China's Tire Industry 2026: Volume Champion, Quality Climb, and a Second Wave of Globalization Under Tariff Siege

1. Prologue: A Hundred Price-Hike Letters and One Supreme Court Ruling

In the first half of 2026, China's tire industry staged two scenes that looked contradictory but in fact sprang from the same root.

The first scene was a wave of price hikes. From March 2026 onward, domestic tire makers issued price-hike letters in dense succession: on April 1 came a first round of across-the-board increases of 2% to 5%; in mid-to-late April, Sailun, Linglong and others launched a second round, followed by Michelin and Bridgestone; in June, Hankook and Dunlop continued—more than 100 price-hike letters in total since March, with some companies raising prices two or three times in a row. The cause was not booming demand; quite the opposite: costs could no longer be contained. Natural rubber prices climbed steadily through the first half of 2026, with Shanghai whole-latex averaging RMB 16,817 per ton in the first half, up nearly 30% year-on-year; synthetic rubber surged more than 100% year-on-year, and carbon black rose 13% in a single month. In the second quarter, tire makers' combined procurement costs rose roughly 20% quarter-on-quarter. Raw materials account for more than 70% of a tire's cost, so as costs rose, companies had no choice but to send out price-hike letters one after another—even though most of the increases could not cover the rise in costs. This was a reluctant round of price hikes forced out by costs.

The second scene was a single court ruling. On February 20, 2026, the U.S. Supreme Court ruled 6 to 3 that all tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) were illegal and void, with customs ceasing collection from midnight on February 24 and refunds reaching as much as approximately USD 175 billion. For Chinese tires—an industry that exports 70% of its output and has long been besieged by tariffs—this ruling felt like an earthquake: the effective U.S. tariff rate on Chinese goods plunged from 36.8% to about 21.2%. But once the earthquake passed, the foundation was unchanged: the several thorns truly lodged in Chinese tires—the 2015 AD/CVD case on passenger car tires, the 2019 AD/CVD case on truck and bus tires, and the EU's final anti-dumping ruling on passenger car tires that had just landed in July 2026—remained utterly unmoved. Trump promptly switched to Section 122 of the Trade Act of 1974 to separately sign a 10% global tariff. A single ruling changed the tactics but not the campaign.

These two scenes distilled all the tension in China's tire industry in 2026: on one side, a domestic hard slog of high costs and squeezed profits; on the other, an overseas battle of tariff sieges and shifting policies. And what supports this industry as it holds its ground under attack from both sides is an equally contradictory backdrop—China produces roughly half of the world's tires yet earns only about a 3% profit margin; China has 39 companies crowded into the global top 75 tire makers, yet holds less than a tenth of the high-end passenger-car OE market; China's tire output, exports and company count are all first in the world, yet brand premium and technological voice have long remained in the hands of Michelin, Bridgestone and Goodyear.

This is the most typical portrait of "big but not strong" in the tire industry. But China's tires in 2026 stand at a critical turning point: a group of Chinese brands is beginning to challenge the performance ceiling with original technologies such as "Liquid Gold," to pry open a reversal of the landscape through new-energy OE fitment for BYD and NIO, to pierce the tariff wall with overseas plants spread across Southeast Asia, Mexico, Morocco and Egypt, and to reshape manufacturing efficiency with "lighthouse factories" certified by the World Economic Forum. ZC Rubber went public on the A-share market in 2025 and Qingdao Doublestar acquired South Korea's Kumho—the capital operations and industrial consolidation of Chinese tires are also accelerating. This "big but not strong" industry is undergoing an arduous turn from "master of quantity" to "climb toward quality."

This report uses fifty thousand words to carry this industry from the structure of a single tire to the value-chain climb of an entire sector: how Chinese tires became first in the world in output yet came last in profit, how two decades of AD/CVD tariffs shaped this industry and forced out what kind of overseas wisdom, whether Liquid Gold and new-energy OE fitment can truly pry open the high end, what lessons the wave of bankruptcy restructurings in Shandong's industrial belt teaches, and, under the two-front squeeze of tariffs and costs, how far China's tires still have to go from "big" to "strong."

Let us begin with the most basic question: why is a seemingly simple tire a jewel in the industrial crown?

2. What Is a Tire: The Magic Triangle Within the Rubber

A tire looks like the most ordinary of industrial products—a black rubber ring. But in an engineer's eyes, it is a precision product that must simultaneously satisfy dozens of mutually contradictory performance requirements and is compounded from over a hundred materials. To understand a tire's difficulty, one must look at three levels.

The first level is the complexity of the materials. A modern tire is not simply "made of rubber"; it is a multi-material composite system: natural rubber provides elasticity and strength, synthetic rubber (polybutadiene, styrene-butadiene) tunes performance, carbon black and silica serve as reinforcing fillers to improve wear resistance and grip, steel cord and fabric cord form the skeleton that bears the load, and there is a whole series of rubber additives such as antioxidants, vulcanizing agents and accelerators. The formulas and proportions of these materials determine everything about a tire's performance—and the formula is the most core secret of every tire company, with Michelin's and Bridgestone's formulas accumulated over more than a century. In a tire's cost, raw materials account for more than 70%, of which the three main materials—natural rubber, synthetic rubber and carbon black—account for more than 60% of the cost. So fluctuations in raw material prices directly determine the life or death of a tire company.

The second level is the precision of the structure. A modern tire is a radial structure (the cords are arranged radially, like the Earth's meridians), formed from more than a dozen components—tread, sidewall, carcass, belt, bead and so on—laminated layer by layer and manufactured through dozens of processes such as mixing, calendering, cutting, building and vulcanization. The radialization rate (the share of radial tires in total output) is an important indicator of a country's tire industry level—radial tires have lower rolling resistance, longer life and greater safety than the old bias tires, and are the mainstream of modern tires. PCR tires (used on passenger cars) and TBR tires (used on trucks and buses) are the two major categories, differing in both process and market.

The third level, and the most critical, is the "magic triangle" of performance. A tire has three most core performance attributes: rolling resistance (which determines fuel/electricity consumption), wet grip (which determines safety) and wear resistance (which determines life). The trouble is that these three are inherently in mutual conflict—lowering rolling resistance (more fuel-efficient) often sacrifices grip (less safe) or wear resistance (shorter life); raising grip in turn sacrifices rolling resistance or wear resistance. This "press down the gourd and the ladle pops up" triangular relationship is the tire industry's famous "magic triangle" (rolling resistance / wet grip / wear resistance). For more than a hundred years, tire engineers the world over have been making trade-offs and seeking balance within this triangle—pushing all three attributes up a little at the same time is a major technological breakthrough. The technological lead of Michelin and Bridgestone is, in essence, balancing this triangle better than others. And the reason Sailun's "Liquid Gold" technology is repeatedly brought up is precisely that it claims to have achieved a breakthrough on this magic triangle—more on this later.

Once these three levels are understood, one can see why the saying that a tire is "a jewel in the industrial crown," though often overused, does hold some truth for tires. It does not have the 1,600-degree-Celsius material ceiling of a gas turbine, nor the several-thousand-ton steel scale of a tunnel-boring machine, but its difficulty lies in being "hidden"—whether a tire is good or bad is buried in an invisible formula, structure and performance balance, requiring over a hundred years of data accumulation and countless road tests to verify. This is why many countries in the world can make tires, but the brands that can make top-tier tires and win luxury-car OE fitment have long numbered only a handful.

And a tire's performance directly bears on the safety of every drive—it is the only part of a car that touches the ground. For a two-ton vehicle, all of its weight, power, braking and steering are transmitted to the ground through four palm-sized rubber contact patches. These "palm-sized contact patches" carry human lives, so the quality thresholds and certification barriers for tires (UL, CE, various national labeling laws) are extremely high. For Chinese tires to move from "cheap" to "high-end" is, in essence, to catch up bit by bit with century-old houses on this invisible performance and visible brand trust.

Having grasped the technological substance of a tire, let us look at the real position of Chinese tires in the global market—a position both glorious and awkward.

3. Radialization and PCR/TBR: The Structural Upgrade of Chinese Tires

To understand the product structure of Chinese tires, one must grasp two key concepts—radialization and PCR/TBR. Behind these two concepts lies the journey of Chinese tires upgrading from "low-end bias tires" to "modern radial tires," and transforming from "expansion of quantity" to "optimization of structure."

First, radialization. Tires are divided by cord arrangement structure into two major categories: bias tires (cords arranged crosswise, the old structure) and radial tires (cords arranged radially, like the Earth's meridians, the modern structure). Compared with bias tires, radial tires have lower rolling resistance (saving fuel/electricity), longer service life, safer handling and better high-speed performance—they are the mainstream of modern tires. A country's radialization rate (the share of radial tires in total output) is an important indicator of the modernization level of its tire industry. China's tire radialization went through a long catch-up—in the early years bias tires dominated, and as technology advanced and the market upgraded, the radialization rate kept rising, so that today the mainstream is radial tires (the China Rubber Industry Association's "15th Five-Year Plan" outlook proposes surpassing a 97% radialization rate). Raising radialization is the foundation for Chinese tires to upgrade from "low-end" to "modern"—only after achieving radialization can one speak of the subsequent move to high-end and high-performance.

Next, PCR and TBR. Radial tires are divided by application and structure into two major categories: PCR tires (used on passenger cars, with carcasses of fabric cord plus a small amount of steel wire) and TBR tires (used on trucks and buses, with carcasses entirely of steel cord, able to bear greater loads). PCR and TBR differ in market, process and competitive landscape. PCR tires face the passenger-car market—large in volume, fiercely competitive, and closely tied to new-energy OE fitment (EV tires are PCR tires); TBR tires face the commercial-vehicle market, tied to the freight-logistics and infrastructure business cycle. In 2025, stimulated by the truck trade-in policy, production and sales recovered (TBR tire output grew 7.19%, while PCR tire output grew only 1.33%). The overseas base layouts of Chinese tire makers also plan PCR and TBR capacity separately (for example, Sailun's Egypt project plans 36 million PCR tires and 3.3 million TBR tires). Only by understanding the difference between PCR and TBR can one read the capacity layout and market structure of Chinese tires.

The 2025 output data reveal a subtle change in the structure of Chinese tires. In 2025, TBR tire output grew 7.19%, while PCR tire output grew only 1.33%, and automotive tires overall still declined 1.59%. Behind this "TBR strong, PCR weak" divergence lie the differing business cycles of the two markets: TBR tires benefited from truck trade-ins and the recovery of the commercial-vehicle market, while PCR tires were suppressed by EU anti-dumping and passenger-car market competition (in the second half of the year, EU anti-dumping on Chinese PCR tires led to insufficient capacity utilization). This change in product structure reflects the uneven fortunes of Chinese tires facing different markets and different policies.

Structural upgrading has a still higher dimension—upgrading from "mass-market tires" to "high-performance tires." Radialization solves "modernization" (from bias to radial); high-performance-ization solves "high-endization" (from ordinary radial tires to high-performance, large-size, EV-dedicated tires). As noted earlier, in 2024 the 18-inch became the largest single size in China's OE market (26.54%) and the 19-inch second (22.63%), together nearly 50%—larger sizing is a marker of high-endization. Liquid Gold, EV-dedicated tires and ultra-high-performance tires are all high-end directions of structural upgrading. The structural upgrading of Chinese tires is moving from "radialization" (basically complete) toward "high-performance-ization, large-sizing and specialization" (in progress)—this is the deepening from "modernization of quantity" to "high-endization of quality."

Product structure upgrading is a hidden main thread in Chinese tires' move from "big" to "strong." It does not catch the eye the way Liquid Gold or new-energy OE fitment does, but it is the foundation of all high-endization—only after achieving the structural upgrade of radialization, large-sizing and specialization can Chinese tires gradually move toward high-value, high-profit products across the PCR, TBR and high-performance segments. Structural upgrading is slow work and foundational engineering, but it determines the overall water level of Chinese tire products. When the product structure of Chinese tires upgrades from "dominated by mid-to-low-end radial tires" to "high-performance, large-size and specialized tires holding a larger share," the 3% profit margin and the predicament of rising volume with falling prices can be fundamentally improved from the product end.

From radialization to PCR/TBR to high-performance-ization—the structural upgrading of Chinese tires is an industrial evolution from backward to modern, and then from modern toward high-end. This evolution continues, and each step of its upgrade is a solid step for Chinese tires climbing toward the upstream of the value chain. What supports this evolution is the complete and powerful industrial chain of Chinese tires, sustained technological investment, and the scale effects afforded by a vast market—these are the deep advantages of Chinese tires relative to later-developing countries, and the confidence that allows its structural upgrading to keep advancing.

4. The Global Landscape: The Chinese Phalanx on the Top 75 List

To see clearly the position of Chinese tires globally, the best window is the annual global top 75 tire list (published by the U.S. magazine Tire Business). The 40th edition, released in August 2025 (based on fiscal 2024 sales), lays out the landscape of the global tire industry with perfect clarity.

At the top of the list are still the big three plus two: Michelin (USD 25.647 billion), Bridgestone (USD 24.77 billion), Goodyear (USD 17.447 billion), Continental (USD 12.466 billion) and Pirelli (USD 7.329 billion). The top four together total USD 80.33 billion, all above USD 10 billion. But a landmark change has appeared: the share of the top three (Michelin, Bridgestone, Goodyear) fell to 38.81% of the top 75's total sales, a ten-year low, and all three saw sales decline more than 5%. The big three have ruled the global tire industry for nearly a century, and now their share has dropped to a ten-year low—this is an epochal signal: power in the global tire industry is shifting from the old European, American and Japanese houses to emerging forces.

And the main force taking up this shift is the Chinese phalanx. On this list, Chinese companies hold 39 seats—35 from the mainland plus 4 from the Taiwan region—the most of any single country. Even more worth recording is the leap in rankings: ZC Rubber has climbed to 9th (USD 5.204 billion, up 9.05%) and Sailun to 10th (USD 4.363 billion, up 21.1%)—two Chinese companies squeezing into the global top ten. Further down: Linglong 15th (USD 3.069 billion, up 2 places), Prinx Chengshan 21st, Double Coin 22nd, Guizhou Tyre 24th, Triangle 25th, Sentury 28th, General Science 36th. As the European, American and Japanese giants' sales decline, Chinese companies' rankings are collectively rising—between this rise and fall, the map of the global tire industry is being redrawn.

The climb in brand value is even more symbolic. On Brand Finance's 2026 global tire brand value list, Sailun ranked 10th in the world with a brand value of USD 1.239 billion, up 37% (the fastest growth among top brands), the only Chinese brand in the top ten. Brand value differs from sales—it measures consumers' recognition of and trust in a brand, precisely the weakest link of Chinese tires over the long term. That a Chinese brand can squeeze into the global top ten by brand value shows that Chinese tires are climbing from "the quantity of contract manufacturing" toward "the quality of brand," even though this climb has only just begun.

But the list also exposes the awkwardness of Chinese tires. Look at sales: ZC Rubber at USD 5.2 billion and Sailun at USD 4.4 billion together do not reach even four-tenths of Michelin alone (USD 25.6 billion). China's 39 companies crowd into the top 75, yet their combined sales cannot match the top three giants—this is the portrait of "many in number, small in scale." Chinese tires crush the world in quantity, but in the size, brand and profit of individual companies, there is still a generational gap versus the giants. This gap will be seen more clearly in the next chapter's paradox of "first in output, last in profit."

The receding tide of the big three has its own specific stories, worth noting individually. Goodyear posted a net loss of USD 1.721 billion in fiscal 2025 (it was still profitable the year before), forced to "cut flesh to survive"—selling its off-road tire business, Dunlop brand rights and chemicals business, recovering nearly USD 2.3 billion in total, and closing multiple plants in Malaysia, Germany, South Africa and elsewhere. Bridgestone designated 2025 as a "year of emergency and crisis management," closing its Tennessee plant in the U.S., laying off workers in Spain and Argentina; its truck-and-bus tire plant in Shenyang, shut down in early 2024, was then acquired by Sailun. Michelin saw both revenue and net profit fall in 2025, and in its financial report bluntly stated that the European market "leans more toward low-priced Asian products"—a sentence tantamount to admitting the price impact of Chinese tires. The giants are contracting on one hand while, against the trend, doubling down on China's high-end market on the other (Bridgestone added RMB 562 million to invest in sound-absorbing foam capacity in Wuxi, and Michelin converted its Shenyang plant's truck-and-bus capacity into passenger-car capacity)—their offense and defense are themselves a footnote to the shift in the global landscape.

The big three recede, the Chinese phalanx advances—this is the clearest main thread of the global tire landscape in 2026. But how far the "advance" goes still depends on whether Chinese tires can unravel that most fundamental paradox: first in the world in output, yet nearly last in profit.

5. The Receding Tide of the Big Three: The Turn of an Era

The landscape of the global tire industry over nearly a century has been one ruled by the "big three"—Michelin, Bridgestone and Goodyear. But from 2025 to 2026, this landscape showed an epochal loosening—the big three collectively receded. Understanding why they receded, and to what extent, is the key to seeing clearly the space for the Chinese phalanx's advance.

First, the numbers of the recession. The global top 75 tire list released in 2025 showed the share of the top three (Michelin, Bridgestone, Goodyear) falling to 38.81% of the top 75's total sales, a ten-year low, and all three saw sales decline more than 5%. The big three have ruled the global tire industry for nearly a century, and now their share has dropped to a ten-year low—this is not an accidental fluctuation but a trend-level turn. The situations of each of the three can be seen more concretely.

Goodyear—the most beleaguered. This century-old American house posted a net loss of USD 1.721 billion in fiscal 2025 (it was still profitable at USD 46 million the year before), falling into severe financial distress. Its response was to "cut flesh to survive": selling its off-road tire business, Dunlop brand rights and chemicals business, recovering nearly USD 2.3 billion in total to repay debt; and closing multiple plants in Malaysia, Germany, South Africa and elsewhere. A former global number three now sustaining itself by selling assets and closing plants—Goodyear's plight is a typical microcosm of an old-line giant under cost pressure and the Chinese impact.

Bridgestone—a year of crisis management. This Japanese giant designated 2025 as a "year of emergency and crisis management"—the very label itself testifies to the severity of its situation. It closed its La Vergne plant in Tennessee, laid off 235 workers in Spain and 740 in Argentina; its truck-and-bus tire plant in Shenyang, shut down in early 2024, was acquired by China's Sailun—a landmark scene: a Japanese giant exits a Chinese market and a Chinese company takes over. But Bridgestone is also doubling down against the trend on China's high end: over the next three years it will add RMB 562 million to invest in sound-absorbing-foam tire capacity at its Wuxi plant—contracting the low end and doubling down on the high end is its strategy.

Michelin—admitting the Chinese impact. This French giant saw both revenue and net profit fall in 2025. Most worth recording is one sentence in its financial report—bluntly stating that the European market "leans more toward low-priced Asian products." This sentence is tantamount to officially admitting the price impact of Chinese tires. Michelin's response was to convert its Shenyang plant's truck-and-bus tire capacity into passenger-car tire capacity (with annual capacity raised to over 17 million tires after the retrofit)—likewise a thinking of "adjust the structure, focus on high value."

What is the root cause of the big three's recession? Three levels. First, cost pressure. Labor, energy and environmental costs in Europe, America and Japan are high, and tires are a cost-sensitive industry—high costs make it impossible for the giants to compete with China in the mid-to-low-end market, so they can only contract. Second, the Chinese impact. Chinese tires strike the global market with price and value-for-money, especially in the mid-to-low-end and replacement markets, eating away at the giants' share bit by bit. Michelin's admission that Europe "leans toward low-priced Asian products" is the direct manifestation of this impact. Third, shifting demand. The new demands of new-energy vehicles on tires, the reshaping of channels by new retail, and changes in the trade landscape—these shifts have disrupted the advantages the giants built over a century and created opportunities for emerging forces.

But one must view the big three's recession soberly. What they are giving up is "share" and "the mid-to-low end"; what they are holding is "brand" and "the high end." Though the big three's share has fallen, they still firmly occupy the high-end market (luxury-car OE, high-performance tires) and brand premium—Goodyear sells assets, Bridgestone lays off workers, Michelin converts production, but their brand value, technological accumulation and high-end OE position remain hard for Chinese tires to shake in the short term. So the big three's recession is, more accurately, a "strategic contraction"—abandoning the mid-to-low end they cannot win and concentrating on holding the high-margin high end. The space this leaves for the Chinese phalanx is mainly in the mid-to-low end and emerging markets; to break into the high end and seize the brand premium, Chinese tires still have hard battles to fight.

The big three recede, the Chinese phalanx advances—this is the main thread of the shift in the global tire landscape, but the second half of this thread (who can seize the high end) is not yet written. The mid-to-low end the big three have exited, Chinese tires have already taken; but the high end the big three defend to the death is the fortress Chinese tires must truly conquer in their move from "big" to "strong." The big three's turn has opened a window of opportunity for Chinese tires, but the high-end market beyond that window must be won bit by bit by Chinese tires with technology (Liquid Gold), brand and OE fitment. The turn of an era has begun, but to whom the throne of the new era belongs still depends on the contest to come.

6. The Road to Brand: From Contract Manufacturing to Entering the Global Top Ten

The most glaring link in Chinese tires' "big but not strong" is brand. But in 2026, a landmark change appeared—Sailun's brand value squeezed into the global top ten. Though this breakthrough is only a small step, it is a precious signal of Chinese tires climbing from "the quantity of contract manufacturing" toward "the quality of brand."

First, the weight of this breakthrough. On Brand Finance's 2026 global tire brand value list, Sailun ranked 10th in the world with a brand value of USD 1.239 billion, up 37% (the fastest growth among top brands), the only Chinese brand in the top ten. Brand value differs from sales—sales measures "how much was sold," while brand value measures "how much consumers trust the brand and how much premium they are willing to pay for it." And brand trust is precisely the weakest link of Chinese tires over the long term. That a Chinese brand can squeeze into the global top ten by brand value shows that Chinese tires are transforming from a "contract factory" into a "brand owner," even though this transformation has only just begun and only one company has achieved it.

Why is brand so important to Chinese tires, and so hard? Important, because brand is the wellspring of profit—as repeatedly noted, for the same-specification product Michelin can sell at a price far above domestic brands, while Linglong, benchmarked against the international first tier, can only sell at 60% to 70% of the price, and this 30% to 40% price gap is the shortfall in brand premium. Only by closing this gap can the profit margin of Chinese tires rise from 3%. Hard, because brand is trust accumulated over a century—Michelin was founded in 1889 and Bridgestone in 1931, and their brands are built from more than a century of technology, quality and reputation. When consumers choose tires (especially a product bearing on driving safety), they tend to trust old brands with history and reputation—this inertia of trust is the hardest barrier for Chinese tires to break.

Chinese tires build their brands along several parallel roads. First, building the brand with technology. Sailun's rising brand value is closely tied to the technological halo of Liquid Gold—when a brand has an original technology that challenges a century-old industry problem, its brand gains hardcore support. Technology is the best endorsement for a brand. Second, building the brand with OE fitment. When Chinese tires fit BYD and NIO, and even enter the OE supply chains of BMW and Audi (Linglong), the endorsement of these automakers becomes a source of brand trust—consumers will think, "a tire even BMW uses can't be bad." OE fitment is a letter of credit for the brand. Third, building the brand with racing and experience. Some Chinese tire companies, by sponsoring races and providing trial experiences, let consumers directly feel the product's performance and build trust from experience. Fourth, building the brand with new retail. As noted earlier, the transparency of platforms such as Tuhu lets consumers see the real performance and reviews of Chinese tires, dismantling the premium that foreign brands built on information asymmetry—new retail gives Chinese brands a stage to "let the product speak."

But brand building is a war of attrition, with no shortcuts. Technology can be broken through (Liquid Gold could yield results in a year or two), OE fitment can be won (the new-energy window has offered the opportunity), but brand trust can only accumulate slowly through time and reputation—it requires one good product after another, one satisfied car owner after another, one year after another of stable quality, slowly building into trust in the consumer's heart. Sailun's brand value entering the top ten is the result of more than a decade of sustained investment in technology, quality and marketing, not something achieved overnight. And to build the century-long brand trust of a Michelin, Chinese tires may still need a generation or two of sustained effort.

The road to brand also reveals the deepest threshold in Chinese tires' move from "big" to "strong." Technology (Liquid Gold), market (new-energy OE fitment), manufacturing (lighthouse factories), going overseas (global layout), capital (listing and consolidation)—in all these dimensions Chinese tires are advancing rapidly, and in some are even ahead. But brand—that trust and premium in the consumer's heart—is the slowest, hardest and most patience-demanding link. It is not like technology that can be tackled, nor capacity that can be expanded, nor cost that can be squeezed; it can only be laid down through time. This is why this report positions Chinese tires as "master of quantity, climber of quality"—quantity has already reached the summit, but quality (especially brand, the core of quality) is still halfway up the mountain, and it is the steepest stretch of that half-mountain.

Sailun entering the global top ten in brand is a precious signal: the brand of Chinese tires is being built bit by bit from zero. This small step took more than a decade, and to walk shoulder to shoulder with Michelin and Bridgestone may take a still longer road. But the direction is right—Chinese tires have already understood that their future lies not in cheaper contract manufacturing, but in trusted brands. On the day when Chinese tire brands can win the trust of global consumers as Huawei phones and BYD cars do today, Chinese tires will have truly moved from "big" to "strong." That day is still far off, but Sailun's small step has made it imaginable.

7. First in Output, Last in Profit: A Paradox of an Industry

The most core characteristic of China's tire industry can be summed up in one sentence: it makes half the world's tires yet earns only a 3% profit margin of the world. This paradox of "first in output, last in profit" is the key to understanding the entire industry.

First, the "first" in output. In 2025, China's rubber tire casing output was 1.207 billion units, of which automotive tires were 834 million; TBR tires 149 million (up 7.19%) and PCR tires 684 million (up 1.33%). China accounts for about half of the world's tire output—this figure fluctuates under different measures, but the direction is clear: China is the world's largest tire producer, with output far ahead. Exports are even more the lifeline of Chinese tires: in 2025 exports were 9.65 million tons, worth RMB 167.7 billion, with exports accounting for 57% of automotive tire output—more than half of Chinese tires are sold overseas. In the sales structure of Chinese tires, exports account for 57%, the OE market for 21%, and the domestic replacement market for 22%—a highly outward-oriented industry.

Next, the "last" in profit. China's tire industry posted total profit of RMB 31.1 billion in 2024, down 8.5% year-on-year; China accounts for about 35% of the global tire share (by sales, since unit prices are lower than under the output measure), but the industry profit margin is only about 3%. What does 3% mean? Giants like Michelin and Bridgestone have long had operating profit margins in the double digits. Making the same tires, Chinese companies earn hard-labor money, razor-thin money, while the European, American and Japanese giants earn brand premium and high-end profit. This chasm in profit margin is the most glaring numerical expression of "big but not strong."

Why first in output yet last in profit? Three reasons stacked layer upon layer.

First, a product structure skewed toward the low end. The volume of Chinese tires is mostly concentrated in the mid-to-low-end market—replacement tires, mid-to-low-end OE, exports to developing countries. The high-end market (luxury-car OE, high-performance tires, large-size tires) has long been held by foreign brands: foreign and joint-venture brands hold about 70% of China's passenger-car tire market and more than 60% of the high-end market, capturing nearly 80% of the profit; domestic brands hold less than 10% of the high-end passenger-car OE market. Making a lot but making cheap goods naturally means thin profit.

Second, the absence of brand premium. For a same-specification tire, Michelin can sell at a price far above domestic brands—because consumers trust the brand and are willing to pay a premium for it. Linglong's product performance benchmarks the international first tier, yet its price is only 60% to 70% of theirs—this 30% to 40% price gap is the shortfall in brand premium. Brand is trust accumulated over a century, and the brand building of Chinese tires has only just begun, hard to close this premium gap in the short term.

Third, cost pressure and involution. Raw materials account for more than 70% of cost, and natural rubber depends mainly on imports (detailed later), so costs are subject to others; meanwhile domestic tire companies are numerous and homogeneous competition is fierce, undercutting each other's prices to grab the market, further thinning profits. The price war is a shadow that hangs over China's tire industry, and the wave of bankruptcy restructurings in Shandong's industrial belt (detailed later) is the extreme consequence of this involution.

The way to crack this paradox is precisely the several main threads this report will unfold later: using original technologies such as Liquid Gold to challenge the high end and win brand premium; using new-energy OE fitment to pry open a reversal of the landscape and cut into high-value markets; using overseas plant-building to pierce the tariffs and place production where profit is higher (overseas bases have a gross margin about 1.5 times that of domestic ones); and using smart manufacturing to cut costs and raise efficiency, improving the profitability of unit output. The road for Chinese tires from "first in output" to "no longer last in profit" is climbed bit by bit from these several directions.

It is worth stressing that this paradox is not unique to Chinese tires—it is a shared portrait of "Made in China" in many industries: master of output, weak in profit, weak in brand, subject to the upstream. Tires are merely a typical sample of this universal predicament. And the breakthrough path Chinese tires are attempting holds reference value for all of Chinese manufacturing that wishes to move from "big" to "strong." Once this paradox is understood, one also understands why every technological breakthrough, every overseas plant and every OE order of Chinese tires is imbued with meaning beyond commerce itself—they are the effort of an industry to break free from the fate of "big but not strong."

And what shaped this industry's overseas landscape was a trade war lasting nearly two decades—AD/CVD tariffs.

8. Rising Volume, Falling Prices: The Danger Signal in the Export Data

China's tire export data conceals a signal that is easy to overlook yet extremely dangerous—rising volume alongside falling prices. This signal is the most direct manifestation of "big but not strong" at the export end, and it is also a key to understanding the predicament of Chinese tires.

Start with the numbers. In 2024, China exported 9.32 million tons of rubber tires worth 164.5 billion yuan, with both volume and value growing. In 2025, exports reached 9.65 million tons (up 3.6%) worth 167.7 billion yuan (up 2%)—volume rose 3.6%, but value grew only 2%, indicating that unit prices were falling. By 2026 the trend intensified: in the first five months, exports were 4.03 million tons (up 3.5%) worth 67.4 billion yuan (down 2.4%)—volume was still rising, but value had begun to fall. June alone saw both volume and value decline (820,000 tons, down 6.9%). "Rising volume, falling prices"—more and more tires exported, but at lower and lower unit prices, earning less and less money. This is the danger signal.

Why does volume rise while prices fall? Three causes are interwoven. First, the product mix skews toward the low end. Most of the tires China exports are mid- to low-end products, whose unit prices are inherently low; and because competition in the mid- to low-end market is fierce, prices can only trend downward. Second, involution is transmitted to exports. Domestic overcapacity and brutal price wars—this involution occurs not only in the domestic market but is also transmitted to exports. To absorb excess capacity, firms undercut one another in the export market as well, dragging down export unit prices. Third, tariffs squeeze pricing. AD/CVD duties and reciprocal tariffs eat into profit margins, and to preserve market share, firms can only cut ex-factory prices to offset the tariffs, further pulling down export unit prices.

The harm of rising volume and falling prices is far-reaching. It means China's tire exports rely on "making up in volume what is lost in price"—sustaining export-value growth by selling more tires rather than commanding higher unit prices. But "making up in volume" is unsustainable: capacity has a ceiling, markets have saturation points, and tariffs have limits. When volume can no longer rise and prices are still falling, export value will turn downward (the simultaneous decline in volume and value in June 2026 is already an early sign). The deeper problem is that rising volume with falling prices reflects the low-end lock-in of Chinese tires within the global value chain—selling a lot, earning little, manufacturing tires for the whole world while leaving the profits to brand owners and channel operators. This is one and the same as the "first in output, last in profit" paradox; it is simply seen more clearly from the export end.

Rising volume with falling prices also reveals a harsh competitive reality: in the mid- to low-end tire market, Chinese firms compete not only against foreign players but even more against one another in an involutionary race. When several hundred Chinese tire makers scramble for orders in the same mid- to low-end market, a price war becomes inevitable—you cut a yuan, I cut two, and in the end no one earns anything; the tires are simply sold to overseas buyers ever more cheaply. This "Chinese fighting Chinese" involution is the deepest root of the disease behind rising volume and falling prices. It explains why China ranks first in the world in tire export volume yet the export profit is thin as paper—it is not foreigners forcing prices down; it is Chinese firms driving the prices down themselves.

There is only one way out of rising volume and falling prices: move upward, stop grinding away at the low end. Concretely, this means the several threads this report has repeatedly emphasized—using technology (Liquid Gold) to create products that can command high prices, using brands (Sailun entering the world's top ten tire brands) to build a premium, using new-energy OE fitment to enter high-value markets, using overseas plants to place capacity where profits are higher, and using industry consolidation to reduce low-end involution. When the export structure of Chinese tires shifts from "large volume, low price, mid-to-low end" to "moderate volume, high price, mid-to-high end," rising volume with falling prices can turn into "rising volume and prices together," or at least "stable prices with rising volume." This transformation is the concrete marker, at the export end, of Chinese tires moving from "big" to "strong."

It is worth noting that leading firms have already partly achieved this transformation. Sailun's Liquid Gold can be priced against Michelin, and the overseas bases of Sentury and ZC Rubber can command better prices—their exports are shifting from "rising volume, falling prices" toward "value uplift." Meanwhile, small and medium-sized plants trapped in the domestic low-end market, able only to export on the basis of low prices, remain mired in rising volume and falling prices and are ultimately cleared out in the wave of bankruptcies. So the rising-volume-falling-prices data is an "industry-average" signal that masks the internal divergence—the head moving up, the tail sinking down. This divergence tells the same story as earnings season and the bankruptcy wave: Chinese tires are undergoing violent differentiation, with the strong climbing to the upstream of the value chain and the weak eliminated in low-end involution. Rising volume with falling prices is a dangerous average that the entire industry presents while this divergence remains unfinished.

9. Twenty Years of AD/CVD: From the Section 421 Safeguard to the New EU Case

The history of Chinese tires going overseas is a history of being repeatedly encircled by trade barriers and repeatedly breaking through. This tug-of-war, lasting nearly two decades, has profoundly shaped today's global footprint of Chinese tires. Only by laying out its timeline clearly can one understand every move in the "wave of building overseas plants" that follows.

The starting point was the 2009 U.S. "tire Section 421 safeguard case"—the first China-directed trade-remedy case after the Obama administration took office. For three consecutive years the United States imposed special tariffs on passenger-car and light-truck tires exported from China: 35% in the first year, 30% in the second, and 25% in the third. This was the first time Chinese tires tasted large-scale tariff encirclement.

The real hammer blow was AD/CVD (anti-dumping plus countervailing duties). In June 2015, the United States issued a final AD/CVD ruling on Chinese passenger-car and light-truck tires: anti-dumping of 14.35% to 87.99%, plus countervailing of 20.73% to 100.77%, for a combined maximum of 192.76%. How high is this rate? It essentially shut Chinese passenger-car tires out of the U.S. market. Subsequently the United States finalized AD/CVD on Chinese truck and bus tires in 2019, and the EU issued a final AD/CVD ruling on Chinese truck and bus tires in 2018 (anti-dumping of 42.73 to 61.76 euros per tire). The U.S. and EU AD/CVD measures against Chinese tires—from passenger cars to trucks and buses, from the United States to Europe—formed an all-around tariff wall.

This wall forced Chinese tires into their first large-scale wave of going overseas—building plants in Southeast Asia. Since China-made tires could not enter the United States, firms opened factories in Thailand and Vietnam, using a "Southeast Asia-made" identity to circumvent the AD/CVD measures against China. In 2013 Linglong began its layout in Thailand and Sailun in Vietnam, and a wave of Chinese tire makers subsequently poured into Southeast Asia. This strategy was for a time highly successful—Southeast Asian bases both avoided China-directed tariffs and enjoyed low local costs, and the profitability of the overseas bases was far higher than that at home.

But the United States soon plugged this gap. In 2021, the United States imposed AD/CVD on passenger-car tires from South Korea, Taiwan, Thailand, and Vietnam—taking direct aim at the Southeast Asian bases of Chinese tire makers. What followed was repeated administrative reviews: rates on PCR tires from Thailand once fell sharply (Sentury's Thailand-specific rate dropped to 1.24%, other firms to 4.52%), giving Chinese-owned plants a reprieve; but in 2024 the U.S. final ruling in a new case on Thai truck and bus tires was another hammer blow (12.33% to 48.39%). Tariffs are like whack-a-mole—plug one hole and another pops up.

In 2025, Trump's "reciprocal tariffs" pushed the situation to a chaotic peak. The April reciprocal tariffs at one point set Thailand at 36%, Vietnam at 46%, Cambodia at 49%, and China at a combined maximum above 145%; tires were also placed on the Section 232 auto-parts list for an additional 25%. The cost advantage that Chinese tire makers had painstakingly built in Southeast Asia was for a time swallowed by these stacked tariffs. Fortunately, in the second half of 2025 the rates were negotiated back down (Thailand, Vietnam, and Cambodia to roughly 19% to 20%), and in February 2026 the Supreme Court struck down the IEEPA tariffs—but this roller-coaster ride made everyone see one truth clearly: betting everything on a single market and a single place of production carries too much risk.

And just as the U.S. front was seesawing back and forth, the EU opened a new theater. In May 2025, the EU launched an anti-dumping investigation into Chinese passenger-car and light-truck tires—another act of encirclement following the 2018 truck and bus tire case. The final ruling came on July 9, 2026: rates of 4.3% to 45.3% (Shandong Yongsheng highest at 45.3%, Hankook's China plants lowest at 4.3%, and the other 64 cooperating firms at 24.4%), with the parallel countervailing investigation expected to conclude by the end of 2026. The EU is replicating its 2018 path, extending its China-directed tariffs from truck and bus tires to passenger-car tires.

Twenty years of AD/CVD can be condensed into one sentence: every time Chinese tires break through one tariff wall, a new wall goes up. From the U.S. safeguard to U.S. AD/CVD, from AD/CVD against China to AD/CVD against Southeast Asia, from the U.S. front to the EU front—trade barriers chase Chinese tires like a shadow. Yet it was precisely this protracted encirclement that forced out the most important capability of Chinese tires: a global footprint. When no single place of production remained safe, Chinese tire makers learned to scatter their factories across the globe—Southeast Asia, Mexico, Morocco, Egypt, Serbia, Brazil. This "whack-a-mole" tariff war, paradoxically, forged the survival wisdom of Chinese tires to pass through trade barriers. This is the "second round of globalization" to be discussed in the next chapter—a more dispersed, more mature wave of going overseas, forced out by tariffs.

10. AD/CVD Case by Case: An Anatomical Chart of Tariff Rates

The previous chapter laid out the twenty-year AD/CVD timeline; here we spread out the rates of several key cases one by one—because the devil is in the details, and it is precisely these concrete tariff figures that have shaped every move of Chinese tires going overseas.

U.S. AD/CVD on Chinese passenger-car tires (2015). This was the hammer that shut Chinese passenger-car tires out of the U.S. market: anti-dumping of 14.35% to 87.99%, plus countervailing of 20.73% to 100.77%, for a combined maximum of 192.76%. A rate of nearly two times is tantamount to a total ban. Subsequent sunset reviews in 2024 and 2026 both maintained the duties—China's domestic passenger-car tire exports to the United States were down to only about 1.3 million tires in 2025, a plunge of roughly 98% from the 2014 peak. Direct exports of passenger-car tires to the United States have in effect gone to zero, and can only take detours through overseas bases.

U.S. AD/CVD on Southeast Asian passenger-car tires (2021). When Chinese tire makers built plants in Southeast Asia to avoid duties, the United States in 2021 extended AD/CVD to Thailand, Vietnam, South Korea, and Taiwan. Thailand's anti-dumping ran from 14.62% to 21.09% (Linglong Thailand at 21.09%); Vietnam's anti-dumping ran from 0 to 22.27% plus countervailing of 6.23% to 7.89% (which for the first time treated "currency undervaluation" as a subsidy). This blow landed on the Southeast Asian bases of Chinese tire makers. But the subsequent administrative reviews brought a turnaround: in the 2024 final ruling, Sentury Thailand's individual rate dropped to 1.24% (from an original 17.06%), and other firms (including Linglong Thailand and General Rubber Thailand) fell to 4.52%. Because of the reduced review rate, Linglong also received a $56 million anti-dumping refund. This rise and fall in rates directly determined the profit and loss of Chinese-owned Thai plants.

U.S. AD/CVD on Thai truck and bus tires (2024). Just as review rates on passenger-car tires were falling and Chinese-owned plants were breathing a sigh of relief, the U.S. new case on Thai truck and bus tires in 2024 was yet another hammer blow: the preliminary ruling was only 0 to 2.35%, but the final ruling in October 2024 reversed sharply to 12.33% to 48.39% (Prinx Chengshan Thailand and other firms at 12.33%). Tariffs are like whack-a-mole—plug one hole and another pops up; the passenger-car tire hole had just been patched when the truck and bus tire hole opened.

EU AD/CVD on Chinese truck and bus tires (2018) and the new passenger-car tire case (2025–2026). The EU's 2018 final AD/CVD ruling on Chinese truck and bus tires (anti-dumping of 42.73 to 61.76 euros per tire as a specific duty), with the 2025 sunset review continuing it (anti-dumping of 0 to 35.74 euros, countervailing of 3.75 to 57.28 euros). And in May 2025 the EU again launched anti-dumping against Chinese passenger-car tires, with the final ruling on July 9, 2026: rates of 4.3% to 45.3% (Yongsheng highest at 45.3%, Hankook's China plants lowest at 4.3%, and the other 64 cooperating firms at 24.4%), with the parallel countervailing case concluding by the end of 2026. The EU is replicating its 2018 path, extending its China-directed tariffs from truck and bus tires to passenger-car tires—the other shoe of the new front has dropped.

Trump's 2025 reciprocal tariffs and the Supreme Court ruling. The April 2025 reciprocal tariffs at one point set Thailand at 36%, Vietnam at 46%, Cambodia at 49%, and China at a combined maximum above 145%, with tires also placed under Section 232 auto parts for an additional 25%. Fortunately the rates were negotiated back down in the second half of the year (Thailand, Vietnam, and Cambodia to roughly 19% to 20%), and in February 2026 the Supreme Court struck down the IEEPA tariffs (the effective rate on Chinese goods dropping from 36.8% to about 21.2%). This roller-coaster ride left everyone dizzy.

Lining up these tariff figures together reveals three patterns of AD/CVD tariffs. First, all-around coverage—from the United States to the EU, from passenger-car tires to truck and bus tires, from China's home base to Southeast Asian bases, the tariff wall is all-around, and no market, product category, or place of production can wholly escape. Second, dynamic gaming—rates are not fixed but keep changing across original rulings, reviews, sunset reviews, and new cases (Sentury Thailand from 17% down to 1.24%, Thai truck and bus tires from 2% up to 48%), and Chinese tire makers must continually adjust their layout amid this dynamic gaming. Third, forcing out globalization—it is precisely these concrete, ever-changing, all-around rates that forced out the second round of globalization of Chinese tires (nearshoring, multipolar hedging)—when any single place of production may be hit with new duties, scattering capacity across multiple global outposts and dynamically adjusting becomes the only way to survive.

This anatomical chart of tariff rates is the cipher for understanding every move of Chinese tires going overseas. Why Sailun went to Mexico (USMCA exemption from Section 232), why Sentury went to Morocco (low tariffs toward both the United States and the EU), why Sailun made a big bet on Egypt (multi-market hedging)—the answers all lie hidden in these tariff figures. The global footprint of Chinese tires is, in essence, a precise exercise in tariff-rate arbitrage and risk hedging. And the complexity of this arbitrage and hedging is rising steadily as the tariff fronts expand (from the United States to the EU) and rates fluctuate (the roller coaster)—which is also why "globalization capability" has become the most central competitiveness of Chinese tires going forward. Whoever can read this tariff anatomy chart and optimize global capacity layout accordingly can win profits and markets amid the AD/CVD encirclement.

11. Building Overseas Plants (Part One): Southeast Asia's First Decade

Forced overseas by tariffs, Chinese tires made their first stop in Southeast Asia. Starting in 2013, Southeast Asia has by today become the "second home base" of Chinese tires—here is gathered the largest scale of Chinese tire makers' overseas capacity, and it also contributes their richest profits. Looking at these bases one by one, one can feel the depth of Chinese tires' globalization.

Sailun—the player with the most complete Southeast Asian footprint. Vietnam was Sailun's first overseas base (from 2012), planned for annual capacity of 16 million PCR tires, 2.6 million TBR tires, and 100,000 tons of off-road tires; in the first half of 2024, the Vietnam base alone earned 4.051 billion yuan in revenue. The Cambodia base is planned for 9 million PCR tires and 1.65 million TBR tires, with revenue of 1.841 billion yuan in the first half of 2024 and an additional 684 million yuan invested in January 2025 for expansion. At the Indonesia base, the first PCR tire rolled off the line in May 2025, with TBR and off-road tires produced in August. Adding the Mexico and Egypt bases discussed later, Sailun's overseas planned capacity reaches 9.75 million TBR tires and 49 million PCR tires—the largest overseas capacity among Chinese tire makers.

Linglong—starting in Thailand, expanding into Europe. Thailand was the first overseas base Linglong launched in 2013, now with annual capacity of 15 million PCR tires and 2.2 million TBR tires, and 2024 revenue of 4.21 billion yuan with net profit of 830 million yuan. Linglong is also one of the earliest Chinese tire makers to build a plant in Europe—the Serbia base (detailed later) is its European bridgehead.

Sentury—Thailand's profit exemplar. Sentury's Thailand base is the best exemplar of the overseas profitability of Chinese tire makers: in 2024 the Thailand base's revenue exceeded 5.3 billion yuan, with a net margin as high as 24.5% and 100% capacity utilization. What does a 24.5% net margin mean? Far higher than the single digits at home—this is the most direct evidence that "opening factories overseas earns more money."

ZC Rubber—a Thai veteran, an Indonesian rookie. ZC Rubber's Thailand base was completed in 2015, with cumulative investment exceeding 5 billion yuan, current capacity of about 20 million tires, and a Thailand-base net margin of about 13%. Its Indonesia base went into production in December 2024, "profitable from the moment it started," with a net margin of 10.4% in the first half of 2025.

General Rubber, Doublestar, Prinx Chengshan, Guizhou Tyre—each with its own outpost. General Rubber has bases in both Thailand and Cambodia, and as of May 2026 reported that "both the Thailand and Cambodia bases are at full production and full sales"; Qingdao Doublestar built its first self-constructed overseas plant in Kratié Province, Cambodia (about $200 million, into production in September 2024), and also holds a Vietnam plant through Kumho; Prinx Chengshan has a base of nearly $300 million in Rayong, Thailand; Guizhou Tyre built a TBR tire base in Tien Giang Province, Vietnam. As of mid-2024, Chinese tire companies already had 25 to 27 overseas plants, and in 2024 alone 15 companies built or expanded plants overseas, with total investment exceeding 30 billion yuan.

Over ten years in Southeast Asia, Chinese tires learned one thing: overseas bases are not merely "channels for avoiding duties" but "engines for making money." The data is most persuasive—Essence Securities' estimate shows that from 2019 to 2021, the overseas gross margins of three tire makers were about 1.5 times those at home; Sailun's 2023 Vietnam base net margin was 22.04% and Cambodia 24.23%, while the domestic Dongying base was only 6.7% and Shenyang only 1.5%. Over 80% of leading tire makers' profits came from overseas—this figure fundamentally changed the business logic of Chinese tires: going overseas is no longer passive duty avoidance but the active pursuit of profit.

But ten years in Southeast Asia also exposed fragility. When the United States extended AD/CVD to Thailand and Vietnam in 2021, when Thai truck and bus tires were hit with high tariffs again in 2024, and when reciprocal tariffs at one point drove up rates at Southeast Asian production sites in 2025—Chinese tire makers found that the single logic of "Southeast Asia equals a tax haven" had failed. Though the Southeast Asian bases were still profitable, they were no longer a tariff safe harbor. More troubling still, the components of tires assembled in Southeast Asia largely come from China—the U.S. "transshipment" clause (a 40% duty on goods with Chinese content that undergo only simple processing) is aimed precisely at this. Chinese tires needed a more dispersed, more thorough round of globalization, scattering factories to places with friendlier tariffs. This is the second wave of going overseas—nearshoring.

12. Thailand's Decade: The Overseas Profit Cipher of Chinese Tires

To understand why Chinese tires go overseas so avidly, the best case is Thailand—the first stop for Chinese tire makers going abroad, and also the most mature and most profitable overseas base. Thailand's decade holds the entire cipher of Chinese tires' overseas profits.

First, look at how astonishing the profitability of the Thailand bases is. Sentury's Thailand base is the most striking exemplar: in 2024 its revenue exceeded 5.3 billion yuan, with a net margin as high as 24.5% and 100% capacity utilization. A 24.5% net margin—compared with the roughly 3% profit margin of the domestic tire industry, the Thailand base's money-making capability is eight times that at home. ZC Rubber's Thailand base also has a net margin of about 13%, and Linglong Thailand had 2024 revenue of 4.21 billion yuan with net profit of 830 million yuan. These figures explain a counterintuitive phenomenon: Chinese tires earn thin profits and fight price wars grimly at home, yet in Thailand can earn net margins above 20%—the same firms, the same products, but change the place of production and profitability differs by a world.

Why are the Thailand bases so profitable? Four ciphers. Cipher one, avoiding China-directed tariffs. Thailand-made tires can enter the U.S. and EU markets under a "made in Thailand" identity, avoiding the high AD/CVD tariffs against China—this was the original value of the Thailand bases. Cipher two, proximity to raw materials. Thailand is the world's largest producer of natural rubber, and Chinese tire makers building plants in Thailand have raw materials right at hand—low cost, stable supply—rather than importing natural rubber from Southeast Asia and bearing transport costs as they do at home. Cipher three, cost advantage. Thailand's labor, land, and energy costs are relatively low, and combined with proximate raw materials, its overall manufacturing cost is even lower than at home. Cipher four, market pricing. The products of the Thailand bases are sold mainly to developed markets such as the United States and Europe, where prices are higher than at home—making at low cost, selling at high prices, so profit margins are naturally ample. Duty avoidance, proximate raw materials, low costs, and high pricing—stacking these four ciphers together is the source of the Thailand bases' net margins above 20%.

The success of Thailand's decade profoundly changed the business logic and strategic understanding of Chinese tires. The first realization—going overseas is not passive duty avoidance but active money-making. Chinese tire makers initially went to Thailand to avoid China-directed tariffs (passive); but the high profitability of the Thailand bases made them realize that going overseas is itself the most profitable business (active). This shift in understanding drove the later second round of globalization—upgrading from "duty avoidance" to "global layout in pursuit of profit." The second realization—profit depends on "where it is made," not just "what is made." The Thailand bases proved that the same tire earns far more when made in Thailand than at home—the geographic location of production became a key determinant of profit. This realization led Chinese tire makers to begin laying out capacity globally as if playing chess, placing factories where tariffs, costs, and markets are optimal. The third realization—overseas bases are the way out of domestic involution. Domestic overcapacity and brutal price wars had squeezed profits down to 3%; the Thailand bases, far from this involution, could preserve a healthy profit above 20%. Going overseas became Chinese tire makers' strategic choice to escape domestic involution and seek healthy profits.

But Thailand's decade also exposed the fragility of overseas bases. When the United States extended AD/CVD to Thailand in 2021, when Thai truck and bus tires were hit with high tariffs again in 2024, and when reciprocal tariffs at one point drove up Thai rates in 2025—the "duty-avoidance dividend" of the Thailand bases was shrinking. Though the Thailand bases were still profitable, they were no longer the safe tax haven of years past. This fragility precisely drove the second round of globalization of Chinese tires—when Thailand was no longer safe, capacity had to be further dispersed to Mexico, Morocco, Egypt, and Serbia, using a multipolar layout to hedge the risk of a single place of production. Thailand went from being "the only tax haven" to "one base among many"—this transformation is a microcosm of Chinese tires going overseas moving from "single-pole" to "multipolar."

The story of Thailand's decade is a complete revelation of the overseas profit cipher of Chinese tires, and also a key to understanding the globalization strategy of Chinese tires. It tells us: the going-overseas of Chinese tires is not a simple transfer of capacity but a global optimization around the three factors of "tariffs, costs, markets"—place capacity wherever duties can be avoided, wherever costs are low, wherever markets are good. Because Thailand simultaneously satisfies these three factors (avoiding China-directed duties, proximate low-cost raw materials, selling into developed markets), it became the golden first stop for Chinese tires going overseas, creating the profit legend of net margins above 20%. And when Thailand's advantages shrank under tariff encirclement, Chinese tires replicated this "global optimization" logic to more bases—this is the second round of globalization.

Thailand's decade is the starting point of Chinese tires' transformation from "output overlord" to "global player." It taught Chinese tires something more important than making tires—the strategic capability to allocate capacity, optimize profit, and hedge risk on a global scale. This capability is the core competitiveness for Chinese tires to survive and profit in a complex trade environment, and it is the key, along the dimension of globalization, for moving from "big" to "strong." Chinese tires have already read this "profit cipher" of Thailand, and are applying it to a broader global chessboard.

13. Building Overseas Plants (Part Two): The Nearshoring Second Round of Globalization

When Southeast Asia was no longer a tariff safe harbor, the going-overseas of Chinese tires entered its second phase—nearshoring. The core logic changed: no longer finding a low-cost place of production to concentrate output, but scattering factories across multiple outposts close to target markets and with friendlier tariffs, dispersing risk and hedging across multiple poles. Mexico for the United States, Morocco for Europe, Africa, and the United States, Egypt for multiple markets, Serbia for Europe—a more complex global chessboard is being laid out.

Mexico—the bridgehead for nearshoring to the United States. Mexico's value lies in USMCA (the United States–Mexico–Canada Agreement)—tires produced in Mexico that meet the rules of origin can be partly exempted from the 25% tariff under U.S. Section 232. Sailun's Mexico base invested 1.7 billion yuan, planned for 6 million PCR tires, with the first PCR tire rolling off the line in May 2025—this is Sailun's first North American plant. ZC Rubber is also building a plant in Mexico (broke ground in 2024). Mexico became a new hotspot for Chinese tire makers' exports to the United States after 2024.

Morocco—the hub of low tariffs toward both the United States and the EU. Morocco is an exquisite choice: it has a free trade agreement with the United States and an association agreement with the EU, enjoying extremely low tariffs toward both, and the 2025 U.S. reciprocal tariff on Morocco was only 10%—the friendliest among all places of production. Sentury's Morocco base (in Tangier Tech City) has a total investment of $490 million, planned for 12 million PCR tires, broke ground in October 2023 and went into production in September 2024 (built in 11 months, an astonishing pace), ramped up to 6 to 8 million tires in 2025, and will reach full production of 12 million tires in 2026 with orders exceeding supply. The Morocco base is Sentury's key move to pass through the dual tariff wall of the United States and Europe.

Egypt—Sailun's latest big play. Egypt is Sailun's fifth overseas base, intensively reinforced in 2026, targeting multiple markets across Europe, Africa, and the United States. Within the single year of 2026, Sailun invested three times, cumulatively more than $1.7 billion: on June 17, 2026 it announced a planned $1.141 billion "Egypt capacity enhancement project," adding 27 million PCR tires, 1.65 million TBR tires, and 20,000 tons of off-road tires—once completed, the Egypt base will total 36 million PCR tires and 3.3 million TBR tires, expected to add annual revenue of $1.161 billion and net profit of $170 million. Egypt is an entirely new pole that Sailun opened after saturation of Southeast Asian AD/CVD, and it is one of the largest single overseas investments by a Chinese tire maker.

Serbia and Brazil—nearshoring to Europe and a Latin American layout. Linglong's Serbia base is the representative of Chinese tire makers' nearshoring to Europe: planned for 12 million PCR tires and 1.6 million TBR tires, with truck tires reaching designed output in 2024 and passenger-car tires in 2025, and 2024 revenue of 1.44 billion yuan. But the Serbia base is also a cautionary tale—it posted a net loss of 120 million yuan in 2024, a loss during its ramp-up period, showing that overseas bases are not a guaranteed win and that Europe's plant-building costs and ramp-up difficulty are both higher than Southeast Asia's. Linglong had originally also planned a Brazil base (14.7 million sets, about 8.7 billion yuan), but in May 2026 it was terminated because the equity terms with the partner could not be agreed—there are times going overseas comes up empty.

Laying out this new chessboard, the logic of the second round of globalization becomes clear: shifting from the single pole of "Southeast Asia exporting to the United States" toward a dispersed "nearshoring / multipolar hedging" layout. Sailun pivots to Mexico, Indonesia, and Egypt; Sentury to Morocco and Spain; Linglong to Serbia and Brazil; ZC Rubber to Indonesia and Mexico. The common feature is—no longer putting all eggs in one basket. When the United States struck down the IEEPA tariffs in February 2025 and when the EU landed its new final anti-dumping ruling in July 2026—Chinese tire makers found that the value of a multipolar layout stood out: no matter which market imposes new duties, other places of production can pick up the slack.

But nearshoring also has its costs. Overseas plant-building requires enormous investment (Sailun Egypt $1.7 billion, Sentury Morocco $490 million), the ramp-up period may bring losses (Linglong Serbia), and the complexity of managing multiple cross-border bases rises sharply. The deeper problem is—no matter where the factory is opened, the core technology, formulas, equipment, and even a large share of components still come from China. Nearshoring solves the tariff problem of "place of production" but cannot solve the high-end problem of "brand" and "technology." The second round of globalization of Chinese tires has scattered capacity across the globe, but to truly move from "big" to "strong" still requires something beyond the place of production—such as an original technology capable of moving the magic triangle. This is the story of Liquid Gold.

14. Why Overseas Is More Profitable: An Arithmetic Problem of Profit Margins

The core driving force of Chinese tires going overseas comes down, in the end, to a simple arithmetic problem—overseas bases are simply more profitable than domestic factories, and far more so. Only by working out this arithmetic problem can one understand why Chinese tire makers, sparing no expense and braving tariff risks, insist on opening factories overseas one by one.

First, look at the numbers. Essence Securities estimates that from 2019 to 2021, the overseas gross margins of three tire makers were about 1.5 times those at home. Concretely, by company: Sailun's 2023 Vietnam base had a net margin of 22.04% (revenue 7.233 billion, net profit 1.594 billion) and Cambodia a net margin of 24.23%, while the domestic Dongying base was only 6.7% and Shenyang only 1.5%. Sentury's 2024 Thailand base revenue exceeded 5.3 billion, with a net margin as high as 24.5% and 100% capacity utilization. ZC Rubber's Thailand base had a net margin of about 13% and its Indonesia base was profitable from the moment it started, with a net margin of 10.4%. Lining up these figures, the conclusion is astonishing: the net margins of overseas bases are generally three to four times those at home. Over 80% of leading tire makers' profits came from overseas—this figure fundamentally changed the business logic of Chinese tires.

Why are overseas bases so profitable? Four reasons stacked together. First, avoiding China-directed tariffs. This was the original driver—China-made tires cannot enter the United States and Europe (high AD/CVD tariffs), whereas Southeast Asia-made ones can (or at far lower rates); the same tire, made in different places, differs by a world in whether it can enter the U.S. market and at what rate. Avoiding tariffs is itself an enormous profit margin. Second, local cost advantages. Southeast Asia's labor, land, and energy costs are low, and it is close to natural rubber production areas (Thailand, Vietnam, and Indonesia are themselves rubber-producing countries)—proximate raw materials, low costs. Third, better market pricing. Tire prices in overseas markets (especially developed markets) are higher than at home, so the same product can command a better price. Fourth, avoiding domestic involution. The domestic tire industry has overcapacity and brutal price wars, squeezing profits extremely thin; overseas markets are relatively less brutally competitive, preserving a healthier profit.

The answer to this arithmetic problem explains the frenzy of Chinese tires going overseas—why they insist on building plants overseas even at investments of several hundred million or over a billion dollars (Sailun Egypt $1.7 billion, Sentury Morocco $490 million). Because the accounts are crystal clear: the high profits of overseas bases can recoup the investment within a few years, and their long-term contribution far exceeds the return at home. When domestic factories have only single-digit net margins and overseas bases have net margins above 20%, any rational firm would choose to shift capacity overseas. This is not passive duty avoidance but the active pursuit of profit—going overseas is the most profitable business for Chinese tires.

But this arithmetic problem also has variables and risks, as earlier chapters discussed. The variable is tariffs—when the United States extended AD/CVD to Southeast Asia and when reciprocal tariffs at one point drove up Southeast Asian rates, the "duty-avoidance dividend" of overseas bases was shrinking. The risk is ramp-up—overseas new bases may run losses in the early production period (Linglong Serbia lost 120 million yuan in 2024), and the complexity of managing cross-border bases rises sharply. So the high profits of overseas bases are not unconditional; they depend on a combination of "friendly tariffs + cost advantage + sound management." When these conditions change (tariff pursuit, rising costs, management losing control), the arithmetic of overseas bases can flip.

This arithmetic problem also holds a deeper lesson: the profit of Chinese tires increasingly depends on "where it is produced," not just "what product is made." The same tire is a thin profit made at home, a thick profit made in Vietnam, and made in Morocco can avoid duties toward both the United States and Europe—the geographic location of production has become a key variable determining profit. This is a feature of manufacturing in the era of globalization: profit comes not only from a product's added value but from the combined optimization of the tariffs, costs, and market pricing of the place of production. The second round of globalization of Chinese tires (nearshoring, multipolar hedging) is, in essence, a search across the globe for the "optimal solution of production geography"—place capacity wherever tariffs are friendly, costs are low, and markets are good.

Once this arithmetic problem is understood, so too is why "globalization capability" is the core competitiveness of Chinese tires going forward. Only firms that can flexibly lay out capacity across multiple global markets, dynamically adjust to changes in tariffs and costs, and optimize "production geography" to the extreme can make money in a complex trade environment; while firms confined to a single place of production and lacking global layout capability will see their profits dry up under the pursuit of tariffs and the squeeze of costs. Why overseas is more profitable—the answer to this arithmetic problem points to the profound transformation of Chinese tires from "product competition" toward "global-layout competition."

15. Morocco and Egypt: Two Samples of Nearshoring

Within the second wave of Chinese tire globalization (nearshoring), two bases stand out as the most representative—Sentury's Morocco and Sailun's Egypt. Dissecting these two samples in detail reveals the ingenious calculus behind China's nearshore tire footprint, and also illustrates the deeper logic of how going global has evolved from "tax avoidance in Southeast Asia" to "multipolar global hedging."

Sentury's Morocco: a textbook case of tariff arbitrage. As a location, Morocco is nothing short of a textbook in tariff arbitrage. It offers two advantages found nowhere else: a free trade agreement with the United States (the U.S.–Morocco FTA) and an association agreement with the European Union—granting extremely low or even zero tariffs into both the U.S. and the EU. Moreover, the U.S. reciprocal tariff imposed on Morocco in 2025 is only 10%, the most favorable of all production origins. This means tires made in Morocco can enter both major markets—the United States and the European Union—at low tariffs simultaneously: one base serving both the U.S. and Europe. Sentury's Morocco base (in Tangier Tech City) has a total investment of USD 490 million and a planned capacity of 12 million semi-steel tires. Construction began in October 2023 and production started in September 2024—built in just 11 months, an astonishing pace that reflects the efficiency of Chinese infrastructure and manufacturing. Output ramps to 6–8 million tires in 2025 and reaches full capacity of 12 million tires in 2026, with orders outstripping supply. The Morocco base is Sentury's key move to breach the dual tariff walls of the U.S. and Europe, and the new path it opened up after its Southeast Asian bases came under tariff siege.

Sailun's Egypt: the single largest overseas gamble. Egypt is Sailun's boldest move of 2026, targeting multiple markets across Europe, Africa, and the Americas. The scale of investment is staggering—three rounds of investment within a single year, 2026, totaling more than USD 1.7 billion: the "Egypt Capacity Expansion Project" announced on June 17, 2026, alone accounts for USD 1.141 billion, adding 27 million semi-steel tires, 1.65 million all-steel tires, and 20,000 tons of off-road tires. Once complete, the Egypt base will total 36 million semi-steel tires and 3.3 million all-steel tires, and is expected to generate an additional USD 1.161 billion in annual revenue and USD 170 million in net profit. What does USD 1.7 billion mean? This is one of the largest single overseas investments ever made by a Chinese tire company—nearly equivalent to Sailun rebuilding an entire overseas entity. Egypt's value lies in its geographic position—straddling the junction of Europe, Asia, and Africa—allowing it to radiate to Europe, Africa, the Middle East, and even the Americas, a natural multi-market hub. Sailun's choice of Egypt is a search, after the anti-dumping/anti-subsidy saturation of Southeast Asia, for a brand-new capacity pole capable of hedging against multiple risks.

These two samples reveal the three layers of logic behind nearshoring. First, from "avoiding a single tariff" to "serving multiple markets." The Southeast Asian bases were originally built to avoid tariffs on China, but could only serve a single market (primarily the United States); Morocco can serve both the U.S. and Europe, and Egypt can radiate to Europe, Africa, and the Americas. Nearshore bases no longer aim merely to avoid a single tariff, but to enter multiple markets at low cost simultaneously. This is an upgrade in strategic thinking. Second, from "passive tax avoidance" to "proactive positioning." Going into Southeast Asia was a passive choice forced by tariffs; Morocco and Egypt represent proactive global positioning—companies searching worldwide for the optimal combination of "tariff + cost + market," placing capacity like chess pieces in the most advantageous positions. Third, speed and scale. Sentury's Morocco built in 11 months, Sailun's Egypt a USD 1.7 billion gamble—the speed and scale of Chinese tire companies going global embody the overall strength of Chinese manufacturing (fast infrastructure, ample capital, strong execution), something Indian and Southeast Asian domestic firms can hardly match.

But both samples carry their own risks. Sentury is betting a single base in Morocco to serve both the U.S. and Europe—if U.S. or European tariff policy toward Morocco shifts (for example, if the U.S. questions whether Moroccan-made tires contain Chinese content), the arbitrage space would shrink. Sailun's USD 1.7 billion investment in Egypt carries a long payback period and uncertain ramp-up—if Egypt's business environment, supply-chain support, or market demand fall short of expectations, this gamble could drag down the company's finances. While nearshoring diversifies risk, each new base is itself a high-investment, high-risk bet.

The deepest lesson from these two samples—Morocco and Egypt—is that Chinese tires going global has evolved from "finding a cheap place to concentrate production" to "dynamic positioning on a global chessboard, pursuing the optimal combination of tariff, cost, and market." This is a more mature, more complex form of globalization that tests a company's global capabilities more severely. Companies that can master this global chess game (Sailun, Sentury, ZC Rubber) will win profits and market share in a complex trade environment; those that cannot will fall behind amid tariff pursuit and positioning missteps. The second wave of globalization is a major capability test for Chinese tires—testing not just the ability to make tires, but the strategic ability to allocate capacity, hedge risk, and optimize profit on a global scale. This capability is the core competitive strength of Chinese tires' move from "big" to "strong" in the dimension of globalization.

16. Liquid Gold: A Chinese Experiment Challenging the Magic Triangle

If Chinese tires' move from "big" to "strong" requires a landmark technological breakthrough, then Sailun's "Liquid Gold" tire is the attempt that comes closest to that landmark so far. Its significance lies in directly challenging the "magic triangle" that no one in the tire industry has been able to fully crack in over a century.

First, the technical principle. At the core of Liquid Gold is a "chemical rubber mixing" technology called EVEC. In conventional tires, the rubber and the silica filler are blended through mechanical mixing (the dry method)—like kneading dough, dry materials are worked together, but the dispersion of filler within the rubber is never quite even. EVEC technology, by contrast, mixes rubber, silica filler, and compounding agents at the molecular level under continuous liquid-phase conditions to produce a masterbatch—the equivalent of upgrading from "kneading dough" to "molecular-level solution formulation," achieving an unprecedented uniformity of filler dispersion within the rubber. When dispersion is uniform, multiple performance attributes can be improved at once—which is precisely the key to cracking the magic triangle. As Chapter 2 explained, rolling resistance, wet grip, and wear resistance are inherently in conflict, and for over a century could only be traded off against one another; Liquid Gold claims that through molecular-level filler dispersion, it achieves "high rubber–filler interaction and low filler–filler interaction," thereby simultaneously reducing rolling resistance, improving wet grip, and enhancing wear resistance—pushing all three attributes up together.

Now the performance data. Here two frames of reference must be distinguished. The official (corporate marketing) frame: fuel-vehicle consumption down 8% per 100 km (about 0.6 liters saved), EV electricity consumption down 12% per 100 km (40–60 km more per charge), wet-braking distance at 80 km/h 7 meters shorter than an ordinary tire, wear resistance up 20% to 30%, and noise down 1 to 2 decibels. These figures come from corporate marketing and should be taken with a grain of salt. But third-party testing offers corroboration: tested by Spain's IDIADA, the passenger-car tire achieved EU label Grade A on both rolling resistance and wet grip (the company claims Grade AA); the truck-and-bus tire is the only domestic product to reach the China Rubber Industry Association's 3A rating; and it has passed multiple certifications from bodies such as TÜV SÜD. Independent testing by PCauto showed that the Liquid Gold E01+ on a Tesla Model 3 delivered a coasting distance 35 meters longer than the Michelin PS4, 8.8% lower electricity consumption, and 6% more range. Viewing the official frame and third-party testing side by side, Liquid Gold has indeed achieved a breakthrough against the magic triangle in terms of performance—though the magnitude of that breakthrough differs between corporate marketing and third-party testing.

The commercial significance of Liquid Gold is even more important than the technology itself. It enabled Sailun to do something Chinese tires had long been unable to do—not fight a price war, but price directly against Michelin. As discussed earlier, one core affliction of Chinese tires being "big but not strong" is the absence of brand premium, leaving them to compete on low prices and earn razor-thin margins. Liquid Gold's performance breakthrough gives Sailun the confidence to price its retail products directly against international first-tier brands like Michelin—entering through a narrative of "value-for-money plus performance superiority" rather than through cheapness. This is the first time Chinese tires have used original technology (rather than low prices) to pry open the high-end market. The product line is also expanding rapidly: Liquid Gold EV tires made their global debut in Las Vegas in November 2022, and in 2023 four domestic series rolled out—new energy, luxury driving, urban driving, and ultra-high performance—fitted as OE on a range of models including BYD, Geely, Chery, Changan, FAW-Volkswagen, NIO, and even Vietnam's VinFast. The rise in brand value (Sailun ranked tenth globally in brand value in 2026, with the fastest growth rate among leaders) is also closely tied to the technological halo of Liquid Gold.

But Liquid Gold must also be viewed soberly. First, it is the technology of a single company (Sailun) and does not represent the technological level of the entire Chinese tire industry—most Chinese tire firms still compete on cost in the low-to-mid-end market. Second, there is a discrepancy between the official performance figures and third-party testing, and the marketing component must be assessed rationally. Third, for a technology to truly build a brand still requires the validation of time—consumer trust in tires is accumulated through years of usage and word of mouth, and whether Liquid Gold can convert its technological advantage into lasting brand trust depends on market performance in the years ahead. Fourth, technology can be imitated and caught up with—if Liquid Gold is genuinely effective, Michelin, Bridgestone, and even other Chinese tire firms will sooner or later follow similar technical routes, and how long Sailun's first-mover advantage can last is an open question.

Despite these reservations, Liquid Gold remains an important signal of Chinese tires' move from "big" to "strong." It proves that Chinese tires can not only make cheap goods but also produce original technology that challenges a century-old industry problem; it demonstrates a path of "entering the high end through technology rather than low prices"; and it gives a Chinese brand, for the first time, the confidence to price against Michelin. For an industry long trapped in the paradox of "first in output, last in profit," these are precious breakthroughs. Whether Liquid Gold can truly reshape the landscape still depends on whether its technology can sustain its lead and whether its brand can be sustainably built—but at the very least it points to a direction: the way forward for Chinese tires lies not in being cheaper, but in being better and more different. And another battlefield of "more different" is new energy vehicles—where a reversal of the OE landscape is now unfolding.

17. After Liquid Gold: How Long Can the Technological Moat Hold?

Liquid Gold gave Sailun a taste of the rewards of original technology—brand premium, high-end OE fitment, pricing against Michelin. But the true value of a technology lies not in the momentary lead it brings, but in how long that lead can be held. How long Liquid Gold's moat can hold is the key question in judging the true worth of Chinese tires' technological breakthrough.

First, the composition of the moat. At the core of Liquid Gold is EVEC chemical rubber-mixing technology—mixing rubber and filler at the molecular level under continuous liquid-phase conditions. This technology's moat has several layers. The first layer is patents and process accumulation—Sailun holds a patent portfolio in chemical rubber mixing and years of process know-how, which others cannot easily replicate in the short term. The second layer is industrialization capability—there is an enormous engineering gap between a laboratory technology and large-scale stable production, and Sailun has already built industrialized production lines (the Rubber Chain Cloud platform, multiple bases); this first-mover industrialization capability is a moat. The third layer is brand and market first-mover advantage—Liquid Gold has already established brand awareness, fitted a range of models as OE, and accumulated market reputation, so even latecomers with similar technology would have to rebuild market trust from scratch. These three layers of moat mean Liquid Gold's lead is not one that can be punctured with a single poke.

But the moat also has its fragile points. First, technology can be caught up with. If Liquid Gold is genuinely effective (simultaneously improving all three sides of the magic triangle), then technically stronger giants like Michelin and Bridgestone will sooner or later follow similar technical routes—they have deeper R&D accumulation and more resources, and once they commit seriously, they may catch up quickly. Second, technology can be imitated. Other Chinese tire firms are also watching Liquid Gold's success and may develop similar chemical rubber-mixing or molecular-level mixing technologies—technology diffuses quickly in the Chinese tire industry, and the first-mover advantage may be diluted. Third, the sustainability of the performance advantage is in doubt. Liquid Gold's performance data differ between the corporate frame and third-party testing, and the claimed magnitude of breakthrough needs long-term market validation—if real-world performance falls short of the marketing, the moat will waver.

The fate of Liquid Gold's moat ultimately depends on whether Sailun can keep innovating and keep leading. A technological moat is not a one-and-done thing—it must be continually deepened and widened to withstand pursuers. What Sailun needs to do is: keep iterating Liquid Gold technology (from E01 to newer products), expand the product line (from passenger cars to trucks and buses, from replacement to OE), deepen industrialization (Rubber Chain Cloud, more bases), and build brand barriers (converting technological advantage into lasting brand trust). Only through continuous innovation can the first-mover technological advantage be sustained; the moment innovation stops and the company rests on Liquid Gold's laurels, the moat will be filled in by the pursuit of giants and peers.

The story of Liquid Gold also offers Chinese tires (and Chinese manufacturing more broadly) a more universal lesson: a single technological breakthrough is not enough to sustain a long-term lead—the capacity for continuous innovation is the true moat. Many of Chinese manufacturing's breakthroughs are "point breakthroughs"—the lead of a single technology or a single product; but if these point breakthroughs cannot be upgraded into a "system of continuous innovation," they are easily caught up with, imitated, and surpassed. Truly powerful companies (such as Michelin, standing for a century) rely not on the lead of any single technology, but on the systemic capability to innovate continuously and keep leading. Whether Liquid Gold can turn from "a single breakthrough" into "sustained leadership" tests precisely the systemic innovation capability of Sailun and of Chinese tires as a whole.

Over a longer horizon, the greatest value of Liquid Gold may lie not in how long its own technological lead can hold, but in what it proves—that Chinese tires are capable of original technological breakthroughs, not just following and imitating. This "proof of capability" is more important than the lead of any single technology. Because it means that even if Liquid Gold's moat is eventually filled in, Chinese tires still have the ability to produce the next original breakthrough. An industry capable of continuously producing original breakthroughs is the one that truly has a moat—the moat lies not in any single technology, but in the capacity for continuous innovation.

So, to judge the true worth of Liquid Gold, one must look not just at how far ahead it is now, but at whether Sailun and Chinese tires can turn this breakthrough into the starting point of continuous innovation. If Liquid Gold is followed by a second and a third original breakthrough, and if Chinese tires can build a systemic capability for sustained leadership, then Liquid Gold will be the beginning of the technological rise of Chinese tires; if Liquid Gold is merely a flash in the pan with no follow-through, then it will be only an isolated breakthrough. How long the technological moat can hold ultimately depends on whether innovation can be sustained—this is the deepest test Liquid Gold leaves for Chinese tires, and the most critical protracted battle in their move from "big" to "strong."

18. New Energy OE: A Reversal of the Landscape Now Unfolding

If Liquid Gold is Chinese tires' attempt to pry open the high end from the technology side, then new energy vehicle OE fitment is Chinese tires' historic opportunity to reverse the landscape from the market side. This reversal is quietly unfolding—and it is happening faster and more thoroughly than many people realize.

First, understand why NEVs are an opportunity for Chinese tires. The OE market for conventional fuel-vehicle tires has long been dominated by foreign brands—when automakers choose tires, they look at brand reputation and long-term partnerships, which happen to be Chinese tires' weak points. Foreign and joint-venture brands hold about 70% of China's passenger-car tire market and over 60% of the high-end market, while domestic brands account for less than 10% of high-end fuel-vehicle OE. This landscape was almost frozen in the fuel-vehicle era—Chinese tires found it very hard to break into the OE supply chains of BMW and Mercedes-Benz.

But NEVs changed the rules of the game, for three reasons. First, NEVs place specific technical demands on tires: battery-added weight (heavier vehicles, so tires must bear greater loads), instantaneous high torque (large motor launch torque, so tires must resist wear and slippage), the absence of engine-noise masking (quieter vehicles make tire noise more prominent, demanding silence), and range anxiety (requiring low rolling resistance to save power). These new demands render conventional fuel-vehicle tires unsuitable and call for dedicated EV tires—which gives every player a chance to "reshuffle the deck," placing Chinese tires and foreign brands on the same starting line. Second, China is the world's largest NEV market, and Chinese automakers (BYD, NIO, Li Auto, Xpeng, etc.) are the leaders of new energy—Chinese automakers are more willing to support the Chinese tire supply chain, especially after the emergence of homegrown EV tire technologies like Liquid Gold. Third, new energy is an incremental market with an undetermined landscape, and whoever grabs share fastest can stake a claim—unlike the frozen landscape of the fuel-vehicle market.

The data on the reversal has already appeared. Linglong Tire is the most vivid sample: it is China's top brand for new energy OE fitment rate, claims the world's top sales for new energy OE, with 12 million tires fitted in 2024 and a 19% market share (corporate frame). Harder third-party data: in China's entire passenger-car OE market in 2024, Linglong topped the chart with 15.6029 million tires and a 14.91% share—surpassing all foreign brands to become number one in China's OE market. This is a landmark moment: in an OE market where foreign brands held 70% in the fuel-vehicle era, a Chinese brand, riding the tailwind of new energy OE, has claimed the top spot in OE sales. Sailun's Liquid Gold has also been fitted as exclusive OE on the BYD Qin L DM-i, Seal 06 DM-i, and Yuan PLUS, as well as NIO and Vietnam's VinFast—Liquid Gold's technological advantage happens to fit the low-rolling-resistance and quietness demands of EV tires.

The deeper significance of this reversal is that Chinese tires have, for the first time, broken into the mainstream of the OE market (rather than the replacement market). OE and replacement are the tire industry's two major markets—OE is what automakers fit onto new vehicles (high technical threshold, strong brand endorsement, high profit and reputational value), while replacement is what car owners use when changing tires (low threshold, price-sensitive). Chinese tires have long established themselves in the replacement market through low prices, while being suppressed by foreign brands in OE. New energy OE has, for the first time, let Chinese tires take a dominant position in the OE market—especially new energy OE. A breakthrough in OE carries more true worth than replacement-market sales volume, because it signifies that automakers and consumers recognize the technology and quality of Chinese tires.

But sobriety is also called for. First, Chinese tires' OE breakthroughs are mainly in new energy and low-to-mid-end models; the OE of high-end luxury vehicles (BMW, Mercedes-Benz, Porsche) is still dominated by foreign brands—the reversal of the landscape has not yet reached the very top end. Second, the profit from new energy OE is not necessarily high—automakers have strong bargaining power and squeeze OE tire prices low; Linglong's "growing revenue but not profit" (net profit down 21.9% in 2025, and net profit plunging about 95% in Q1 2026) is a warning: OE volume went up, but profit did not follow. Third, the new energy window will not stay open forever—as the market matures, the landscape will gradually freeze, and Chinese tires must seize the window to stake claims and build brands as quickly as possible, or reversal will become hard once the window closes.

Despite these reservations, new energy OE remains Chinese tires' most important historic opportunity. It provides a "reshuffle" window, giving Chinese tires a chance to shake off the foreign dominance of the fuel-vehicle era and take a dominant position in the OE market—especially the new energy OE that represents the future. Linglong topping the OE chart, Liquid Gold fitted on BYD and NIO—these are not merely a handful of orders, but a crucial step in Chinese tires' climb up the value chain. The two lines of technology (Liquid Gold) and market (new energy OE) are working together to push Chinese tires from "first in output" toward "value enhancement." And underpinning these two lines is another advantage of Chinese manufacturing—smart manufacturing.

19. Battery Cells and Controls: New Energy's Unexpected Gift to the Tire Supply Chain

What new energy vehicles bring to Chinese tires is not only the opportunity of the OE market, but also an unexpected gift—they have incidentally activated a supply chain adjacent to Chinese tires: power battery cells. This seemingly tire-unrelated industry chain is in fact closely tied to the overall rise of Chinese manufacturing, and reflects the deep advantage of China's industrial-chain coordination.

Here we must first clarify a point that is easily confused: tires themselves do not use batteries. But geographically highly overlapping with the tire industry are the power battery cells used in power tools and outdoor power equipment (lawn mowers and the like)—and this cell supply chain happens to conceal yet another story of Chinese manufacturing moving from "follower" to "leader." Tools and OPE (outdoor power equipment) use high-rate cylindrical cells (18650, 21700); this market was once dominated by Japanese and Korean firms such as Samsung SDI and Murata, and is now being rapidly replaced by Chinese cell makers.

The pattern of substitution is clear. Samsung SDI is still the world's number one in tool-cell shipments, but its share has fallen markedly (a sustained decline from a peak of around 36% around 2020); Japan's Murata took a JPY 49.5 billion impairment on cylindrical lithium-battery equipment in fiscal 2023—Japanese cells are contracting substantially. Meanwhile, Chinese cell makers are rising fast: EVE Energy (world number two) and TenPower (a subsidiary of Highstar Lithium, world number three) are gaining share year by year. TenPower's numbers are hard—number two domestically and number three globally, with capacity of 600 million cells in Zhangjiagang plus a first phase of 400 million cells in Malaysia (started in April 2025), totaling 1 billion cells a year, and a second phase planned to reach 1.6 billion cells by 2027; its full-tab 21700 cell has a yield of 99% (industry average about 90%) and a 15% lower unit cost, and it has won orders from Bosch. Ampace was the first to mass-produce full-tab 21700 cells and has entered the supply chains of TTI, Stanley Black & Decker, and Bosch.

This story of cell substitution shares a common underlying logic with the tire's value climb: Chinese manufacturing is extending from the low-to-mid-end of the industry chain toward the high end and toward core components. The tire's Liquid Gold and the cell's full-tab technology—both are cases of Chinese firms using original or leading technology to achieve breakthroughs in segments once dominated by Japan, Korea, Europe, and the U.S. The deeper lesson is industrial-chain coordination: Chinese cell makers can rapidly replace Japanese and Korean firms thanks to China's vast downstream demand (power tools, lawn mowers, energy storage) and complete lithium-battery supply chain; likewise, the rise of Chinese tires owes itself to a complete and powerful upstream supply chain (molds, equipment, tire cord, and additives all lead the world). Industrial-chain coordination and completeness are Chinese manufacturing's deep advantage over later-developing nations—others may catch up in a single segment, but can hardly, within a few years, build an industrial-chain ecosystem as complete, coordinated, and vast in scale as China's.

The shift in TenPower's downstream mix also foreshadows a larger trend: the cell industry adjacent to tools and tires is spilling over into higher-value-added scenarios such as AI robots and eVTOL. As China's high-rate cell technology matures and its cost leads, it can extend from traditional scenarios like tools and lawn mowers to future scenarios like humanoid robots and flying cars—when one segment of the industry chain grows strong, it can pull along an entire swath of emerging industries. This is the archetype of Chinese manufacturing's "chain-linked rise": a breakthrough in one segment spreads along the industry chain to upstream and downstream and to new scenarios.

Placing this "unexpected gift" of cells into a tire report is not a digression but a way to illustrate a larger picture: Chinese tires' value climb is not an isolated industry event, but part of Chinese manufacturing's overall move from "big" to "strong." Tires, cells, power tools, gas turbines, tunnel-boring machines—these seemingly unrelated industries share the same underlying logic: a complete and powerful industrial chain, vast downstream demand, original or leading technological breakthroughs, and a continuous climb from the low-to-mid-end toward the high end. The tire's Liquid Gold and the Chinese cell's full-tab are different chapters of the same story—a vast manufacturing system advancing simultaneously on multiple fronts toward the upstream of the value chain.

Understanding this larger picture is understanding why Chinese tires' climb warrants optimism: it is not fighting alone, but is backed by a complete, coordinated Chinese manufacturing sector that is upgrading as a whole. The tire's move from "big" to "strong" is a microcosm of this grand upgrade, and will also draw support from it. And the most solid foundation of this grand upgrade is the world-leading hidden champions along the Chinese tire supply chain—they have already appeared in earlier chapters, and they are the most silent, and most solid, force of Chinese tires.

20. Lighthouse Factories: China's Smart-Manufacturing Sample in Tires

Beyond technology (Liquid Gold) and market (new energy OE), Chinese tires' move from "big" to "strong" has another path that is often overlooked yet equally crucial—smart manufacturing. Making tires with smarter factories is a pragmatic channel for Chinese tires to cut costs, boost efficiency, improve profit quality, and narrow the gap with the giants. And on this path, Chinese tires have already produced world-class samples.

The landmark event is Guizhou Tire's selection as a "Lighthouse Factory." In January 2025, Guizhou Tire was selected into the World Economic Forum's (WEF) first batch of "Lighthouse Factories" for 2025—the first in the entire national tire industry. The "Lighthouse Factory" is the WEF's benchmark for global smart manufacturing, representing the highest level of Fourth Industrial Revolution (4IR) technology application; at the time there were only 189 in the world. Guizhou Tire implemented over 40 4IR solutions (AI design, advanced data analytics, flexible automation), with hard-hitting results: product defects down 57%, labor productivity up 68%, and inventory down 34%. That a tire company located in western China and not an industry leader could earn the highest global certification in smart manufacturing is itself evidence that Chinese tires' smart-manufacturing level has already entered the world's first tier.

The Lighthouse Factory is not an isolated case. Sentury was rated a national "Excellence-Grade Smart Factory" (national-level acceptance), and its smart-factory data are equally striking: changeover time cut from 4–6 hours to 45 minutes, equipment utilization up 35%, tire weight error controlled within 4.3‰, labor costs 75% lower than traditional factories, and a pass rate of 99.8%—it has already built four digital smart-manufacturing bases. Sailun has built "Rubber Chain Cloud"—the world's first industrial internet platform in operation for the rubber and tire industry, unifying data standards and technical architecture to achieve full-element, full-chain data connectivity; Sailun's factories are also rated national "Excellence-Grade Smart Factories." ZC Rubber has taken the "Factory of the Future" route, with its high-performance radial-tire green digital factory in Qiantang District becoming a global benchmark for semi-steel tire smart manufacturing.

The significance of smart manufacturing for Chinese tires runs deeper than it appears on the surface. First, cost reduction. Tires are a highly cost-sensitive industry (raw materials account for 70%, with margins of only 3%); the 75% drop in labor costs, 34% cut in inventory, and gains in production efficiency brought by smart manufacturing—every percentage point converts directly into profit, helping Chinese tires ease the dilemma of "big but thin margins." Second, quality improvement. Tire quality consistency (weight error of 4.3‰, pass rate of 99.8%, defects down 57%) bears directly on brand trust—and stable, consistent quality is the prerequisite for Chinese tires to break into high-end OE and build brands. Smart manufacturing makes Chinese tire quality more controllable and more consistent, which is the foundational engineering of brand building. Third, flexibility. Changeover time cut from 4–6 hours to 45 minutes—this means factories can rapidly switch products to adapt to the market demands of new energy OE, customization, and small-batch multi-variety production. Flexible manufacturing is the key capability for coping with market fragmentation.

Smart manufacturing is also a hidden advantage Chinese tires hold over the foreign giants. Michelin and Bridgestone have a century of brand and formulation accumulation, but their factory systems are vast and aging, with a heavy burden and slow pace of intelligent retrofitting; many Chinese tire factories, by contrast, were newly built over the past decade or so and can be constructed directly to smart-manufacturing standards, free of historical baggage, so their intelligentization proceeds faster and more thoroughly. This is the "latecomer advantage"—on the new track of smart manufacturing, Chinese tires need not carry the burden of old factories and can go straight to the most advanced solutions. That Guizhou Tire could earn the global tire industry's first Lighthouse Factory certification is partly for this reason.

Of course, smart manufacturing is no panacea. It can cut costs, improve quality, and add flexibility, but it cannot solve the more fundamental problems of brand premium, technological leadership, and market landscape—a smart factory that still makes low-to-mid-end products and sells at low prices will only find that smart manufacturing lets it "earn thin margins more efficiently," not leap to the high end. So smart manufacturing must be combined with technology (Liquid Gold), market (new energy OE), and brand building to truly drive Chinese tires' value climb. Smart manufacturing is the "technique," the value climb is the "way"—only when technique serves the way does it have meaning.

Viewing the three lines of technology, market, and manufacturing together, Chinese tires are climbing along multiple fronts simultaneously: Liquid Gold challenges the technological ceiling, new energy OE pries open the market landscape, and Lighthouse Factories reshape manufacturing efficiency. The combined force of these three lines is gradually rewriting the paradox of "first in output, last in profit." But along the road of the climb still lies an unavoidable vital point—natural rubber. This raw material, on which China depends for nearly 90% of its supply through imports, is the sword of Damocles hanging over the entire industry.

21. The Latecomer's Advantage: Why China's Tire Factories Are Smarter

China's smart manufacturing in tires can earn the World Economic Forum's highest "Lighthouse Factory" accreditation—Guizhou Tire was the first tire company in the world to receive it—and behind this lies a frequently overlooked reason: the latecomer's advantage. Understanding this advantage is the key to grasping why China's tire factories are, in certain respects, "smarter" than the century-old plants of Michelin and Bridgestone.

The core logic of the latecomer's advantage is "no historical baggage." Michelin and Bridgestone have histories spanning more than a century; their factory systems are vast, their equipment aging, their processes entrenched. To upgrade these old plants toward smart manufacturing means carrying heavy baggage, high costs, and strong resistance—existing equipment, personnel, and workflows all have to be disturbed. By contrast, many of China's tire factories were built within the past decade or so, and could be constructed directly to the highest standards of smart manufacturing—with no old equipment to phase out and no legacy processes to overhaul, drawing the newest blueprint on a blank sheet of paper. This is the latecomer's advantage: building a plant later actually allows you to deploy the most advanced solutions. Guizhou Tire could win the tire industry's first-ever Lighthouse Factory accreditation, Sentury's smart factory could cut labor costs by 75% and achieve a 99.8% pass rate, and ZC Rubber's digital factory could become the global benchmark for semi-steel tire smart manufacturing—part of the reason lies here. Their factories are new, and can embed AI, data analytics, and flexible automation—all the latest technologies—directly, without shouldering the burden of old plants.

The latecomer's advantage also shows up in "generational leapfrogging." China's tire smart manufacturing did not advance step by step along the path of "mechanization, electrification, informatization, intelligentization"; rather, in many links it jumped directly to the newest form of intelligentization—just as China's mobile payments skipped the credit-card era and China's e-commerce skipped certain stages of traditional retail. This generational leapfrogging lets China's tire industry "overtake on the curve" in smart manufacturing—without having to repeat every step that developed nations walked, it can adopt the latest technologies and models directly. Sailun's "Rubber-Chain Cloud" (橡链云)—the world's first industrial internet platform for the rubber and tire industry to enter service—is an embodiment of this generational leapfrogging: China's tire industry built an industry-wide industrial internet directly, rather than first going through a long stretch of single-plant informatization.

But the latecomer's advantage is not omnipotent; it has its boundaries. First, the latecomer's advantage lies mainly in the intelligentization of "hardware" and "processes"—new factories, new equipment, new platforms. But in "soft power" (compound accumulation, brand trust, century-long know-how), being a latecomer is a disadvantage—these things that require time to settle are precisely what China's tire industry lacks. So the picture for China's tire industry is "hardware leads, software catches up"—the factories are smarter than the giants', but the formulations and brands are weaker than the giants'. Second, the latecomer's advantage fades over time—when China's new factories also become old factories, and when the giants complete their own smart-manufacturing upgrades, the latecomer's advantage will level out. To convert the latecomer's advantage into durable competitiveness still requires continuous innovation and staying ahead.

The deeper lesson of the latecomer's advantage is a shared pattern in the overall rise of Chinese manufacturing. Many of Chinese manufacturing's industries (tires, photovoltaics, power batteries, home appliances) have all benefited from the latecomer's advantage of "no historical baggage, able to deploy the latest technology directly"—starting late, they could instead use the most advanced production lines and the newest models to achieve catch-up with, and even surpass, developed nations. This is one of the underlying logics of Chinese manufacturing's "overtaking on the curve." But the latecomer's advantage can only help Chinese manufacturing catch up on "hardware, capacity, efficiency"; on "brand, technological accumulation, soft power," time must still do its settling—these are the places the latecomer's advantage cannot help, and can only be filled in slowly through continuous investment and accumulation.

China's tire smart manufacturing is a vivid sample of the latecomer's advantage. It proves that China's tire industry has the ability to build the world's most advanced factories and to reshape manufacturing efficiency with the latest smart technologies—a real advantage relative to the century-old giants. But it also reminds us that the latecomer's advantage lies mainly in hardware and efficiency; for China's tire industry to move from "big" to "strong," beyond leveraging this hardware advantage, it must also make up the soft-power shortfalls of brand and technological accumulation. Hardware leadership (the Lighthouse Factory) and software catch-up (brand, formulation)—only when the two combine can China's tire industry truly move from "strong in manufacturing" to "strong in brand." The latecomer's advantage gave China's tire industry a smart factory, but to build a trusted brand still requires much beyond a smart factory.

22. Natural Rubber: The Vital Weakness of Nearly 90% Import Dependence

China's tire industry has one weakness it cannot avoid, and it lies neither in technology, nor in brand, nor in market, but in the most upstream raw material—natural rubber. This vital weakness of nearly 90% import dependence is a sword of Damocles hanging over the entire industry.

First, consider how deep the dependence runs. China consumes roughly 40%-plus of the world's natural rubber, but its self-sufficiency rate is extremely low—in 2024, China's natural rubber import dependence reached as high as 87%, meaning that of the natural rubber China uses, nearly nine-tenths relies on imports. In 2025, China's natural rubber imports (dry-weight equivalent) reached 6.492 million tons, accounting for about half of global output and hitting a record high; while domestic natural rubber output was only 973,000 tons. Nearly 90% import dependence—this is a rare degree of high dependence among China's strategic raw materials, higher even than the dependence on oil or iron ore.

Why can't China produce enough natural rubber? The answer is natural conditions. Natural rubber comes from the rubber tree, and the rubber tree can only grow in tropical regions—the only places in China suitable for growing rubber are Yunnan and Hainan (together accounting for over 95% of national output), with limited area and a very low ceiling on output. This is neither a technology problem nor an investment problem, but a hard constraint of geography and climate—most of China's territory does not lie in the tropics, so natural rubber capacity simply cannot be raised. By contrast, Southeast Asian nations such as Thailand, Indonesia, Vietnam, and Malaysia occupy the overwhelming majority of global natural rubber capacity. The top five sources of China's natural rubber imports in 2025 were Thailand (41.4%), Vietnam (18.95%), Malaysia, Côte d'Ivoire, and Laos—highly concentrated in Southeast Asia.

This vital weakness brings three layers of risk. First, price risk. Natural rubber accounts for a considerable share of tire cost, and the swings in rubber prices directly determine tire companies' profits. In the first half of 2026, natural rubber prices climbed steadily; the average price of Shanghai whole-latex rubber in the first half was 16,817 yuan per ton, up nearly 30% year-on-year—this directly squeezed tire makers' profits to the point of suffocation and forced out those 100-plus price-increase notices. And the swings in rubber prices are almost impossible for China's tire companies to control—they are jointly determined by Southeast Asian output (affected by weather and tree aging), global demand, and financial speculation. Part of the 2025-to-2026 rubber price rise stemmed from El Niño causing production cuts in Southeast Asian growing regions. Tire companies can only passively bear the ups and downs of rubber prices—this is the most direct manifestation of the "vital weakness." Second, supply-chain risk. Nearly 90% imported and highly concentrated in Southeast Asia—if Southeast Asia sees extreme weather, geopolitical conflict, or export restrictions, China's tire raw-material supply would be threatened. Third, cost risk. Importing means shipping costs, exchange-rate risk, and trade friction (for example, the EU's EUDR zero-deforestation regulation, which requires imported natural rubber to be traceable and deforestation-free, adds compliance costs).

Facing this vital weakness, China is doing several things. First, seeking alternative rubber sources. Dandelion rubber (rubber extracted from dandelions) and eucommia rubber are two directions—dandelion rubber, led by Beijing University of Chemical Technology and invested in by Linglong, has already built a pilot line and produced a concept tire, but is still far from large-scale industrialization; eucommia rubber has also seen breakthrough progress, but is not yet industrialized. If these alternative rubber sources succeed, they could ease dependence on natural rubber imports, but in the short term they still cannot amount to much. Second, synthetic rubber as a supplement. China is a major producer of synthetic rubber (butadiene rubber, styrene-butadiene rubber), with butadiene rubber capacity ranking first in the world—synthetic rubber can partially substitute for natural rubber. But synthetic rubber cannot fully replace natural rubber (certain properties of natural rubber cannot be matched by synthetics), and can only supplement it. Third, overseas rubber-plantation layout and futures hedging—some companies are laying out rubber plantations in Southeast Asia and using futures to hedge price risk, but all of these can only alleviate, not cure.

The deeper lesson of the natural-rubber weakness is this: an industry's strength depends not only on its own technology and manufacturing capability, but also on its control over upstream key raw materials. China's tire industry is advancing rapidly in technology (liquid gold), market (new-energy vehicle fitment), and manufacturing (Lighthouse Factories), but on the most upstream input, natural rubber, it is subject to the hard constraints of geography and climate, with nearly 90% import dependence—this weakness is another dimension of China's tire industry being "big but not strong." It reminds us that for China's tire industry to move from "big" to "strong," it must not only catch up on technology and brand, but also find ways to secure raw materials—although the geographic constraint on natural rubber is nearly unsolvable, alternative rubber sources, synthetic rubber, overseas layout, and price hedging are each paths worth pursuing.

Beyond this vital weakness, China's tire industry has another dimension worth digging into—industrial geography. Shandong's tire cluster is both the heart of China's tire industry and the setting for a complete story of prosperity, involution, bankruptcy, and consolidation.

23. Synthetic Rubber and Alternative Rubber Sources: Three Paths to Crack the Vital Weakness

China is not without responses to the vital weakness of nearly 90% import dependence on natural rubber. Although the hard constraints of geography and climate make domestic production of natural rubber nearly unsolvable, China is seeking ways to crack it along three paths—synthetic rubber, alternative rubber sources, and overall control of the industrial chain. These three paths are China's tire industry's efforts to ease its upstream weakness.

The first path is synthetic rubber. Unlike natural rubber, synthetic rubber (butadiene rubber, styrene-butadiene rubber) is synthesized from petrochemical feedstocks and is not subject to tropical geographic constraints—as long as there is a petrochemical industry, synthetic rubber can be made. And China happens to be a petrochemical powerhouse, leading the world in synthetic rubber capacity. In butadiene rubber, China's capacity ranks first in the world (accounting for 38% of the global total in 2023, 25 percentage points ahead of second-place the United States), reaching 2.072 million tons by the end of 2024. In styrene-butadiene rubber, total capacity reached 1.765 million tons by the end of 2024. Synthetic rubber can partially substitute for natural rubber in tire formulations—within a single tire, natural and synthetic rubber are used in combination according to performance needs. China's self-reliance and leadership in synthetic rubber have, to a degree, eased dependence on natural rubber imports. But one must be clear-eyed: synthetic rubber cannot fully replace natural rubber. Certain properties of natural rubber (elasticity, tear resistance, low heat buildup) cannot be matched by synthetic rubber, and all-steel tires (truck and bus tires) in particular depend more deeply on natural rubber. So synthetic rubber is a supplement, not a substitute—it can ease the pressure of the vital weakness, but cannot solve it at the root.

The second path is alternative rubber sources. This is the most imaginative, and also the most distant, path—extracting rubber from plants other than the rubber tree. Two directions: dandelion rubber and eucommia rubber. Dandelion rubber—natural rubber extracted from a special dandelion (rubber dandelion). In 2012, Beijing University of Chemical Technology took the lead and Linglong invested 5 million yuan to launch commercialization; in 2015 an industrial-technology innovation strategic alliance was formed, and cultivation bases have been built in Xinjiang, Inner Mongolia, Heilongjiang, Shandong, Guangdong, and Hainan, with Linglong having built the country's first continuous dynamic countercurrent comprehensive extraction pilot line and produced a concept tire. The significance of dandelion rubber is this—dandelions can grow in temperate and even frigid zones, free of tropical geographic constraints; if industrialization succeeds, China could grow its own rubber dandelions and extract rubber, fundamentally easing its dependence on imported natural rubber. Eucommia rubber—a rubber extracted from the eucommia tree, on which China has, since 2010, achieved breakthrough progress in molecular breeding, rubber extraction, equipment, and application. But both of these alternative rubber sources are still at an early stage—dandelion rubber is still at the pilot and concept-tire stage, and eucommia rubber is not yet in large-scale industrialization. They represent the ultimate direction for cracking the vital weakness, but in the short term still cannot amount to much.

The third path is overall control of the industrial chain and risk hedging. Since importing natural rubber cannot be avoided, the aim is to find ways to control supply and hedge risk. Some companies are laying out rubber plantations in Southeast Asia (directly controlling upstream rubber sources), using natural-rubber futures to hedge price swings (Shanghai rubber futures are an important hedging tool), and building diversified import sources (not relying on Thailand alone, but also importing from Vietnam, Malaysia, Côte d'Ivoire, and Laos to spread risk). Although these measures cannot change the fact of "nearly 90% imported," they can ease the risks of price volatility and supply disruption, letting companies take less damage on the rubber-price roller coaster.

Taking the three paths together, China's strategy for cracking the natural-rubber weakness is "multi-pronged, alleviation-focused." Synthetic rubber (self-reliant and leading) lightens the dependence, alternative rubber sources (dandelion, eucommia) explore the ultimate solution, and industrial-chain control and risk hedging reduce the damage from volatility. But one must be honest—these three paths can only "alleviate," not "cure." The geographic constraint on natural rubber is hard; as long as the rubber tree can only grow in the tropics and most of China's territory does not lie in the tropics, China must import natural rubber. Unless alternative rubber sources (dandelion) achieve large-scale industrialization—but that is still far off.

The difficulty of cracking the natural-rubber weakness reflects a more universal truth: the hardest part of an industry's self-reliance is often not technology (technology can be tackled through concerted effort), but resources (resources are subject to natural endowment). China's tire industry can catch up with, and even lead in, technology (liquid gold), manufacturing (Lighthouse Factories), and brand (entering the global top ten), but on the geographically constrained resource of natural rubber, it is nearly without a solution. This is similar to the predicament faced by many Chinese industries that depend on imported resources (oil, iron ore, some rare metals)—technology can be self-reliant, resources are hard to make self-reliant. What China's tire industry can do is make itself strong in technology, manufacturing, and brand, and use the overall advantages of its industrial chain and the flexibility of global layout to partially hedge the risks brought by the natural-rubber weakness. The weakness cannot be eliminated, but it can be managed—this is the most realistic attitude for China's tire industry on the natural-rubber question.

Beyond natural rubber, the upstream of China's tire industry has another set of links—those hidden champions mentioned earlier, which form the most solid foundation of China's tire supply chain. And the geographic distribution of this supply chain is itself a map of China's tire industry worth unfolding.

24. The Shandong Tire Cluster: Prosperity, Involution, and Bankruptcy Restructuring

The heart of China's tire industry lies in Shandong. This province contributes more than 40% of the nation's tire output and is home to 6 of the 9 A-share-listed tire companies. But the story of the Shandong tire cluster is not only one of prosperity—it also tells a complete parable of involution, bankruptcy, and restructuring, and is the best sample for understanding the competitive ecology of China's tire industry.

First, prosperity. Shandong's tire industry stands on a "tripod": Weihai (historical depth, the home base of Triangle Tire, 5 plants), Dongying's Guangrao (scale, the "Tire Capital of China"), and Weifang (a pioneer of green, smart, and global operations). Guangrao is the absolute core—this county-level city, dubbed the "Tire Capital," has cultivated the tire industry for more than 40 years, with an annual comprehensive tire capacity reaching 176 million units (about 196 million on a radial-tire basis), accounting for roughly half of Shandong province and a quarter of the nation. It has clustered a large number of tire companies, forming a "20-kilometer supporting circle" with a local supporting rate of 75%, covering the full industrial chain from raw materials to manufacturing to testing to recycling. Guangrao's rubber-tire export value is 24.37 billion yuan, accounting for 15.1% of the nation, with 8 companies ranking among the global top 75 tire makers. Qingdao, meanwhile, is the heights of headquarters and R&D—the headquarters of Sailun, Doublestar, and Sentury are all in Qingdao, along with Rubber Valley, the National Engineering Technology Research Center for Rubber and Tires, and Qingdao University of Science and Technology, known as the "Whampoa Military Academy" of rubber. Linglong is headquartered in Zhaoyuan, ZC Rubber in Hangzhou, and Triangle in Weihai—a tire industry network covering the Shandong Peninsula, holding up half the sky of China's tire industry.

But behind the prosperity is brutal involution, and the extreme consequence of involution is a wave of bankruptcy restructuring. On July 2, 2018, the Guangrao County Court ruled in a single stroke that 14 tire companies would enter bankruptcy restructuring—the most shocking scene in the history of China's tire industry. Once-star companies fell one after another: Yongtai Group, founded in 1994 and ranked 32nd among global tire companies in 2016, declared bankruptcy in August 2018 due to insolvency, with assets disposed of at a "fire-sale" price of 254 million yuan; Hengyu Rubber, with total assets of nearly 2 billion yuan and liabilities exceeding 2.4 billion yuan, filed for bankruptcy restructuring. In 2018, roughly 25 tire companies nationwide went bankrupt, of which Shandong accounted for 13—more than half. Why would a prosperous industrial cluster collectively collapse?

The root causes of the bankruptcy wave were the superposition of three factors. First, price wars amid overcapacity. The tire industry has a relatively low barrier to entry and easy expansion; a large number of companies rushed in and blindly expanded capacity, leading to severe overcapacity, and to grab market share they could only undercut one another, pressing profits below the point of covering costs. Second, contagion through the mutual-loan-guarantee chain. Shandong's private enterprises have a tradition of mutually guaranteeing one another's loans—company A guarantees company B's loan, B guarantees C's, forming a web of guarantees. When one of them runs into trouble, the guarantee chain spreads the contagion like dominoes, dragging even otherwise healthy companies underwater. Aoguorui (16 affiliated companies) and Deruibao (mutual loan guarantees with 12 companies) are typical examples. Third, banks deleveraging and pulling loans. From 2015 to 2016, deleveraging by Dongying banks accelerated; loan withdrawals and cutoffs added frost to snow for companies already tight on cash flow. The superposition of these three factors is the complete pathology of that collective bankruptcy.

After the bankruptcy wave came consolidation of "break first then build, restructure first then combine." The "Tai generation" (Yongtai, Shengtai) declined; the "Sheng generation" (Huasheng, Yongsheng, Fangxing) focused on their core business and operated steadily; the "Yu generation" (Haoyu, Jinyu) were the first to open up Vietnamese capacity and pursue branded operations. Beginning in 2019, the restructured Hengyu and Aoguorui resumed normal production and sales. This bankruptcy restructuring, though brutal, also eliminated backward capacity, washed out blind expansion, and educated the entire industry—it moved Shandong's tire industry from "wild growth" to "relative rationality." After consolidation, Shandong's tire industry has a clearer landscape and more orderly competition, with leading companies (Sailun, Linglong, Triangle) growing bigger and stronger against the tide.

The story of the Shandong tire cluster is a microcosm of the competitive ecology of China's tire industry, and a concrete enactment of "big but not strong" at the regional level. Prosperity (40% of national output), involution (overcapacity, price wars), collapse (14 companies bankrupt on the same day), and consolidation (break first then build)—this complete cycle lays bare a fundamental contradiction of China's tire industry: the overcapacity and cutthroat competition brought on by low barriers and easy expansion trap the entire industry in a predicament of "the more involuted, the more it loses; the more it loses, the more involuted." Bankruptcy restructuring is the extreme eruption of this contradiction, and also the necessary birth pangs of industry clearing and moving toward health. The relative rationality and top-tier concentration of Shandong's tire industry today are precisely what that brutal clearing bought.

It is worth noting that the bankruptcy wave also has a present-day version now being re-enacted. From 2025 to 2026: Delun Rubber went into bankruptcy liquidation, Shandong Yinuo Engineering Tire went bankrupt, Zhongchuang Tire underwent restructuring, Changhong Rubber was once again petitioned into bankruptcy, and Haifeng Tire went through six rounds of auction—bankruptcies concentrated among domestic-sales-oriented small and medium plants without overseas capacity. Meanwhile, leading companies (Sailun, ZC Rubber) are expanding globally against the tide. A "bankruptcy-auction wave" coexists with "leaders going abroad to expand capacity"—this shows that China's tire industry is accelerating its concentration toward the outbound leaders, while backward, domestic-sales, non-outbound small and medium plants are being cleared out. This is yet another round of birth pangs in the evolution from "big but not strong" toward "the strong stay strong." This story of the Shandong tire cluster is not yet finished.

Beyond the story of the cluster, China's tire industry has another hidden yet powerful force—the upstream hidden champions. Behind a single tire lies an entire Chinese supply chain of world-class strength.

25. Beyond Shandong: China's Tire Industry Map

The heart of China's tire industry lies in Shandong, but not in Shandong alone. Pulling the view out to the whole country reveals a more complete map of China's tire industry—Jiangsu, Zhejiang, Anhui, Guizhou, and Liaoning each have their strongholds, and foreign-invested factories in China are also part of this map. Only by understanding this map can one see clearly the full picture and structure of China's tire industry.

Jiangsu—the meeting point of foreign and domestic capital. Jiangsu is a heavyweight center for foreign-invested tire manufacturing in China—one of Hankook's three major Chinese bases is in Huai'an (the other two in Jiaxing, Zhejiang, and Chongqing), with total China capacity of about 37.6 million units. At the same time, Jiangsu also has strong domestic players—General Rubber is headquartered in Wuxi, and Suzhou is the headquarters of Positec (the WORX brand) and Chervon (although both firms' core business is power tools, they reflect Suzhou's manufacturing density). Jiangsu's defining feature is the intersection of foreign and domestic capital atop a robust manufacturing base.

Zhejiang—the home base of ZC Rubber. ZC Rubber is headquartered in Hangzhou; its "Chaoyang" brand, born in 1966, belongs to China's largest tire company. The "high-performance radial-tire green digital factory" that ZC Rubber built in Qiantang District in 2025 has become the global benchmark for semi-steel tire smart manufacturing. Zhejiang also has tire production zones such as Yuyao. As the home of China's largest tire company's headquarters, Zhejiang holds a pivotal place on China's tire map.

Anhui—Giti's China base. Giti (a Singapore brand) has 5 plants in China, one of which is in Hefei, Anhui (the others in Putian, Fujian; Chongqing; Mudanjiang, Heilongjiang; and Yinchuan, Ningxia)—6 of Giti's 8 global plants are in China, a textbook case of foreign capital deeply dependent on Chinese manufacturing.

Guizhou—OTR tires and the Lighthouse Factory. Guizhou Tire is a special coordinate on this map—in 2025 it became the first company in the nation's tire industry to earn the World Economic Forum's "Lighthouse Factory" title, and it is also distinguished by giant OTR tires, having built an all-steel tire base in Vietnam's Tiền Giang Province. That a tire company located in China's west could win the world's highest smart-manufacturing accreditation shows that China's advanced tire capacity is no longer concentrated only along the eastern seaboard.

Liaoning and beyond. Liaoning's Chaoyang Langma (annual capacity of about 3.4 million to 4.8 million sets) represents the Northeast's tire capacity. In addition, Weihai (Triangle Tire, Shandong Peninsula), Zhaoyuan (Linglong, Shandong), and Qingdao (headquarters of Sailun, Doublestar, and Sentury, Shandong)—the Shandong Peninsula alone has multiple strongholds. Yunnan's role is special—it is not a heavyweight tire-manufacturing center (the former Yunnan Tire Factory went bankrupt in 2007), but the main producing region for natural rubber (Yunnan plus Hainan account for over 95% of the nation's natural rubber output), a coordinate on the upstream of the industrial chain rather than the manufacturing end.

Looking at this map as a whole, one can read three features of China's tire industrial geography. First, Shandong dominates while distribution spreads across many regions. Shandong contributes more than 40% of the nation's output and is home to 6 of the 9 A-share-listed tire companies, the absolute core; but Jiangsu, Zhejiang, Anhui, Guizhou, and Liaoning each have their strongholds too, forming a "one super, many strong" distribution. Second, domestic and foreign capital interweave. This map has both China's Sailun, ZC Rubber, Linglong, and Triangle, and the China plants of foreign firms Hankook, Giti, Bridgestone, and Michelin—China is both the home base of domestic tire makers and an important manufacturing base for foreign tire makers. Third, geographic division of labor along the industrial chain. Yunnan and Hainan are the natural-rubber upstream; Shandong, Jiangsu, and Zhejiang do whole-tire manufacturing; Gaomi (Himile molds), Qingdao (Mesnac equipment), Henan (Shenma tire cord fabric), and Shandong (Yanggu Huatai rubber chemicals) are supporting suppliers—the entire industrial chain is laid out across different regions of China with a division of labor, forming a complete system of industrial geography.

This industry map also reveals a deeper advantage of China's tire industry relative to latecomer nations—the completeness of the industrial cluster. China's tire industry is not a few isolated factories, but a complete industrial cluster covering the upstream (rubber, carbon black, steel cord, rubber chemicals), midstream (whole-tire manufacturing), downstream (channels, retreading), and supporting links (molds, equipment), and this cluster is highly coordinated geographically (Shandong's "20-kilometer supporting circle" with a 75% local supporting rate). This completeness and coordination of the industrial cluster is hard for latecomer nations such as India and Southeast Asia to replicate in the short term—they can build tire factories, but it is hard for them to build an industrial ecology as complete as China's. This is also why China's tire industry going abroad is, much of the time, a matter of "the factory goes abroad, the industrial chain stays at home"—overseas bases assemble tires, but the core technology, equipment, molds, and even a large share of raw materials still come from China's industrial cluster.

Beyond the industry map, China's tire industry faces an increasingly important external variable—green barriers. The EU's environmental regulations are becoming a new threshold for China's tire exports, and a new battlefield in the global tire industry's competition over greening.

26. Hidden Champions: The Chinese Supply Chain Behind a Single Tire

The strength of a single tire lies not only in the whole-tire plants that make tires, but even more in the invisible supply chain upstream. And along this supply chain, China hides a batch of "hidden champions"—unknown to the public, yet dominant in global niche markets. Taking stock of this supply chain reveals another side of China's tire industry beyond "big but not strong": in many upstream links, China is actually "small but very strong."

Tire molds—Himile, first in the world. A tire mold is the "form" for making tires, determining the tread pattern and shaping of the tire. The global leader in this link is Himile of Gaomi, Shandong—since 2014 it has overtaken South Korea's Sehwa to become the global leader in tire molds, producing 20,000 molds a year, with business relationships with 66 of the world's top 75 tire makers and a global market share of about 30%. In 2024 the mold segment's revenue was 4.65 billion yuan, more than half of the company's revenue. Many of the world's tire giants use molds from China's Himile—a textbook "hidden champion": the public does not know it, but it is first in the world in its niche. Interestingly, Himile is also a core supplier of gas-turbine casings (mentioned in that report on gas turbines)—a single Shandong company that has become a global leader in both tire molds and gas-turbine components.

Tire equipment—Mesnac, first in the world. For the machines that make tires (the full set of equipment for compounding, mixing, calendering, cutting, building, curing, and testing), the global leader is Mesnac of Qingdao—ranked first among global rubber-machinery companies by European Rubber Journal in 2023, with a global market share of 14.2%. Mesnac has also launched the "Rubber-Chain Cloud" industrial internet platform, and in 2025 its new-materials (liquid gold EVEC rubber) revenue was 2.559 billion yuan, accounting for 30% of the company. China not only makes tires, it also makes "the machines that make tires"—a deeper level of industrial-chain self-reliance.

Tire cord fabric—Shenma, first in the world. Tire cord fabric is the skeleton material of a tire. Henan's Shenma has a global market share of about 40% in tire cord fabric, first in the world—"1 out of every 4 high-speed tires in the world uses Shenma tire cord fabric"—tied with Turkey's Kordsa among the top two in global nylon-66 skeleton materials.

Rubber chemicals—China accounts for 70% of the world. Rubber chemicals (antioxidants, accelerators, anti-scorching agents, etc.), though used in small quantities, are crucial to tire performance. China's rubber-chemicals capacity accounts for over 70% of the world: Yanggu Huatai of Liaocheng, Shandong is the world's largest producer of the anti-scorching agent CTP (global market share over 60%, a MIIT single-champion product), and Sennics is the world's largest producer of PPD-type antioxidants. In this inconspicuous link, China holds the world's absolute dominance.

Carbon black and steel cord. The leader in carbon black (a reinforcing filler) is Black Cat, with capacity of 1.162 million tons, first in the nation since 2004 and among the world's top four, covering 90% of top-tier tire customers. In steel cord (a skeleton material), Xingda International plus Belgium's Bekaert together hold over 50% market share, and Daye Co. is a global leader in bead wire; in 2023 China's steel cord output surpassed 3 million tons for the first time.

Switches, controllers, and other electronic components. Huazhijie's (listed in 2025) smart switches, and the controllers of Topband and Homa—though used more in power tools, they also show China's deep accumulation in the electronic supporting links of the tire and rubber industrial chain.

Placing these hidden champions side by side, a counterintuitive picture emerges: China's tire industry being "big but not strong" refers mainly to whole-tire brands (versus Michelin); but in the upstream supply chain—molds (first in the world), equipment (first in the world), tire cord fabric (first in the world), rubber chemicals (70% of the world), carbon black (world's top four), steel cord (50%+ market share)—China is in fact "small but very strong," even globally dominant. This world-class strength of the supply chain is the solid foundation of the rise of China's whole-tire industry, and a deep advantage of China's tire industry relative to latecomer nations such as Southeast Asia and India—others can build tire factories, but they can hardly build such a complete and powerful upstream supply chain within a few years.

This contrast of "whole-tire big but not strong, upstream small but very strong" offers an important lesson for China's tire industry's value climb: China's tire industry's deepest moat lies not in any single whole-tire brand, but in the completeness and strength of the entire industrial chain. When behind a single tire stand the world's first molds, the world's first equipment, the world's first tire cord fabric, and 70% of the world's rubber chemicals—the coordination efficiency and cost advantage of this industrial chain are hard for any single-link rival to replicate. For China's tire industry to move from "big" to "strong," beyond making up the shortfall in whole-tire brands, it must even more leverage the strength of its upstream supply chain—using a complete and powerful industrial chain to support the premiumization of whole-tire brands. The hidden champions are China's tire industry's most silent, and most solid, force.

Beyond the supply chain, a tire must ultimately be sold into consumers' hands—and China's tire downstream channels are being reshaped by a new-retail revolution.

27. The Cost Sheet of a Single Tire: How Raw Materials Decide Life and Death

To truly understand the predicament of China's tire industry being "big with thin profits," the best approach is to break open the cost sheet of a single tire—to see where the money goes, and why swings in raw materials can decide a company's life or death.

First, the cost structure. In the cost of a single tire, raw materials account for more than 70%. And within raw materials, the three major inputs—natural rubber, synthetic rubber, and carbon black—account for more than 60% of the cost. The rest is auxiliary materials such as steel cord, tire cord fabric, and rubber chemicals, plus manufacturing costs such as energy, labor, and depreciation. This structure tells us a cruel fact: most of a tire company's cost is not in its own hands, but in the prices of upstream raw materials. When natural rubber rises, when carbon black rises, when synthetic rubber rises, a tire company's cost rises with the tide, and it is nearly powerless to control the prices of these raw materials.

Next, what happened in the first half of 2026. Natural rubber prices climbed steadily, with the average price of Shanghai whole-latex rubber in the first half at 16,817 yuan per ton, up nearly 30% year-on-year; synthetic rubber surged more than double year-on-year; carbon black rose 13% in a month. In the second quarter, tire makers' comprehensive procurement costs rose about 20% quarter-on-quarter. The three major inputs rose together, pushing tire companies' costs to high levels. And tire selling prices cannot rise in step (fierce market competition, downstream automakers pressing prices, consumers sensitive to price increases)—costs rose 20%, but selling prices could rise only a few percent. This scissors gap of "costs rising a lot, prices rising little" directly devoured companies' profits. This is why, in the first half of 2026, China's tire companies issued more than a hundred price-increase notices on one hand while their profits still declined on the other—the price increases could not cover the rise in costs.

The cost sheet also explains why leading companies are more resilient under pressure. The keys to resilience are "cost pass-through ability" and "cost control ability." Cost pass-through ability—companies with brand, technology, and high-end products (such as Sailun's liquid gold) can pass cost increases on to consumers willing to pay a premium for quality; while mid- and low-end companies that can compete only on low prices lose customers when they raise prices, and can only bear the cost themselves and eat into their own profits. Cost control ability—companies with smart manufacturing (Lighthouse Factories cutting costs), scale effects (mass production diluting costs), and overseas low-cost bases (Southeast Asia close to raw materials and low in cost) can press costs lower; while small companies and old factories are at a disadvantage in cost control. So facing the same rise in raw materials, leading companies can hold on (cost pass-through plus cost control), second-tier companies see net profits halved, and small companies go bankrupt and are cleared out—the pressure of the cost sheet produces entirely different outcomes across different companies.

The deeper lesson of the cost sheet is a root cause of China's tire industry being "big with thin profits"—its high dependence on, and low control over, upstream raw materials. When 70% of cost is in upstream hands, and within that natural rubber depends nearly 90% on imports with prices set by the international market—tire companies become "passive bearers of upstream prices," their profits squeezed at both ends between "upstream price increases" and "downstream price pressure." This squeeze is the cost root of the "profit margin of only 3%." Tire companies labor hard to make tires, yet what they earn is "a small processing fee between upstream and downstream," and even this small fee can at any time be eaten up by a surge in raw materials.

The way to crack the predicament of the cost sheet is consistent with cracking "big with thin profits"—move upward, break free of pure cost competition. Use technology (liquid gold) and brand (premium) to gain cost pass-through ability, use smart manufacturing (Lighthouse Factories) and scale (consolidation) to gain cost control ability, use overseas layout (low-cost bases) to optimize the cost structure, and use alternative rubber sources and synthetic rubber (limited though they are) to reduce dependence on natural rubber. When China's tire industry can turn from a "passive bearer of costs" into a "value creator with some ability to control and pass through costs," that 3% profit margin has hope of improving.

The cost sheet, that inconspicuous ledger, is in fact the key to understanding all the predicaments and efforts of China's tire industry. The paradox of "first in output, last in profit" has its roots in the cost sheet—70% of cost subject to the upstream, natural rubber nearly 90% imported, selling prices suppressed by the downstream. Liquid gold, new-energy fitment, Lighthouse Factories, going abroad to build plants, industry consolidation—all these efforts to climb are, in essence, aimed at rewriting this cost sheet: either raise selling prices (pass through costs), or lower costs (control costs), or reduce dependence on the upstream. For China's tire industry to move from "big" to "strong" is, in the final analysis, to rewrite this cost sheet where "profit is squeezed at both ends" into one that "can create and retain value." And rewriting this cost sheet is precisely this industry's hardest, and most fundamental, climb.

28. Downstream Channels: Tuhu and the New-Retail Revolution in the Replacement Market

The way tires reach consumers is being reshaped by a new-retail revolution. At the center of this revolution is the replacement market—the market where car owners replace their tires. It is a major pillar of China's domestic tire sales, and its channel structure is shifting from traditional roadside shops toward an integrated online-offline new-retail model.

First, grasp the weight of the replacement market. Tires have two major markets: original equipment (OE, tires fitted to new vehicles by automakers) and replacement (owners swapping out worn tires). China's replacement demand runs at roughly 180 million tires per year (domestic scope); adding replacement demand tied to exports, the total runs into the hundreds of millions. The replacement market is defined by low barriers to entry, price sensitivity, and channel fragmentation. In the past, owners replaced tires mainly at roadside auto-repair shops and tire stores—a highly fragmented market with opaque information and uneven service. And it is precisely this fragmented, traditional market that internet platforms are transforming.

The lead player in this new-retail revolution is Tuhu. Over the past year, this company sold roughly 18 million tires, accounting for over one-tenth of the domestic replacement market and ranking first nationally in online share; as of mid-2025, it operated 7,205 workshop stores, covering 320 prefecture-level and 1,855 county-level administrative regions. Tuhu's model is "order online, install offline"—the owner selects tires, compares prices, reads reviews, and places an order on the app, then goes to the nearest Tuhu workshop store for installation. This model resolves the pain points of the traditional replacement market: transparent pricing (clearly marked prices online, no fear of being overcharged), reliable quality (platform-backed, no fear of counterfeits), and standardized service (chain workshop stores with consistent service). Third-party platforms (Tuhu, JD Auto Care, Tmall Auto Care) already hold roughly 60% of the tire replacement market, and the three platforms' self-operated stores total over 12,700.

The significance of new retail for Chinese tires runs deeper than the channel itself. First, it changes how brands are built. In the traditional replacement market, information was opaque, so consumers mainly gravitated to big foreign brands (not knowing whom to trust, they trusted the most famous). Online platforms let consumers see tire performance specs, genuine reviews, and value-for-money comparisons—giving Chinese brands a chance to "let the product do the talking." When a consumer sees on Tuhu that a domestic tire performs no worse than a Michelin, costs 30% less, and has strong reviews, they are more likely to choose domestic—the transparency of new retail is dismantling the premium that foreign brands built on "information asymmetry." Second, it provides data and user touchpoints. Platforms hold vast volumes of tire-replacement data (what vehicle, what operating conditions, which tire was chosen, what the reviews were), and this data is enormously valuable to tire companies for product R&D and precision marketing. Third, it accelerates industry consolidation. The scale effects and standardization of new retail squeeze the survival space of traditional roadside shops, pushing the market to concentrate toward leading platforms and leading brands.

Another dimension of the replacement market is the "trade-in program" and retreaded tires for commercial vehicles. The 2024 truck trade-in program was extended into 2025 and broadened to cover China IV-standard vehicles, driving three consecutive rounds of heavy-truck growth and a recovery in all-steel tire output and sales (all-steel tire output grew 7.19% in 2025)—policy directly stimulated replacement demand for commercial-vehicle tires. Retreaded tires (worn truck tires refurbished for reuse) are another direction for green recycling; five national retreaded-tire standards took effect starting August 2025, building a full-chain framework of norms—retreaded tires are a niche market, but they align with the circular-economy direction and enjoy policy support.

The new-retail revolution also reveals a defining feature of China's domestic tire demand: it is a vast but steadily growing stock market. China's vehicle parc reached 366 million in 2025, with an average replacement cycle of four to five years—meaning huge and stable replacement demand every year. Although this domestic market lacks the high-growth upside of exports, it is the "ballast" of China's tire industry—stable, vast, and being reshaped by new retail in ways that favor domestic brands. As new retail dismantles the premium foreign brands built on information asymmetry in the replacement market, Chinese brands' share of the domestic market is poised to keep rising.

From the supply chain (hidden champions) to the channel (new retail), China's tire industry ecosystem is maturing across the board. Yet within this maturing ecosystem, there remain a few special high-end niche markets that serve as touchstones for China's tire technology strength—giant off-the-road (OTR) tires and aircraft tires. They represent two extremes of tire technology, and also the ambition of Chinese tires to break through to the very top.

29. Green Barriers: EUDR and the Tire Labeling Law

Beyond tariffs, Chinese tire exports now face a new threshold—green barriers. The EU's environmental regulations are setting new rules for the global tire industry from two directions—"zero deforestation" and "performance labeling"—and these rules are both a challenge for Chinese tire exports and a new battleground in the industry's green competition.

First, consider the EUDR—the EU Deforestation Regulation. It requires that relevant products entering the EU market (including natural rubber and its products such as tires) prove their raw materials do not originate from deforested land and are fully traceable. The impact on the tire industry is direct—natural rubber is a core raw material for tires, and the world's natural rubber comes mainly from plantations in Southeast Asia and Africa, some of which may involve deforestation. The EUDR requires tire companies to trace the origin of their natural rubber and prove no deforestation—substantially raising compliance costs and the complexity of supply-chain management. The EUDR was originally slated to take effect at the end of 2024, but has been postponed twice—on December 4, 2025, the EU Council and Parliament reached a provisional agreement on amendments, uniformly deferring the application date to December 30, 2026, with an additional six-month buffer for micro and small enterprises. The postponement gives companies more time to prepare, but the direction is set: the window before the end of 2026 is a compliance sprint.

The EUDR's price effect is also worth recording. The premium of compliant natural rubber (traceable, deforestation-free) over non-compliant rubber once reached USD 200 to 500 per ton, compressing to just over USD 100 amid the postponements and loosening. For China, the EUDR's impact is threefold—rising compliance costs (building traceability systems), more complex supply-chain management (verifying the origin of every batch of rubber), and the possibility that Southeast Asian rubber sources prioritize Europe (with compliant rubber in tight supply), thereby pushing up China's import costs. The EUDR is a textbook green barrier—in the name of environmental protection, it objectively raises the cost and difficulty for Chinese tires (and their raw material, natural rubber) to enter the EU.

Next, consider the tire labeling law. The EU's tire labeling law requires that tires sold in the EU be labeled for rolling resistance, wet grip, and noise level—like the energy-efficiency labels on home appliances, letting consumers see a tire's environmental and safety performance at a glance. In 2025, the EU labeling law required exported tires to reach grade B or above. This labeling law is both a threshold and an opportunity. The threshold: substandard tires cannot enter the EU, forcing Chinese tires to upgrade their compounds and improve performance (low rolling resistance, good grip). The opportunity: it gives high-performance Chinese tires a stage on which to "let the data do the talking." When Sailun's Liquid Gold can reach grade A or even AA on the EU label, the labeling law instead becomes a tool for it to prove its technological strength and build its brand. As noted earlier, Liquid Gold, tested by Spain's IDIADA, reached grade A on the EU label for both rolling resistance and wet grip—under the labeling law, that result is the best marketing there is.

The deeper logic of green barriers is an upgrade in the dimensions of global tire competition—an extension from "price competition" toward "green competition." In the past, tire competition mainly came down to price and performance; now, environmental attributes (low rolling resistance to save fuel/electricity, traceable and deforestation-free, sustainable materials) have become a new competitive dimension. The EU uses the EUDR and the labeling law to turn green standards into market-access thresholds—this is both a means for developed markets to erect trade barriers under the banner of environmental protection (protecting domestic industry) and a driving force for the global tire industry's green transition. For Chinese tires, green barriers are a double-edged sword: they raise the compliance cost and difficulty of exporting (especially for mid- and low-end products), but they also give high-performance, green Chinese tires (such as Liquid Gold) a chance for differentiated competition.

China's strategy for coping with green barriers is shifting from "passive compliance" toward "proactive leadership." Passive compliance—building traceability systems, meeting label grades, satisfying EUDR requirements. Proactive leadership—using green technology (Liquid Gold's low rolling resistance, energy-saving mixing), sustainable materials (Sailun's targets of 40% sustainable-material content by 2030 and 100% by 2050), and the circular economy (retreaded tires, reclaimed rubber) to turn greenness from a "cost" into a "competitive edge." When Chinese tires not only meet green standards but also lead in green technology, green barriers turn from a "challenge" into an "opportunity"—using green leadership to open high-end markets and build brand premiums.

Green barriers are a new variable in Chinese tires' overseas expansion, and a new battleground in the future of global tire competition. They remind us that for Chinese tires to move from "big" to "strong," they must not only catch up on technology, brand, and cost, but also keep pace with the world's new rules on greenness, sustainability, and compliance capability. Whoever can turn greenness into competitiveness will gain the upper hand in future global tire competition. And greenness is precisely a direction where Chinese tires (by virtue of low-rolling-resistance technology like Liquid Gold, a complete industrial chain, and the efficiency of smart manufacturing) have a chance to achieve differentiated leadership. Beneath the green barriers lies an opportunity for Chinese tires to overtake on the curve.

30. The Circular Economy: The Green Ledger of Retreaded Tires and Reclaimed Rubber

Downstream of the tire industry lies a dimension often overlooked yet increasingly important—the circular economy. Retreaded tires and reclaimed rubber are a path for the tire industry to achieve green recycling, and also a way for Chinese tires to cope with green barriers and open up new value.

First, retreaded tires. The all-steel tires of trucks and buses have a very sturdy casing (skeleton); what mainly wears is the tread. A retreaded tire takes a worn old truck tire, keeps the sturdy casing, and replaces the tread with a new one, putting it back on the road—the equivalent of giving the tire a new sole. The economic and environmental value of retreaded tires is both high: costs are far below those of new tires, resource consumption is greatly reduced (a retreaded tire consumes only a fraction of the raw material of a new tire), and carbon emissions drop significantly. In cost-heavy industries like freight logistics, retreaded tires can help fleets sharply cut tire spending. Starting August 2025, China implemented five national retreaded-tire standards (covering basic conditions for retreading production, process flows, passenger-car retreads, heavy-truck retreads, and construction-machinery retreads), which, together with the earlier technical specifications for waste-tire processing, build a full-chain framework of norms for retreaded tires—one of the core supporting measures of the "trade-in action plan." The introduction of national standards marks the upgrade of China's retreaded-tire industry from "small, scattered, and disorderly" toward "standardized."

Next, reclaimed rubber. The pile-up of scrap tires is a global environmental headache—"black pollution." Reclaimed rubber takes scrap tires through processes such as crushing and desulfurization, turning them back into usable rubber raw material for making new rubber products. Reclaimed rubber both solves the pollution problem of scrap tires and provides a low-cost rubber raw material (partially substituting for natural and synthetic rubber)—killing two birds with one stone. Against a backdrop where nearly 90% of natural rubber is import-dependent and prices swing sharply, the value of reclaimed rubber stands out all the more—it is a "domestic, circular rubber source" that can, to some degree, ease reliance on imported natural rubber.

The significance of the circular economy for Chinese tires has three layers. First, green compliance. As discussed, the EU's EUDR zero-deforestation regulation and tire labeling law—the global tire industry is transitioning toward greenness, and retreaded tires, reclaimed rubber, and sustainable materials are important components of that greenness. Sailun has set targets of 40% sustainable-material content by 2030 and 100% by 2050—the circular economy is a path to achieving these green targets. As greenness becomes a new dimension of global tire competition, the circular economy turns from an "environmental responsibility" into a "competitive edge." Second, cost and resources. Retreaded tires lower usage costs, and reclaimed rubber provides a domestic rubber source—against a backdrop of heavy cost pressure and import-dependent raw materials, the circular economy can help Chinese tires cut costs and ease their raw-material lifeline. Third, new value space. Retreaded tires, reclaimed rubber, and scrap-tire processing are themselves a growing industry—driven by national standards, policy support, and green demand, the circular economy opens a new value-growth point for Chinese tires.

But the circular economy has its limits. Retreading mainly applies to all-steel tires (truck and bus tires); the retreading value of passenger-car semi-steel tires is low and the market small. Reclaimed rubber underperforms virgin rubber, so it can only be used in scenarios with modest performance requirements, and the substitution ratio is limited. The system for collecting, sorting, and processing scrap tires is still imperfect, and scaling the circular economy will take time. So the circular economy remains for now a "niche but important" supplement to the tire industry, not the mainstream—it can contribute green value and ease cost and raw-material pressure, but it cannot yet carry the overall upgrade of Chinese tires.

Placed within the whole of Chinese tires, the circular economy is positioned as a "handle for greening" and a "supplement to circular value." It is not the main battlefield of Chinese tires' move from "big" to "strong" (the main battlefields are technology, brand, high-end, and globalization), but it is an increasingly important supporting front—especially against a backdrop where green barriers (EUDR, the labeling law) become a new dimension of global competition, the capabilities of the circular economy (retreading, recycling, sustainable materials) will increasingly influence the global competitiveness of Chinese tires. Whoever does the circular economy well will gain the upper hand on the green track, turning "environmental responsibility" into "differentiated competitiveness."

The circular economy also reveals a future trend for the tire industry—a shift from a "linear economy" (extract raw materials, manufacture, use, discard) toward a "circular economy" (a closed loop of raw materials, manufacture, use, recycling, and regeneration). This shift is the broad direction of green manufacturing globally, and tires—as a high-raw-material-consumption, high-waste industry—particularly need to move toward circularity. In this shift, Chinese tires face both challenges (green-compliance costs) and opportunities (using circular-economy capabilities to achieve differentiated leadership). When Chinese tires can not only make tires but also retread tires, reclaim rubber, and use sustainable materials, they occupy a more proactive position in the future green competition. This "green ledger" of the circular economy is a tally of Chinese tires' competitiveness in a sustainable future.

31. Two Extremes: Giant OTR Tires and Aircraft Tires

The very top of tire technology hides in two extreme categories—at one end, the largest and heaviest giant off-the-road (OTR) tires, and at the other, the most precise and demanding aircraft tires. These two categories are touchstones for a nation's tire-industry strength. China's breakthroughs at these two extremes mark its ambition to advance to the very top.

Giant OTR tires—the largest and heaviest tires. Giant OTR tires are the oversized tires used on mining dump trucks—the giant mining trucks that haul hundreds of tons of ore, each tire a story tall and weighing several tons. The largest specification is 59/80R63 (63 inches), and very few countries can make this size. China's trailblazer is Hai'an Rubber: in 2015, in collaboration with the Beijing Research and Design Institute of Rubber Industry, it successfully developed the 59/80R63 all-steel giant tire, making China the third country able to produce this specification. Hai'an ranks first in China for all-steel giant-tire output: roughly 14,000 tires in 2022, a 52.4% domestic share and about 6.5% globally (fourth in the world, behind only the three major brands Michelin, Bridgestone, and Belshina); it mass-produces the full 49-to-63-inch range, the world's third company to do so; its customers include Zijin Mining and XCMG (note: XCMG is a mining-truck OEM customer and does not make its own tires). Hai'an Rubber listed on the A-share market in 2025 with net profit exceeding RMB 600 million—a "little giant" focused on giant tires. Sailun also rolled out a 63-inch giant tire in 2016 and possesses full 49-to-63-inch-range technology, supplying Caterpillar, XCMG, and Sany; Triangle Tire likewise has the full 49-to-63-inch-range capability. The technology barrier for giant OTR tires is extremely high—they must bear loads of hundreds of tons and work under harsh mining conditions, an extreme test of materials, structure, and process. That China can make the world's largest-specification giant tires shows that Chinese tires have entered the world's first tier in extreme-condition technology.

Aircraft tires—the most precise and demanding tires. Aircraft tires are the other extreme of tire technology—they must withstand the enormous impact of aircraft takeoffs and landings (a jet of hundreds of tons touching down at hundreds of kilometers per hour), extreme temperature swings, and repeated high-speed friction, with the utmost demands on safety and reliability and an extremely high certification threshold. Aircraft tires have long been monopolized by international giants such as Michelin and Bridgestone, and are one of the hardest fortresses for Chinese tires to crack. The breakthrough came with China's homegrown large aircraft: on May 27, 2025, Guilin Lanyu (a subsidiary of Sinochem) obtained the CAAC's CTSOA (China Technical Standard Order Approval) for the C919's main and nose tires—meaning the tires for the homegrown large aircraft C919 achieved a "from 0 to 1" certification landing. Guilin Lanyu's product matrix covers six aircraft models and twelve specifications (the C909 and Boeing 737NG are in commercial service, the A320 series completed test flights, and the C919 passed the full range of indoor tests); its Guangxi production line has an annual capacity of 100,000 tires, about 40% of domestic demand. Haohua Technology (Shuguang Institute) has also entered COMAC's C909/C919 cultivation-supplier roster. Sentury, meanwhile, announced it can produce multi-specification aircraft tires fitted to Boeing, Airbus, and regional jets, entering the manufacturer-supplier roster in 2025 and beginning small-batch deliveries. Homegrown aircraft tires are only getting started, but the breakthrough of C919 fitment is a landmark step in Chinese tires' advance to the very top. Of course, the shortcomings must be stated plainly: high-load radial aircraft tires (such as those for plateau-airport aircraft) still require imports from Michelin and Bridgestone—the localization of aircraft tires is still in the uphill phase after the "from 0 to 1."

The breakthroughs in these two extreme categories mean more for Chinese tires than the categories themselves. They prove one thing: Chinese tires can win not only on scale and cost in the mid- and low-end market, but also achieve technological breakthroughs in the most high-end, most demanding categories. Giant OTR tires and aircraft tires are both "small-market, high-barrier" categories—modest in market size, but with extremely high technology thresholds, so simply being able to make them is proof of technical strength. That China can make the world's largest giant tires and the tires for its homegrown large aircraft—these breakthroughs are the ceiling of Chinese tire technology, and an endorsement for its brands to move upmarket.

From Liquid Gold (high-end passenger car) to giant OTR tires (construction-machinery extreme) to aircraft tires (the most demanding in aviation)—Chinese tires are attacking the technological summit from multiple directions. Although these breakthroughs cannot immediately change the overall pattern of "first in output, bottom in profit," they are directional signals: the future of Chinese tires lies not in cheaper mid- and low-end products, but in a stronger high end. Once the technology ceiling is broken through, brand and profit gains gain a fulcrum. And what ultimately supports these technological breakthroughs and market climbs comes down to companies' operations and finances—the 2025 earnings season laid bare the true, unevenly warm-and-cold situation of China's tire companies.

32. Earnings Season: Half Seawater, Half Flame

The April 2026 earnings season laid China's tire companies' 2025 operating situation out in black and white. The most striking feature of this report card is divergence. In the same industry, the same year, under the same tariff and cost pressures, different companies' fates could not be more different: some hit record highs against the trend, some saw net profit halved, and some posted massive losses. Half seawater, half flame.

The flame end: leaders growing against the trend. ZC Rubber is the most dazzling sample: 2025 revenue of RMB 44.956 billion, up 14.52%, and net profit attributable to shareholders of RMB 4.147 billion, up 9.51%—the only leader with positive net-profit growth, and it also listed on the A-share main board in June 2025 (raising RMB 4.066 billion). Its secret is the steady profitability of overseas bases (a 13% net margin in Thailand, profitable from the start in Indonesia) plus the scale advantage of a power-tool-like operation. Sailun's revenue reached RMB 36.792 billion, up 15.69% to a record high, with overseas revenue accounting for 76.7%—but net profit fell 13.3%, a case of "revenue up but profit down." Greatstar Tools (mainly hand tools, adjacent to tires) saw revenue dip slightly but net profit grow 8.95%. These leading companies steadied themselves under the twin pressures of tariffs and costs by relying on overseas capacity, technology (Liquid Gold), and scale.

The seawater end: second-tier players with net profit halved or heavy losses. Linglong's revenue grew 11.72% but net profit fell 21.9%, "revenue up but profit down," and in the first quarter of 2026 net profit plunged about 95%—global expansion instead landing it in the predicament of revenue up but profit down (declining gross margins, losses as overseas bases ramp up, and sharply higher selling expenses). Sentury's net profit fell 48.54% (nearly halved), even though its overseas revenue accounted for 91.31% and its Thai base's net margin reached as high as 24.5%—surging raw-material costs dragged down profit, and it relied on volume from its Morocco base to "build a floor." Triangle Tire saw both revenue and net profit decline. General Science & Technology's revenue grew 22% but net profit fell 46% (its first-year performance commitment falling through after the state-owned entity took control). Qingdao Doublestar posted a net loss of RMB 360 million (a cumulative five-year loss of RMB 1.814 billion), turning to a restructuring survival play by acquiring a 45% stake in South Korea's Kumho Tire. Small companies like Ruiqi are in persistent losses.

Why, in the same year and the same industry, are fates so divergent? The answer lies in the combination of several variables. First, the extent of overseas capacity. Leaders (ZC Rubber, Sailun) have large overseas capacity, early layouts, and stable profits, enabling them to hedge tariffs and domestic cutthroat competition; second-tier companies have insufficient overseas capacity or are still ramping up (Linglong's Serbia base loss, Sentury's Morocco base only just ramping), unable to withstand the shocks. Second, the ability to pass through costs. In 2025 to 2026, natural rubber soared and raw-material costs jumped sharply; companies that could pass costs on (via brand, via price hikes) fared well, while those that could not saw net profit devoured. Third, the level of product mix. Companies with technology, brands, and high-end products (Liquid Gold) had strong resilience; those stuck in the mid- and low-end, competing on low prices, fell first. Fourth, financial soundness. Exchange losses and financial expenses (Guizhou Tire's financial expenses surged 487.92%, General's surged 277%) devoured many companies' profits amid RMB volatility and high leverage.

The divergence of earnings season is the most direct evidence that China's tire industry is "accelerating its concentration toward the leaders." Earlier we discussed the bankruptcy wave in Shandong's industrial belt—domestic-sales-oriented small and medium plants without overseas capacity are being cleared out; and this earnings season further shows that even listed second-tier companies are struggling with halved net profits and heavy losses, while leading companies hold steady or even grow against the trend. The industry's profit and resources are accelerating their concentration toward the leaders—those with "overseas capacity, technology and brand, cost pass-through ability, and financial soundness." This is another signal of the evolution from "big but not strong" toward "the strong stay strong": Chinese tires as a whole remain "big but thin-margin," but internal divergence is under way—a group of leading companies is emerging from this thin-margin industry and climbing toward "strong."

First-quarter 2026 data continued this divergence: ZC Rubber and Sailun saw profit recovery, while Linglong and Sentury kept declining. Brokerages judge that "short-term disturbances are gradually clearing, and a 2026 earnings recovery can be expected"—but the dividend of recovery will most likely still concentrate among the leaders. The Chinese tire industry as revealed by earnings season is not an industry of across-the-board prosperity or across-the-board depression, but one undergoing dramatic divergence and accelerating reshuffling. Only by understanding this divergence can one truly read the real picture of Chinese tires in 2026—it is not "everyone doing well together" or "everyone doing badly together," but "the strong grow stronger, the weak are cleared out." And driving this reshuffle, beyond operations and finances, is the force of the capital markets—ZC Rubber's listing and Doublestar's acquisition of Kumho show that Chinese tires' capital operations are also accelerating.

33. The Domestic Ballast: Stable Demand from 366 Million Vehicles

Most eyes in China's tire industry are on overseas expansion and the high end, but there is one market often underestimated that is the industry's most stable base—the domestic market. The replacement and OE demand supported by a vehicle parc of 366 million is the ballast that carries China's tires through export volatility and the tariff siege.

First, see just how heavy this ballast is. As of 2025, China's vehicle parc reached 366 million, with an average replacement cycle of four to five years—meaning huge and stable replacement demand every year. China's replacement demand runs at roughly 180 million tires per year (domestic scope). Adding the OE market for new vehicles, the scale of China's domestic tire market is enormous—although figures differ under different scopes (ranging from roughly RMB 20 billion to RMB 40 billion, depending on the statistical boundary), the direction is clear: China has the world's largest auto market, and thus one of the world's largest domestic tire markets. This domestic market is a huge advantage that sets Chinese tires apart from purely export-oriented countries—it has a vast home market as its base.

The value of the domestic market stands out all the more against the backdrop of the tariff siege. As exports face the layered siege of anti-dumping/countervailing duties, reciprocal tariffs, and green barriers, and as overseas markets are fraught with uncertainty, stable domestic demand becomes a safe harbor and cash-flow source for Chinese tires. A company that over-relies on exports (especially exports to the US) swings violently on the tariff roller coaster (companies with high US exposure like Chervon and Globe took heavy hits in 2025); companies with stable domestic-demand support have stronger risk resilience. Although the domestic market grows steadily (lacking the high-growth upside of exports), it is stable, vast, and reliable—the ballast that carries an industry through the cycle.

The domestic market is also being reshaped by two forces, becoming more favorable to domestic brands. The first force is new energy. As discussed, the new demands new-energy vehicles place on tires give Chinese tires a chance to "reshuffle the deck," and Linglong topped China's OE sales through new-energy fitment—this reversal happened mainly in the domestic market. China is the world's largest new-energy vehicle market, and Chinese automakers (BYD, NIO, etc.) dominate new energy; they are more willing to support the Chinese tire supply chain—domestic new-energy fitment is the main battlefield for Chinese tires to break into OE and build brands. The second force is new retail. As discussed, platforms like Tuhu have reshaped the fragmented, opaque replacement market into a transparent, standardized new retail—this transformation dismantles the premium foreign brands built on information asymmetry and gives Chinese brands a chance to "let the product do the talking." These two forces, new energy and new retail, are pushing the domestic market from "foreign-brand dominance" toward "the rise of domestic brands."

Policy is also adding weight to domestic demand. The 2026 auto trade-in program continues—scrapping an old vehicle to buy a new-energy passenger car earns a subsidy of 12% of the vehicle price, capped at RMB 20,000, while buying a fuel vehicle of 2.0 liters or below earns 10%, capped at RMB 15,000. This policy stimulates auto consumption, thereby pulling OE and replacement demand. The 2024 truck trade-in program was extended and broadened to cover China IV-standard vehicles, driving three consecutive rounds of heavy-truck growth and a recovery in all-steel tire output and sales (all-steel tire output grew 7.19% in 2025)—policy directly stimulated demand for commercial-vehicle tires. Consumption-stimulus policies like the trade-in program are an important catalyst for the domestic market.

But the domestic market has its limits too. First, steady growth. China's auto market has entered the stock era, parc growth is slowing, and although replacement demand is stable it can hardly grow explosively—domestic demand is ballast, not a growth engine. Second, fierce cutthroat competition. The domestic market has overcapacity and brutal price wars, and domestic demand's profits are squeezed very thin—stable does not equal high-profit. Third, the high end is still held by foreign brands. The high end of the domestic market (luxury-car OE, high-performance replacement tires) is still dominated by foreign brands; Chinese brands' domestic advantage is mainly in the mid- and low-end and in new energy—the high-end contest is equally hard in the domestic market.

Placed within the whole of Chinese tires, the domestic market's position is clear: it is ballast, not a growth engine; a safe harbor, not a gold mine. For Chinese tires to move from "big" to "strong," overseas expansion and the high end are "offense" (pursuing growth and profit), while domestic demand is "defense" (providing stability and cash flow). A healthy tire company needs a balance of offense and defense—using stable domestic-demand support to back offensive overseas and high-end moves. Companies that over-rely on exports and neglect domestic demand lose their balance amid tariff volatility; only companies that balance offense and defense, weighing domestic and export equally, can carry through the cycle and grow steadily. The domestic demand from 366 million vehicles is the most solid confidence of China's tire industry—it may not be sexy, but it is the ballast that carries the industry through the storms.

Domestic demand and overseas expansion, defense and offense—understanding this balance is understanding the survival philosophy of Chinese tires in a complex environment. And to place all of this within a larger coordinate system requires a comparison with the climb of China's other manufacturing industries.

34. Capital and Consolidation: ZC Rubber's Listing and Doublestar's Acquisition of Kumho

From 2025 to 2026, an important change in China's tire industry was the acceleration of capital operations and industry consolidation. Two landmark events—ZC Rubber's A-share listing and Qingdao Doublestar's acquisition of South Korea's Kumho Tire—reveal that Chinese tires are using the force of capital to push the industry from "scattered cutthroat competition" toward "concentration and consolidation."

ZC Rubber's listing: the capitalization of China's largest tire company. On June 5, 2025, ZC Rubber listed on the Shanghai Stock Exchange main board, with an issue price of RMB 46.50 and net proceeds of about RMB 4 billion—one of the largest A-share IPOs up to that point in the year. ZC is China's largest tire company (2025 revenue of RMB 44.956 billion, ranked first in China by the China Rubber Industry Association), and its "Chaoyang" brand was born in 1966. Its listing has two meanings. First, financing for expansion. Tires are a heavy-asset industry; overseas plant construction, capacity expansion, and technology R&D all require huge capital, and the listing provides capital ammunition for ZC's global expansion (bases in Vietnam, Indonesia, Mexico). Second, it marks the entry of China's tire leader into the mainstream view of the capital markets—when China's largest tire company becomes a large-cap A-share stock, it shows that the industry's leading companies now have the scale and quality recognized by the capital markets. After the listing, although ZC's share price experienced volatility (up 6.84% on day one, pulling back the next day), the capitalization of an industry leader is a marker of the maturation of China's tire industry.

Doublestar's acquisition of Kumho: the first case in Chinese tire history of acquiring an overseas listed company. In 2026, Qingdao Doublestar acquired a 45% stake in South Korea's Kumho Tire for RMB 4.927 billion, gaining control and completing the restructuring—this is the first case in Chinese tire history of a listed company acquiring an overseas listed company. The logic of this deal is clear: Qingdao Doublestar was struggling operationally (a 2025 net loss of RMB 360 million, a cumulative five-year loss of RMB 1.814 billion), while Kumho is a veteran South Korean tire company with accumulated brand and technology (net profit of RMB 900 million to 1.8 billion from 2023 to 2025)—by acquiring Kumho, Doublestar both gained Kumho's brand, technology, and channels, and improved its own finances through consolidation (after restructuring, its debt-to-asset ratio fell from 78.6% to 73.4%, and it turned a profit in the first quarter of 2026). This is a textbook case of "the weak saving themselves by acquiring the strong," and a signal that Chinese tires' "going out" is upgrading from "building plants" to "acquisitions"—not just building new plants overseas, but beginning to acquire mature overseas brands and capacity.

These two events, together with the bankruptcy-and-restructuring wave discussed earlier, jointly sketch the full picture of China's tire industry consolidation. At one end is bankruptcy clearance—domestic-sales-oriented small and medium plants without overseas capacity or technology and brands (Delun, Yinuo, Zhongchuang, Changhong, Haifeng) being eliminated in bankruptcy auctions; at the other end is capital expansion—leading companies growing stronger against the trend through listings (ZC), acquisitions (Doublestar buying Kumho), and overseas plant construction (Sailun's Egypt, Sentury's Morocco). Bankruptcy and expansion coexist, clearance and consolidation proceed in tandem—Chinese tires are undergoing a profound industry consolidation, with resources and profits accelerating their concentration toward the leaders.

Capital operations are extending into more dimensions. The China Rubber Industry Association's "15th Five-Year Plan" targets speak volumes about the direction: profit growth should exceed revenue growth by 2 percentage points, cultivate three to five world-class enterprises with revenue over RMB 50 billion, and raise industry concentration (CR10) to 40%. All three targets are essentially about "concentration" and "quality improvement"—China's tire industry is consciously pushing consolidation, reducing cutthroat competition, and cultivating world-class leaders. And the capital markets (listing financing, mergers and restructuring) are important tools for achieving this consolidation. When Chinese tires move from "hundreds of scattered companies in cutthroat competition" toward "leader-dominated, rising concentration," the industry's health and profitability have a chance to improve.

Capital and consolidation are the organizational path for Chinese tires to move from "big but not strong" toward "strong." Technology (Liquid Gold), market (new-energy fitment), and manufacturing (lighthouse factories) are climbs at the product and operations level, while capital and consolidation are a reshaping at the organizational and structural level—by clearing out backward capacity, concentrating quality resources, and cultivating world-class leaders, the whole industry moves from "wild-growth cutthroat competition" toward "orderly-competition maturity." This consolidation is still under way, and its success or failure will, to a large extent, determine whether Chinese tires can truly untie the paradox of "first in output, bottom in profit."

Beyond consolidation, the future of Chinese tires also depends on changes in the macro environment—tariffs, raw materials, domestic demand, and rate cuts. How these variables evolve in 2026 determines the industry's near-term fate. The judgments of brokerages and the market on 2026 are worth hearing.

35. Timeline: From the Summer of 2025 to the Height of Summer 2026

Laying out the major events in China's tire industry over the past year in chronological order offers the most intuitive sense of the industry's rhythm amid the multiple variables of tariffs, costs, and capital. This timeline is the temporal coordinate system for understanding where China's tire industry stands in 2026.

May 2025. The EU launched an anti-dumping investigation into passenger car and light-truck tires from China—following the truck-and-bus tire case of 2018, this was another EU siege against Chinese tires, opening a new front. In the same month, the first semi-steel tire rolled off the line at Sailun's Indonesia plant and the first semi-steel tire rolled off the line at its Mexico plant—Sailun's fourth Southeast Asian base and its first North American base came online in succession.

June 2025. ZC Rubber listed on the main board of the Shanghai Stock Exchange (offering price 46.50 yuan, raising roughly 4 billion yuan), completing the securitization of China's largest tire company—one of the largest A-share IPOs of the year up to that point. Natural rubber prices bottomed out this month (around 13,200 yuan per ton, a near-one-year low)—the starting point of a subsequent climb.

July 2025. Trump's reciprocal-tariff letter rates were announced—Thailand and Cambodia 36%, Vietnam 20% (transshipment 40%). Media calculated that, layering in component tariffs, Thai and Cambodian tires reached a combined 61%—"Southeast Asian tire exports in crisis." Fortunately, rates eased back after negotiations at the end of July. In the same month, the EU imposed mandatory customs import registration on the Chinese tires under investigation.

Second half of 2025. Natural rubber rebounded from its bottom, fluctuating in the 14,000-to-15,500-yuan-per-ton range and stabilizing above 15,000 yuan by year's end—cost pressure began to accumulate. Sailun's Indonesia plant began producing all-steel and off-road tires.

November 2025. Acting on a complaint from Husqvarna, the EU launched an anti-dumping investigation into robotic lawn mowers originating in China—green barriers and trade remedies extending to emerging product categories.

December 2025. Citing the "technical complexity of the case," the European Commission suspended the provisional anti-dumping duties on Chinese tires that had been set to take effect in January 2026—a twist in tariff tactics. Stanley Black & Decker sold its aviation business for 1.8 billion dollars to slim down and focus on its core tools business.

January 2026. Linglong Tire announced the termination of its H-share issuance and Hong Kong listing (planned for nearly a year, aborted because its share price had fallen below net asset value)—a setback in capital operations. Sailun increased the capital for its Indonesia project, raising total investment from 251 million to 300 million dollars and doubling semi-steel capacity to 6 million units. ZC Rubber approved a plan to invest 1.04 billion yuan to build a new base in Vietnam.

February 2026. The U.S. Supreme Court ruled 6-3 that the IEEPA tariffs were illegal and void; customs stopped collecting them on February 24, with refunds of up to roughly 175 billion dollars—the effective tariff rate on Chinese goods to the U.S. fell from 36.8% to about 21.2%. Trump promptly switched to Section 122 of trade law to separately impose a 10% global tariff. BLUETTI filed for a listing on the Hong Kong Stock Exchange.

From March 2026. A wave of price increases erupted—starting in March, domestic tire makers issued a flurry of price-hike notices; on April 1 the first round of across-the-board increases of 2% to 5%, followed by a second and third round, cumulatively exceeding 100 price-hike notices. Natural rubber prices climbed steadily, averaging 16,817 yuan per ton in the first half, up nearly 30% year on year. In mid-March, the 21st China Rubber Annual Conference of CRIA (Qingdao, themed "Breaking the Grind and Building the New, Chain Collaboration for Symbiosis") convened.

April 2026. The FY2025 annual report season was disclosed en masse—ZC Rubber posted positive net profit growth, Sailun grew revenue without growing profit, Linglong's net profit fell 22%, and Sentury fell 49%—sharp divergence across the industry. Qingdao Doublestar completed the restructuring of its 4.927-billion-yuan acquisition of a 45% stake in South Korea's Kumho Tire. The final ruling in the second sunset review of the anti-dumping/countervailing case on Chinese passenger car tires by the U.S. upheld the duties.

May 2026. Linglong terminated its Brazil project (14.7 million units, roughly 8.7 billion yuan, because the equity terms could not be agreed)—a case of a misstep in going global. Ahead of the EU's final ruling, supplementary disclosures showed provisional rates cut sharply (Hankook from 12.1% down to 4.3%).

June 2026. Sailun announced a planned capacity-expansion project in Egypt worth 1.141 billion dollars—one of the largest single overseas investments by a Chinese tire maker. Delun Rubber entered bankruptcy liquidation, and the bankruptcy proceedings of Shandong Yinuo Engineering Tire concluded—a continuation of a new round of the bankruptcy wave. Natural rubber prices retreated from highs in mid-to-late June.

July 2026. The EU's final anti-dumping ruling on passenger car and light-truck tires from China landed, with rates of 4.3% to 45.3%—the other shoe dropped on the EU's new front.

This timeline conceals several clear undercurrents. First, the roller coaster of tariffs—from the surge of Trump's reciprocal tariffs, to the plunge when the Supreme Court struck down IEEPA, to the landing of the EU's new anti-dumping duties, tariff tactics swung violently, yet the siege against Chinese tires never stopped. Second, the relentless rise in costs—natural rubber climbed from its low in June 2025 to a high in the first half of 2026, forcing out hundreds of price-hike notices, the single greatest source of pressure this year. Third, the acceleration of capital and consolidation—ZC Rubber's listing, Doublestar's acquisition of Kumho, Sailun's Egypt gamble, and the twin stalls of Linglong's Hong Kong listing and Brazil project—capital operations saw both successes and failures, but the direction of industry consolidation was clear. Fourth, the intensification of divergence—the report season's fire-and-ice, the coexistence of a bankruptcy wave and overseas expansion—China's tire industry is diverging sharply and reshuffling at speed. This timeline is the most vivid temporal record of that divergence and reshuffling.

36. The 2026 Outlook: Accelerated Globalization and Profit Elasticity

Looking back from mid-2026, China's tire industry faces a macroeconomic environment dense with variables and uncertain in direction. Tariffs on a roller coaster, raw materials at highs, domestic demand waiting and watching, rate cuts brewing—the combination of these variables determines the short-term fate of China's tire industry in 2026. The mainstream judgments of brokerages and the market can provide a coordinate for the industry's near-term trajectory.

First, the core logic of the brokerages. In March 2026, Zhongtai Securities argued that 2026 is the "inflection year of accelerated globalization" for domestic tire makers—the core logic being that Chinese tire makers' overseas capacity in Southeast Asia, Mexico, Morocco, and Egypt is coming online and ramping up in succession, able to punch through tariffs and contribute profit elasticity. Its Q1 2026 review further judged that leading firms' 2026 earnings elasticity would average about 30%, remaining bullish on the overseas ramp-up of ZC Rubber's, Sailun's, and Sentury's semi-steel and all-steel tires. Orient Securities emphasized "bullishness on leading firms with multi-point overseas capacity layouts that can flexibly respond to tariff changes"—naming the globalization footprints of Sailun, ZC Rubber, Linglong, and Sentury. The brokerages' consensus judgment is: in 2026, whoever completes their overseas capacity layout earliest, most extensively, and most stably will win profit elasticity amid the tariff siege.

Next, the evolution of several key variables. First, tariffs. In February 2026 the Supreme Court struck down the IEEPA tariffs, lowering the effective rate on Chinese goods to the U.S. from 36.8% to about 21.2%—a short-term positive that eased pressure on exports to the U.S. But the anti-dumping/countervailing duties (passenger car tires, truck-and-bus tires) and the EU's new final anti-dumping ruling (landing in July 2026 at 4.3% to 45.3%) remain firmly in place—the tactics of tariffs change, the battlefield does not. Overseas capacity layout remains the fundamental solution for punching through tariffs. Second, raw materials. In the first half of 2026 natural rubber surged (up nearly 30% year on year), devouring tire makers' profits—the greatest current source of pressure. But the market is divided on the second half—some hold that rubber prices will fluctuate at high levels, others that they will retreat as supply loosens. The direction of raw materials directly determines whether tire makers' profit elasticity can be realized. The brokerages' "profit elasticity" judgment largely bets on a resonance of "raw materials retreating + overseas capacity ramping up"; but in the first half of 2026 raw materials in fact rose, so the point at which profit elasticity is realized may be pushed back.

Third, domestic demand. In 2025 China's automobile production and sales reached 34.53 million units, ranking first globally for the 17th consecutive year, with new-energy production and sales at 16.62 million units—a vast vehicle parc (366 million units) underpins stable replacement demand. In 2026 the automobile trade-in policy continues (scrapping an old vehicle to purchase a new-energy passenger car earns a subsidy of 12% of the vehicle price, capped at 20,000 yuan), continuing to stimulate automobile consumption and OE demand. Domestic demand is the ballast of China's tire industry—though its growth is steady, it is stable and reliable. Fourth, rate cuts. The Federal Reserve paused rate cuts in the first half of 2026 (standing pat for the fourth consecutive time), while the U.S. housing and DIY markets have yet to fully recover—a drag on China's tire export demand. The market broadly expects a resumption of rate cuts to stimulate U.S. housing and automobile consumption, thereby pulling tire demand—the pace of rate cuts is an important catalyst for overseas demand.

Combining these variables, the picture for China's tire industry in 2026 is: short-term pressure (raw materials at highs, rate cuts not yet arrived, tariffs firm), medium-term bullishness (the resonance of overseas capacity ramping up, raw materials retreating, and rate cuts stimulating). The brokerages' judgment of "accelerated globalization + profit elasticity" is essentially a bet on the medium-term resonance—when overseas capacity ramps up to offset tariffs, raw materials retreat from highs, and rate cuts stimulate overseas demand, Chinese tire makers' profit elasticity can be realized. But this resonance takes time, and the rise in raw materials in the first half of 2026 has already pushed the realization point back. So 2026 is more likely to be a year of "grinding through the first half, with a possible turn in the second," and the dividend will most likely be concentrated among the leading firms that have completed their overseas capacity layouts.

The 2026 outlook also reveals a long-term trend for China's tire industry: this industry's fate increasingly hinges on "globalization capability." In a complex environment of tariff siege, raw-material volatility, and demand migration, only leading firms that can flexibly deploy capacity across multiple global markets, hedge risk, and chase profit can ride through the cycle; firms trapped at home, with a single production base and lacking technology and brand, will be eliminated in the reshuffle. China's tire industry's second wave of globalization (near-shoring, multipolar hedging) is not merely a survival strategy forced out by tariffs, but the core competitiveness of this industry's future.

After the outlook, an honest report should, precisely where things look most hopeful, lay out a sober list—China's tire industry's hidden worries deserve to be taken seriously.

37. The 15th Five-Year Blueprint: Breaking the Grind, Building the New, and Three Goals

China's tire industry has a clear blueprint for its own future. The 21st China Rubber Annual Conference of March 2026 (Qingdao) set its theme as "Breaking the Grind and Building the New, Chain Collaboration for Symbiosis"—these eight characters precisely encapsulate the core problems China's tire industry must solve in moving from "big" to "strong." And the three goals for the "15th Five-Year Plan" put forward by CRIA sketch out this industry's direction over the next five years.

First, the weight of the four characters "Breaking the Grind and Building the New." "Breaking the grind"—breaking the ruinous internal competition. As discussed repeatedly, the root ailment of China's tire industry is overcapacity, price wars, and vicious internal competition (the bankruptcy wave in Shandong's industrial belt is the extreme consequence of this grind). "Breaking the grind" means breaking this low-profit trap of "the more it grinds, the more it loses; the more it loses, the more it grinds." "Building the new"—establishing a new competitive paradigm, shifting from the old paradigm of competing on price and capacity to a new paradigm of competing on technology, brand, and globalization. "Breaking the grind and building the new" means moving China's tire industry from "brutal grinding" to "orderly innovation"—precisely this industry's most urgent transformation. And "chain collaboration for symbiosis" emphasizes coordination along the industrial chain—upstream and downstream cooperation, complementary strengths, mutual flourishing, rather than everyone fighting each other.

Next, the three goals of the "15th Five-Year Plan." First, profit growth should exceed revenue growth by 2 percentage points. This goal targets the pain point of "big but thin-margin"—in the past China's tire industry saw fast revenue growth and slow or even declining profit growth (volume up, price down); in the future this must reverse, letting profit growth exceed revenue growth. This means the industry must shift from "winning by volume" to "profiting by quality"—no longer growing by selling more tires, but profiting through higher value-added, better brands, and superior costs. This is the concrete financial embodiment of "breaking the grind and building the new." Second, cultivate 3 to 5 world-class enterprises with revenue exceeding 50 billion yuan. This goal targets the pain point of "small and scattered"—although China's tire industry has 39 enterprises in the top 75, individual scale is small and it lacks a truly world-class leader (ZC Rubber at 44.9 billion yuan, Sailun at 36.8 billion yuan, none yet stably exceeding 50 billion). Cultivating 3 to 5 world-class leaders means the industry must, through consolidation, expansion, and strengthening, give rise to Chinese giants that can stand shoulder to shoulder with Michelin and Bridgestone. Third, raise industry concentration (CR10) to 40%. This goal targets the pain point of "low concentration"—China's tire enterprises are numerous and concentration is low, leading to serious internal competition. Raising concentration means the industry must, through clearing out the laggards (the bankruptcy wave) and concentrating quality resources (mergers and restructuring), let leading firms take a larger share and reduce low-end grinding.

Taken together, these three goals point in the same direction—concentration and quality upgrading. Concentration—clearing out backward capacity, cultivating world-class leaders, and raising industry concentration, so that resources and profits concentrate toward the leaders and grinding is reduced. Quality upgrading—from volume to quality, from price to value, from OEM to brand, raising the value-added and profitability of the whole industry. Concentration is the means, quality upgrading the end—through concentration (reducing the number of players engaged in disorderly competition), quality upgrading is achieved (raising the overall competitive water level). This fully aligns with the industry reality observed in this report (the bankruptcy wave clearing out the tail, the report season's divergence, capital operations accelerating concentration toward the leaders)—CRIA's blueprint is in effect an official confirmation and guidance of the industry consolidation already underway.

But realizing the blueprint faces real challenges. "Breaking the grind" is hard—overcapacity cannot be digested overnight, the inertia of price wars is strong, and clearing out backward capacity brings pain (bankruptcy, unemployment, shocks to local economies). "Building the new" is hard—shifting from competing on price to competing on technology and brand requires long-term R&D investment and brand building, not achievable by chanting slogans. Cultivating world-class leaders is hard—going from 44.9 billion yuan to 50 billion is not hard, but becoming a truly world-class leader like Michelin, with brand, technology, and a global footprint, requires decades of accumulation. Raising concentration is hard—China's tire enterprises are numerous, with local protectionism and tangled interests, and industry consolidation will meet layer upon layer of resistance. The blueprint points the way, but there is still a long road to the goals.

The value of the "15th Five-Year Plan" blueprint lies in condensing the path from "big" to "strong" for China's tire industry into clear goals and directions. Breaking the grind and building the new, chain collaboration for symbiosis, profit growth exceeding revenue growth, cultivating world-class leaders, raising concentration—these goals are all, in essence, meant to resolve the core contradiction of "big but not strong": grinding, thin margins, small and scattered, low-end. When China's tire industry can truly achieve "breaking the grind and building the new"—breaking internal competition, establishing an innovation paradigm, cultivating world-class leaders, raising concentration—it can transform from a "volume champion" into a "quality powerhouse." This transformation is the core task for China's tire industry over the next five to ten years, and the ultimate goal of CRIA's blueprint. The blueprint has been drawn; what comes next is whether the industry can turn it into reality step by step. And this process of "turning the blueprint into reality" is precisely the most critical, and most arduous, leg of China's tire industry's journey from "big" to "strong."

38. The Risk List: Seven Hurdles Beneath the Gloss

An honest industry report should, at the story's most hopeful point, lay out a sober list. On the road from "big" to "strong," China's tire industry has at least seven hurdles across its path.

First, the chasm of brand premium. This is the most fundamental hurdle, and the hardest to cross. China's tire industry ranks first in the world in output, exports, and number of enterprises, but has long lacked brand premium—for the same specification, Michelin can charge a substantial premium over domestic brands, while Linglong, benchmarking against international first-tier brands, can only sell at 60% to 70% of their price. A brand is a century of accumulated trust, and China's tire brand building has only just begun (Sailun's brand value ranks tenth globally, the only Chinese brand in the top ten). The chasm of brand premium is hard to fill in the short term, and it directly determines whether the paradox of "first in output, bottom in profit" can be resolved. Technology (Liquid Gold) can help build a brand, but there is no shortcut to accumulating brand trust—only time and word of mouth.

Second, the Achilles' heel of natural rubber. Nearly 90% is imported, and highly concentrated in Southeast Asia—this upstream vulnerability leaves China's tire industry's profits highly beholden to rubber-price swings. In the first half of 2026 rubber prices surged nearly 30%, directly forcing out hundreds of price-hike notices and devouring corporate profits. China's tire industry has almost no control over the direction of rubber prices. This vital weakness, imposed by the hard constraints of geography and climate, is nearly insoluble—it can only be mitigated through alternative rubber sources, synthetic rubber, overseas layouts, and price hedging.

Third, the persistence of the tariff siege. Twenty years of anti-dumping/countervailing duties, the landing of the EU's new anti-dumping duties, the roller coaster of U.S. tariffs—trade barriers chase China's tire industry like a shadow. Although building factories abroad can punch through tariffs, the tariff front keeps expanding (from the U.S. to the EU, from passenger car tires to truck-and-bus tires), and the cost and complexity of going global are also rising. The uncertainty of geopolitics is a permanent cloud over China's tire industry's globalization.

Fourth, overcapacity and internal competition. The tire industry has a relatively low barrier to entry and expands easily, so capacity is severely oversupplied and price wars flare up one after another. The bankruptcy wave in Shandong's industrial belt (14 firms going bankrupt on the same day) is the extreme consequence of this grind, and the new round of bankruptcies from 2025 to 2026 shows the problem persists. Overcapacity and vicious internal competition trap the whole industry in the low-profit snare of "the more it grinds, the more it loses; the more it loses, the more it grinds." Industry consolidation (clearing out laggards, concentrating the leaders) is the solution, but consolidation is a long and painful process.

Fifth, the risks of overseas bases. Although building factories abroad is a sound strategy for punching through tariffs, overseas bases involve enormous investment, may run losses during ramp-up (Linglong's Serbia plant lost 120 million yuan in 2024), sharply increase the complexity of managing multiple transnational bases, and may also misstep (the termination of Linglong's Brazil project). Moreover, overseas production sites are no longer tariff havens either (U.S. anti-dumping/countervailing action against Southeast Asia, Section 232 tariffs)—going global is itself under tariff pursuit. Although overseas bases are generally more profitable than domestic ones, their risk and uncertainty are also rising.

Sixth, the uncertain realization of profit elasticity. The profit-elasticity resonance the brokerages bet on—"overseas capacity ramp-up + raw materials retreating + rate cuts stimulating"—requires multiple variables to turn favorable simultaneously. But in the first half of 2026 raw materials were in fact rising, rate cuts had not yet resumed, and U.S. housing had not recovered—the realization point of profit elasticity is being pushed back. If raw materials stay high and rate cuts keep failing to arrive, China's tire industry's profit elasticity may fail to materialize, and the optimistic expectations for 2026 may come to nothing.

Seventh, the long march of premiumization. Liquid Gold, NEV OE fitment, giant engineering tires, aircraft tires—these high-end breakthroughs are exhilarating, but for them to truly change the overall pattern of "first in output, bottom in profit" still requires a long time. Liquid Gold is a single company's technology, and most tire makers remain in the low-to-mid tier; NEV OE fitment profits are not necessarily high (Linglong grew revenue without growing profit); giant tires and aircraft tires are niche markets. The direction of premiumization is right, but from a "breakthrough at points" to a "change across the whole," the road is still long.

Having finished the list, let us weigh it once more: not one of these seven hurdles can negate China's tire industry's progress over the past twenty years, but every one of them may slow its pace from "big" to "strong." China's tire industry's true position is "volume champion, quality chaser"—it is already the undisputed first in output, but in brand, profit, raw-material control, and high-end technology it still lags the giants by a generation. This generation gap cannot be instantly filled by one or two technological breakthroughs (Liquid Gold); it requires an all-round, long-term chase in brand, supply chain, premiumization, and industry consolidation.

Unlike the judgment in that piece on shield machines of "already at the summit, how to hold it," China's tire industry faces "not yet at the summit, how to climb"—it has summited in output, but on the value chain it is still halfway up the mountain. Clearly recognizing these seven hurdles is not to negate China's tire industry's achievements, but to remind us: from "big" to "strong," China's tire industry still has a long road to travel, and every hurdle on this road must be taken seriously and crossed one by one.

39. Reference Cases: Three Kinds of Climb in Tires, Gas Turbines, and Shield Machines

Placing China's tire industry within the coordinate system of Chinese manufacturing, and comparing it against gas turbines and shield machines, allows a more accurate view of the stage it is at and the unique challenges it faces. Three industries tell three different stories of Chinese manufacturing's move from "big" to "strong."

Compared with shield machines: one already at the summit, one halfway up the mountain. Shield machines and tires are both industries where China accounts for a very large share of the world—shield machines about 70%, tires about half. But the situations of the two are utterly different. Shield machines are "already at the summit"—not only first in output, but also globally leading in technology (building the world's largest diameter, setting world records), pushing European, U.S., and Japanese rivals to the margins; its perplexity is "where to go after the summit" (overcapacity, how to hold and optimize). Tires are "still halfway up the mountain"—first in output, but still a generation behind the giants in brand, profit, and high-end technology (a profit margin of only 3%, high-end fitment less than 10%); its perplexity is "how to keep climbing" (brand premium, high-end breakthroughs). Both are volume champions, but shield machines have summited on the value chain while tires are still climbing—this difference stems from the differing competitive dimensions of the two industries: the competition in shield machines is mainly in technology and manufacturing (where China already leads), while the competition in tires, besides technology and manufacturing, also involves brand and consumer perception (where China is still catching up). Brand is a hurdle harder for tires to cross than for shield machines—because the buyers of shield machines are professional construction firms (looking at performance and price), whereas the buyers of tires are ordinary consumers (recognizing brand and reputation), and consumers' brand perception is harder to change than professional buyers' rational judgment.

Compared with gas turbines: one with a high technical ceiling, one with a high market barrier. Gas turbines and tires are both industries where China is catching up, but the difficulty of catching up differs. The difficulty of gas turbines lies in the technical ceiling—a turbine inlet temperature of 1,600 degrees Celsius is the limit of materials, requiring decades of operating data to grind out slowly, and China has only just won its first order to export to North America, still climbing in the window period. The difficulty of tires lies not in the technical ceiling (tires have no material-physics limit like gas turbines; China has even used Liquid Gold to assault a century-old industry puzzle), but in the market barrier—brand premium, consumer perception, tariff siege, and access to high-end fitment. Gas turbines are "technically hard, market relatively simple" (buyers are power companies, recognizing technology and delivery); tires are "technically relatively attackable, market barriers layered high" (buyers are consumers and automakers, recognizing brand and relationships, plus the tariff siege). This comparison shows: the obstacle to Chinese manufacturing's move from "big" to "strong" is not always technology—sometimes it is the "soft" barriers of market, brand, and rules, and these soft barriers are often harder and slower to cross than technical barriers.

The shared undertone of the three climbs. Although the situations of the three industries differ, they share the common undertone of Chinese manufacturing's move from "big" to "strong." First, all start from "big"—in all three industries China is the champion of output/share, and "big" is the common starting point of Chinese manufacturing. Second, all are climbing upstream on the value chain—gas turbines climbing technology (indigenous complete machines), shield machines climbing technology and standards (world records, brand), tires climbing brand and high-end (Liquid Gold, NEV OE fitment). Third, all face new challenges of "after the summit" or "amid the climb"—overcapacity, thin-margin operations, brand shortcomings, insufficient soft power, globalization risks—these are the common subjects of all of China's advantaged industries.

The three climbs together sketch the full spectrum of Chinese manufacturing's move "from big to strong": gas turbines climbing in the window period of technical assault, shield machines seeking a direction to optimize after summiting in manufacturing, tires climbing halfway up the mountain of market and brand. They represent three different stages and three different challenges of Chinese manufacturing's move from "big" to "strong"—some stuck at the technical ceiling, some stuck in the post-summit confusion, some stuck at brand and market barriers.

And the tire industry's unique position in this spectrum is: it is an industry that is "technically attackable, but hard to brand." China's tire industry has proven it can break through technically (Liquid Gold assaulting the Magic Triangle), but the chasm of brand premium and the barrier of consumer perception are the hardest hurdles for it to cross on its way from "big" to "strong." This offers a general lesson for Chinese manufacturing: when technology is no longer the main obstacle, the "soft power" of brand, channels, and consumer trust becomes the key that decides success or failure—and building soft power is longer and requires more patience than technical assault. China's tire industry's climb is, in essence, a protracted war of brand and trust, and this protracted war has only just begun.

40. Conclusion: From Volume Champion to Quality Climb

Gathering the threads of this report together, the story of China's tire industry is a story about "how a volume champion completes a quality climb."

Looking back at the present, this is a picture full of tension. On one hand, China's tire industry is the undisputed volume champion: about half of global output, first in exports for many consecutive years, 39 enterprises squeezing into the global top 75, two entering the top ten—by the numbers, China's tire industry already dominates the world. On the other hand, China's tire industry is an awkward quality chaser: a profit margin of only about 3%, absent brand premium, high-end fitment less than 10%, nearly 90% of natural rubber imported—by quality, China's tire industry still lags Michelin and Bridgestone by a generation. The paradox of "first in output, bottom in profit" is this industry's most core characteristic, and the knot it must untie in moving from "big" to "strong."

But in 2026 China's tire industry is climbing this paradox along multiple fronts at once. On the technology side, Sailun's Liquid Gold assaulted the century-old "Magic Triangle" of the tire industry, giving Chinese tires the confidence, for the first time, not to fight a price war and to price directly against Michelin. On the market side, NEV OE fitment pried open the pattern ossified in the fuel-vehicle era—Linglong topped China's OE sales, and Liquid Gold fitted BYD and NIO—China's tire industry took a dominant position in the OE market for the first time. On the manufacturing side, Guizhou Tyre won the first World Economic Forum "Lighthouse Factory" certification in China's tire industry, with smart manufacturing reshaping efficiency and quality. On the globalization side, from Southeast Asia to Mexico, Morocco, Egypt, and Serbia, China's tire industry used a second wave of globalization to punch through the tariff wall. On the capital side, ZC Rubber's listing and Doublestar's acquisition of Kumho, industry consolidation accelerating, resources concentrating toward the leaders. The combined force of these five lines is, bit by bit, rewriting the paradox of "first in output, bottom in profit."

But the road of the climb is still long, and very steep. The chasm of brand premium, the Achilles' heel of natural rubber, the persistent tariff siege, the internal competition of overcapacity, the long march of premiumization—seven hurdles lie ahead, each requiring a long-term, all-round crossing. China's tire industry's move from "big" to "strong" is not a leap that can be instantly completed by one or two technological breakthroughs, but a long process requiring continuous climbing in brand, supply chain, premiumization, and industry consolidation. Liquid Gold, NEV OE fitment, the Lighthouse Factory, building factories abroad—these are footholds along the climb, but from a "breakthrough at points" to a "change across the whole" still takes time and patience.

It is worth emphasizing that this climb of China's tire industry is a typical microcosm of "Chinese manufacturing" as a whole moving from "big" to "strong." Volume champion, weak profits, weak brand, beholden to the upstream—this "big but not strong" predicament is the shared portrait of Chinese manufacturing across many industries; and the breakthrough path China's tire industry is attempting (original technology, market opportunity, smart manufacturing, global layout, industry consolidation) holds reference value for every Chinese industry seeking to move from "big" to "strong." Tires are not the most high-end industry, but their climb, precisely because it is ordinary, is all the more universal—it shows how a vast and ordinary swath of Chinese manufacturing, by exerting itself simultaneously across technology, market, manufacturing, globalization, and capital, climbs inch by inch upstream on the value chain.

The things to watch in the coming years are already clear: whether Liquid Gold can go from a single company's technology to a technical benchmark for the industry, and whether it can build lasting brand trust; whether China's tire industry can fully seize the window period of NEV OE fitment and convert its OE share advantage into profit and brand; whether the multipolar overseas layout can punch through the persistent tariff siege and enlarge the profitability advantage of overseas bases; whether industry consolidation can clear out backward capacity and cultivate 3 to 5 truly world-class leaders; and that most fundamental question—whether the chasm of brand premium can be filled bit by bit. The answer to each question determines whether China's tire industry can truly transform from a "volume champion" into a "quality powerhouse."

The story of manufacturing is, ultimately, a story about patience and accumulation. China's tire industry took decades to become first in the world in output—this is the victory of "volume"; but to achieve the strength of "quality"—brand trusted, profit not at the bottom, a place in the high end—may take another few decades, and harder ones, because there is no shortcut to the climb of "quality," only the slow accumulation of one good product after another, one good reputation after another, one inch of brand trust after another. From "volume champion" to "quality climb," China's tire industry is walking this long and steep road. It has already proven it can make the most tires; what it must prove next is that it can make the best and most trusted tires. Every step of this road deserves continued attention. The Tianxia Gongchang Industry Research Institute will continue to track every key node of this industry.

Data Sources and Main References

A few notes on methodology and calibration: all data in this report come from public financial reports, government documents, industry-association statistics, and authoritative media coverage, cross-checked against multiple sources before writing; unverified rumors have been uniformly excluded; financial data are baselined to the 2025 annual reports and the latest 2026 quarterly reports, while industry, tariff, and policy data are updated through July 2026; where the same metric has multiple statistical calibrations (such as global market size, China's domestic market size, and output share), each is annotated in place in the text; performance data for products such as Liquid Gold clearly distinguish between the "company's official figures" and the "third-party testing figures." Main sources include:

• Tianxia Gongchang industrial platform—China factory database and industrial-chain data (covering 4.8 million Chinese manufacturing factories)
• Tire Business—global top 75 tire rankings
• China Rubber Industry Association—industry economic operation data, China Rubber Annual Conference information, "15th Five-Year Plan" goals
• General Administration of Customs—tire export volume and value data
• ZC Rubber, Sailun Tire, Linglong Tire, Sentury, Guizhou Tyre, Triangle Tire, Qingdao Doublestar, General Rubber, and others—2025 annual reports and announcements
• Michelin, Bridgestone, Goodyear, Continental—FY2025 annual reports and developments in China
• U.S. Department of Commerce, European Commission, U.S. Supreme Court, the White House—anti-dumping/countervailing duties, reciprocal tariffs, EUDR, and other trade and policy documents
• World Economic Forum (WEF)—"Lighthouse Factory" certification information
• Sunsirs, Guanyan Report, Huajing Industry Research Institute—natural rubber price and industry size data
• Civil Aviation Administration of China, Guilin Lanyu, and others—C919 aircraft tire certification information