Zhongce Wants to Become Top Five Tiremaker

June 28, 2024

MTD Publisher Greg Smith was recently in China and had the opportunity to meet with the top executives of Zhongce Rubber Group Co. Ltd. (ZC), China’s largest tire manufacturer, including the company’s vice president, Hao Yu (Henry) Shen.

Shen, who did his post-graduate work at Columbia University, said the company achieved revenues of 35.2 billion yuan ($4.528 billion) in 2023, making it the ninth largest tire manufacturer in the world.

The goal is to be a top five producer within five years, said Shen.

But revenue is just one aspect of what Shen is striving to achieve.

To do this, the company continually pushes for efficiency in all aspects of its operation. Shen emphasized that the company does continue to invest heavily in research and development, higher than many competitors.

The company recently announced plans for new factories in Indonesia and Mexico, which Shen said will increase the company’s capacity by 15% when the first stage of each plant is completed.

Shen said the Indonesia plant will be open yet this year, while the Mexican plant, which held its ground-breaking in July, should be running in 12 to 15 months. In both cases, the company is only using 40% of the land it purchased to allow for future expansion.

“To grow, we want to show the world that we are willing to compete in all areas,” said Shen.

ZC currently has nine factories, with eight of them in China and the other plant in Thailand. In late-2023, the company’s highly automated 5G factory next to its corporate headquarters in Hangzhou produced its first passenger tire.

In 2022, the company bought Tianjin United Tire & Rubber International Co., Ltd. (Tutric), which manufactures the Tianli tire brand. This producer of OTR and ag tires is an area of growth for the company. Shen said they aim to have 25% to 30% of the company’s current revenues come from the company’s OTR tire, ag tire and rubber track business.

ZC currently has 53% of its sales within China, with the other 47% coming from outside the country. Shen would like to see this change to 40% in China and 60% outside the country within the next three years. Right now, 25% of ZC’s international business is coming from the U.S.

Of the U.S. PLT and TBR business, Shen said the business is split about 50/50 between PLT and TBR. Right now, OTR is a very small portion of the total, but the company is targeting that segment for growth, leading with its Tianli brand.

In looking at how ZC positions its products, Shen said, “Today, people are buying our tires (PLT) because they are good at an affordable price.”

He added that the new generation of ZC tires have won awards in different tests in worldwide. “We wish to offer customers tier-one and tier-two quality products with tier-two and tier-three pricing,” Shen said.

Shen does see a big difference with the EV tire buyer, particularly in the fast-growing Chinese market. The vehicles are not cheap, but those buyers do care about price when it comes to buying tires for these vehicles. Toward that end, Shen said the company “is in serious development of several different features, especially noise levels and rolling resistance.”

Looking at TBR tires, “fleet managers think the same throughout the world and we must be at the highest level,” said Shen. “We must have the performance of a tier- one brand, but not at the tier-one pricing level.”

ZC sells tires worldwide under the Arisun, Westlake, Tianli, Trazano, Goodride and Chao Yang brands as well as producing private label tires.