Yongtai Group Durun tyre factory goes bankruptcy

Shandong Yongtai Group Co., Ltd, the 10th-largest maker of tires in China (Durun tyre factory), declared bankruptcy earlier this month, at least partly because of pressure from the U.S.–China trade war.

On Aug. 2, the Dongying City Intermediate People’s Court in Shandong Province received the company’s bankruptcy filing. The company, which was established in 1996, was ranked 32nd in 2016 on U.S. magazine Tire Business’s list of the world’s most powerful tire companies. At its peak, the company had more than 5,000 employees.

It’s the biggest bankruptcy case in China’s tire industry, the trade publication China Tire Dealer reported on Aug. 18.

The U.S. Department of Commerce has levied anti-dumping and countervailing duties on Chinese tire imports since at least 2008, accusing tire makers of selling goods in the United States at less than fair value, and saying the Beijing regime provides companies with subsidies that undermine competition.

The Yongtai Group bankruptcy was caused by a number of internal and external factors. In recent years, China’s tire industry has had serious overproduction, leading to more supply than demand.

China Tire Dealer reported that Yongtai Group’s situation isn’t a special case. Shandong Province is home to the most tire companies in China, with more than 300 that account for three-fifths of the entire industry. However, from 2017 to Aug. 1 of this year, 35 tire makers in Shandong have been shuttered and declared bankruptcy.

According to a China Rubber Industry Association survey, in the first quarter of this year, about 15 percent of the top 39 tire companies surveyed have fully or partially stopped production. About 40 percent of the companies had incurred more financial losses than previous years, while 30 percent said their profit margins decreased. Only 15 percent have seen growth in sales and profits.

Li Ke, a senior commentator in the tire industry, told China Business Network on Aug. 19 that with the escalation of the U.S.–China trade war, tariffs will make things worse.

China exports 40 percent of the tires it produces, with the United States as its main export market—accounting for about a quarter of that total, China’s state-run newspaper International Financial News reported on Aug. 1, citing industry data.

Tires are among the list of more than 800 Chinese goods subject to 25 percent duties, as part of the United States’ first set of tariffs on $34 billion of products that went into effect in early July.

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