ZC Rubber eyes tire plants in North America and Europe, post-IPO

Nuerburg, Germany - ZC Rubber officials have restated the group's ambitious target of becoming the world's fifth largest tire maker within a decade.

The goal is to be delivered largely by an international growth strategy that includes establishing production in North America and then in Europe in the near-to-medium term.

During an 11-12 July client & media event at the Nuerburgring race track, the group’s marketing director of international business Richard Li said ZC’s strategy is to deliver “continuous growth”, particularly overseas.

ZC’s vision is to be a “global leading tire manufacturer [with] the most advanced equipment, best raw material, leanest management, latest technology, lowest energy and resource consumption and most suitable products.” 

The focus, added Li, will be on increasing sales volumes and sales of higher-value tires, supported by expansion of ZC’s current production set-up – nine plants in China and one in Thailand – with ‘local production for local markets’ as a guiding principle.

However, the ZC marketing director acknowledged the scale of the challenge ahead when it comes to closing the sales-gap with Sumitomo Rubber Industries (SRI), the world’s current no. 5 tire producer.

The latest ERJ-published Global Tire Report, ranks ZC as the world’s ninth largest tire producer, with 2021 revenues of $4,528 million, compared to $7,250 million for SRI – followed next, in order, by Pirelli, Hankook and Yokohama.

Key to ZC Rubber’s ambitions, noted Li, will be funds from an IPO, which China’s largest tire producer aims to complete by the end of this year, following hoped-for clearance by the country’s financial-markets regulator.

Due to the IPO, ZC can only provide estimated 2022 revenues, of ‘around $4.2 billion’, Li noting that previous sales projections had recently been pegged back by currency-exchange developments.

International business, he continued, is “growing quickly,” particularly in the US and Europe: expanding overall by about 15% in 2022 to represent more than 40% of total sales at ZC – towards an eventual target of 60% overseas sales and 40% in China.

At $1,782 million, international business accounted for 39.4% of ZC’s total sales in 2021, up from a prior-year $1,465 million or a 37.6% share. Group estimates indicate that overseas are sales on track to exceed 44% of total revenues in 2022.

Li’s presentation also included figures showing that international unit-sales of truck & bus radials had increased by 13.4% between 2020 and 2022, to 21.15 million tires, while passenger car tire sales grew by 21.8% to 59.3 million units.

'Global tire maker'

For his part, deputy general manager of international business Leo Liao said ZC will be "a global tire manufacturer, not only a Chinese manufacturer. Each year we invest more than $100 million in R&D and we promise to supply the most suitable and most valuable tires to consumers.”

“We already have a factory in Thailand [and are] this moment considering a North American factory and the next step will be to consider an EU factory,” continued Liao, who has specific responsibility for the European market.

ZC's order-of-priority reflects a more pressing need to address US import tariffs on Chinese-made tires, particularly passenger car tires – whereas output from its Thai plant is not subject to EU tariffs, which only apply to TBRs.    

Towards a target of achieving sales of 10 million PCR and 1.2 million TBR tires over the coming five years, Liao said the way forward is “local sales teams to ensure more efficient communications and local engineering teams to develop more suitable products.”

ZC, he continued, aims to enhance its local logistics capabilities to ensure faster supply, and leverage its “OE business to energise the aftermarket.”

Within its tire brand strategy, Liao said: “We will bring only a few brands to the market to avoid conflict between brands [as well as] unique patterns for each brand to avoid competition.”

The focus for the flagship Westlake brand will be on ‘retail business and OE’; Goodride on ‘regional wholesaler and online business’ and Trazano on ‘big importer[s]’.

According to Liao, ZC will also strive to “avoid having many clients with one brand in one market [and] if a client is performing well will look to appoint exclusively.”

A further measure, he said, will be to “consolidate current budget lines and invest more energy on niche markets, such as EV, UHP, studded tires, so clients can make more money.”

We will report further on ZC Rubber's expansion plans in the July/August edition of European Rubber Journal magazine.