Car tires

	The MA-Z1 model from Cheng Shin of Taiwan features a tread compound designed for drifting and racing.

The US and Europe continue to be the main markets, but suppliers are also boosting shipments to alternative destinations.

Car tire exports on both sides of the Taiwan Strait remain on the upswing despite recent concerns over quality and safety in the US, one of the line's key markets.

Based on estimates, mainland China's shipments between January and August 2007 have already replicated the 20 percent annual growth rate the industry has registered over the past three years. In 2006, total exports reached about $4.7 billion.

The US, together with Europe, continues to be the primary destination of mainland-made car tires. Products sent to these markets represent 57 percent of all exports.

Projections are generally upbeat, although some small suppliers had to scale down shipments to the US and Europe due to quality and safety issues.

These companies are now targeting Asia and the Middle East, considered the markets with the biggest potential for growth in the next six to 12 months. At present, these regions absorb one-quarter of the mainland's exports.

In addition, some suppliers are shifting to other alternatives, including South Africa and South America.

The industry's strong showing, combined with steady demand, is attracting new suppliers to the line. In the past year, the number of car tire makers in the mainland has grown 28 percent to about 600. Furthermore, foreign manufacturers such as Michelin and Kumho are building offshore factories there.

In contrast, Taiwan is home to only five suppliers, although all have large operations and are publicly listed.

These include Cheng Shin Rubber Ind. Co. Ltd, which s ranked among the top 15 makers of car tires in the world. Cheng Shin has 11 factories in the island, and offshore in the mainland and Thailand. The company invests more than 2 percent of annual revenue in R&D.

Kenda Rubber Industrial Co. Ltd has been producing tires since 1962. The company expanded into car tires in March 2007 with the establishment of a joint-venture factory with US-based Cooper.

Taiwan companies in this report said the effects of the recent tire recall in the US have been negligible as far as outbound shipments from the island are concerned. In fact, the US continues to be the primary driver of export revenue, followed by Europe.

For Federal Corp., the two markets account for 67 percent of outbound shipments. The company exports between 85 and 90 percent of output totaling 7.2 to 7.6 million pieces annually.

According to customs statistics, Taiwan's car tires industry earned more than $258 million from exports in the eight months ending August 2007. This is a 17 percent increase from shipments in the same period in 2006.

	Taiwan-based Federal offers the Couragia SU2 model with a sloped radius gradient tread pattern that prevents uneven wear.

Spurred by strong demand, suppliers, particularly those in the mainland, will continue to send a significant portion of their shipments to the US. This comes amid the implementation of the FMVSS 139 in the US last June.

The new standard has a set of requirements for several performance parameters that is different from the previously enforced FMVSS 119. High-speed endurance testing under FMVSS 139, for instance, is carried out for 30 minutes at 140, 150 and 160kph, compared with 121, 129 and 137kph for the latter. Long-term durability, on the other hand, is tested at 4,080 kilometers instead of 2,720 kilometers.

To ensure compliance with FMVSS 139, makers in the mainland are boosting investment in design enhancements and upgrades in the production process. Moreover, they are implementing QC measures that monitor parameters specified by the standard.

Aside from following certain industry requirements, suppliers in the mainland test products according to customers' specifications. Fullrun Tyre Corp. Ltd, Kings Tire Group Tianjin Normandy Rubber Co. Ltd and Shandong Linglong Rubber Co. Ltd are among the makers in this report doing so. In addition, these companies have obtained ECE and DOT approval.

Models from Shandong Linglong, one of the top three car tire manufacturers in the mainland, also conform to Inmetro. Products from Fullrun likewise follow this Brazil standard, and the NOM of Mexico.

Comar Tyre & Rubber (China) Co. Ltd offers models bearing DOT approval.

Suppliers on both sides of the strait will be focusing R&D efforts on improving product performance.

In line with this endeavor, mainland-based Shanghai Tianyee Tyre Co. Ltd has developed self-sealing car tires. These products feature a 2 to 4mm inner chemical layer that can plug punctures up to 8mm in diameter. Models can be used continuously for 200 kilometers.

Federal will be modifying the construction of tires set for release in the next 12 months. The company has plans of changing the rubber formulation or tread pattern, and introducing a gum strip.