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China has become the world's largest tire producer, with its global market share steadily rising each year. The Chinese tire market has been growing at a rate of over 20% annually, drawing significant attention from multinational corporations. These companies have intensified their presence in China by investing heavily in factory construction, localized research and development, and expanding their franchise networks, which have led to substantial profits. However, this rapid expansion has also brought about serious issues such as resource waste and environmental pollution.
The competition among multinational tire companies has become increasingly fierce, especially in the retail sector, where the latter’s sales account for two-thirds of all tire sales. A company’s market share in the retail segment largely depends on its network coverage, prompting these firms to accelerate their expansion efforts.
Goodyear was one of the first multinational tire companies to enter the Chinese market. Recently, it has shifted its strategy in China toward sales channels, sales models, and after-sales services. Within six months, it opened 300 retail franchise stores, averaging two new stores per day.
Michelin has invested over $400 million in China to capture a larger share of the market. Today, it operates factories in Shenyang and Shanghai, with more than 300 dealers and an annual growth of 100 new dealers.
Bridgestone has also significantly increased its investment in China, becoming the largest tire manufacturer there. It recently invested RMB 5 billion in a factory in Huizhou, causing considerable industry shock. Additionally, Bridgestone has established several tire factories and R&D centers in Jiangsu, including an 839,000-square-meter testing ground in Yixing.
Hankook considers China the most important tire market globally and has set up factories in Jiaxing and Jiangsu. It currently holds a leading position in the Chinese car tire market and aims to open 300 franchise stores within five years. It has also launched a full-vehicle production line, expected to produce 60,000 tires annually.
Environmental pollution and resource waste have become major concerns as multinational tire companies expand rapidly in China. Some companies failed to implement the "three simultaneous" system during initial construction, neglecting to build sewage treatment facilities and illegally discharging wastewater. These violations have been on the rise.
In January 2007, Michelin’s subsidiary in China was penalized by the State Environmental Protection Agency for multiple environmental violations, including uncontrolled emissions and noise pollution. Despite being ordered to rectify the issues, Michelin delayed its response, leading to further penalties.
Industry experts point out that tire production involves numerous chemical intermediates, making strict controls essential to prevent severe environmental damage. The pollution incidents involving Michelin are closely related to these factors.
While some multinational companies cite cost pressures as a reason for environmental negligence, many have managed to raise product prices—such as Bridgestone, Michelin, and Goodyear, which increased prices by 3% to 5% in 2007. These price hikes have not only offset rising costs but also boosted profits, highlighting a lack of environmental responsibility and an overemphasis on profit.
Beyond environmental issues, the continuous expansion of multinational tire companies in China is draining resources such as rubber, carbon black, land, and human capital. The Chinese tire market is now mature, yet these companies continue to expand without sufficient planning.
Multinational corporations often apply double standards when it comes to environmental protection. While they maintain high environmental standards in their home countries, they sometimes relax these requirements in developing nations like China. This discrepancy has raised concerns among environmental experts.
To address this issue, experts suggest strengthening legal frameworks, ensuring equal treatment of domestic and foreign enterprises, and increasing supervision and penalties for illegal operations. Closing down severely non-compliant foreign-funded companies and stopping local governments’ preferential treatment of multinationals would also be crucial steps.