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23 Jan 2008

Industry

China’s Tire Industry and the Impacts on Thailand (Current Issue No.2028)

China's rubber tire industry is growing rapidly for their domestic tire market. The intensifying competition in China's rubber tire market has forced Chinese tire manufacturers to pay more attention to export markets, including Thailand, to offset risk in their domestic market. Recently, China's tire production industry has faced problems about quality, which has sometimes been sub-standard. For Thailand, we are one of the world's largest rubber tire manufacturing bases. So far, although Thai export tires have never received complaints of having low quality, the public and private sectors should not be indifferent to watchfulness.
All concerned agencies and other entities should urgently learn from the case studies on China as an example in establishing quality control that will enable our rubber tire exports to meet international safety standards. Public relations must be urgently carried out to ensure both Thai and foreign consumers are aware of our quality.
At present, imported rubber tires from China are still not very common in Thailand. However, they are cheaper than imported tires from other countries, and even Thai-domestic made tires, thus they have attracted some interest from Thai consumers in the industry and commerce in the low- to medium-price markets for motorcycles, large trucks, pick-ups, passenger cars, including buses, taxis, etc. These market segments are more price sensitive than the up-market segment as they will consider price first when they choose tires rather than other factors such as quality or brand name.
It is projected that in the future, tires imported from China will capture more of the medium and lower markets here and will increase pressure to small and medium Thai tire producers whose customer bases are also the groups of low- to medium-price buyers. If Thai producers cannot reduce their production costs and develop their quality and brands to be more acceptable to the market, they will face higher market risk. Large tire manufactures in Thailand may not feel this impact in the short-term because their customers are generally up-market where Chinese brands have still not penetrated.
However, the Thai tire industry has the chance to progress further. The public sector should urgently study quality testing standards for tires used on industrial forklifts and other solid tires and promote international standards. They should also encourage Thai entrepreneurs to become more competitive in radial tire production as this tire category has high demand in the market. The public sector should consider providing assistance in funding and data on the production of these tire categories.

Foreign companies must be encouraged to jointly invest with Thai companies, e.g., foreign companies that have expertise in producing high quality radial tires. In addition, the public sector should urgently monitor quality control and enhance the image of Thai tire standards to reach international standards. Tires on the street also need checking, as well, via regular, random inspections on the condition of these tires. Guidelines on how to select a tire must be disseminated to consumers out of concern for safety standards.

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