China's tire industry is a growth logic, and high-quality tire companies are expected to be among the world's top

Second, China's automobile export volume ranks first in the world, and Chinese tire enterprises are expected to leverage China's increasingly powerful automobile industry to achieve leapfrog development. According to the China Auto Association and Japan Auto Industry Association data, 2023 January to June China's auto exports reached 2.141 million, the same period of Japanese auto exports of 2.023 million, China has surpassed Japan to become the world's largest auto exporter. As China's automobile industry continues to optimize quality control, improve maintenance and repair after-sales service system, its competitiveness is expected to further improve. China's tire enterprises can leverage car enterprises to further enhance customer stickiness by entering their supporting system, and at the same time, automobile exports can improve the overseas visibility of Chinese tires, and thus achieve leapfrog development.

Third, the great development of China's new energy vehicles provides an important opportunity to improve the brand influence and long-term competitiveness of China's tire enterprises. In the field of new energy vehicles, Chinese car companies have established a leading edge. From the sales data, according to the China Automobile Association, the sales volume of new energy vehicles in China in 2022 reached 6.887 million, with a CAGR of 78.7% in 2019-2022; According to Clean Technica, global sales of new energy vehicles in 2022 will be 10.09 million, and China's EV sales in 2022 will account for 68.25% of the world's total. In terms of brands, according to Clean Technica, BYD, a Chinese car company, ranked first in the world with sales of 1.8478 million vehicles in 2022, accounting for 18.31% of global sales. In addition, among the top 10 global new energy vehicle sales in 2022, 5 are Chinese brands, namely BYD, GAC, SAIC, Changan and Chery, and SAIC-GM-Wuling is a Sino-US joint venture brand. The voice and influence of Chinese car companies have been further established and strengthened in the great development wave of new energy vehicles. Compared with foreign car companies, Chinese tire companies are easier to enter the supporting system of China's new energy vehicle companies, and domestic tires are included in the supporting/replacement system of new energy vehicle ordinary models and high-end models, which is not only conducive to obtaining a huge Chinese new energy vehicle tire supporting and replacement market, but also expected to rely on a huge export volume. Lay the foundation for subsequent entry into the tire supply system of more foreign car companies, so as to further leverage the demand market, enhance brand influence, and build long-term competitiveness.

Chinese tire companies have achieved a lot in the field of new energy vehicles, supporting many high-end models. There are big differences between new energy vehicles and traditional fuel vehicles in vehicle weight, power output, torque, noise performance, etc., and the tires applied in new energy vehicles need to have better performance in terms of grip, low noise, wear resistance, energy saving, and green environmental protection. The evaluation system of new energy automobile tires weakens the brand influence of traditional tire companies and provides domestic tire companies with the opportunity to compete at the same starting line. Chinese tire companies have different strategies in the new energy vehicle business, but they all seize the opportunity to create cost-effective tires suitable for new energy vehicles, and the results are fruitful. Taking Linglong Tire as an example, Linglong tire is currently the largest tire supplier of SAIC Wuling General Motors and BYD, and its supporting models are not limited to low-end models, but also included in FAW Hongqi high-end SUV-LS7, Geely Auto high-end model "Star" series, Lynk & Co 06 high-end models, Chery high-end models - Tigo8 and other high-end model supporting systems.

2.2. Internal: Global operation demonstrates strength, copy and upgrade to create a profit upward spiral

From the point of view of internal factors, China's tire enterprises have the ability to operate globally, from the early concentrated layout of Southeast Asia, began to explore Europe and Africa, highlighting the continuous enhancement of the comprehensive ability of China's tire enterprises. China's tire enterprises can further establish raw material advantages through global operations, enjoy low tariffs, expand a larger market, and disperse the layout to reduce international trade risks. And overseas base gross profit margin is usually higher than the domestic, has successfully established overseas production base and efficient operation of the enterprise is expected to accelerate the overseas operation model copy and upgrade speed, to create a profit upward spiral, with the expansion of production capacity and comprehensive strength, is expected to occupy a place in the head of the world tire industry.

In terms of capacity expansion, Chinese enterprises have accelerated the layout of overseas production bases to enhance production capacity, and further explored overseas markets with higher profitability. Although China's tire production capacity is overall excess, but a considerable part of it is low quality and small business tires, from the capacity of a single enterprise, the international head tire companies are much higher than Chinese tire companies, Chinese tire companies want to enter the world's first echelon of tires, still need to carry out quality tire production capacity expansion. 2021-2022 China's tire enterprises under construction projects continue to hit a new high. In terms of the layout of production bases at home and abroad, on the one hand, the domestic competitive environment is relatively harsh, and in recent years, under the environment of strengthening environmental management, it is more difficult for Chinese tire companies to approve the construction of tire production capacity in China, and from the sales point of view, because China's tire exports face high tariffs, domestic tire export profits are suppressed. Reviewing the gross profit margin of China's tire industry sales at home and abroad from 2012 to 2022, the gross profit margin of tire export is higher than that of the country for most of the time, and overseas factory construction is close to the terminal market, usually with obvious customs and tax advantages, therefore, overseas factory construction has become an important direction of tire enterprises. Michelin, Goodyear and other giant tire manufacturers have a number of production and development bases in the world, and building factories overseas is the only way for Chinese tire companies to grow into global giants.