Hello everyone, Linglong Tire had previously finalized the plan to build a tire factory in Brazil with a total investment of approximately 8.71 billion yuan. However, on May 27, it officially announced the termination of all cooperation negotiations. This news triggered heated discussions throughout the tire industry.
The core reason for the termination of this project was that the Chinese and local Brazilian partners could not reach consensus on core cooperation terms such as shareholding ratio and management rights. This overseas investment that was suspended midway reflected a major change in the domestic manufacturing overseas model.
As the economic leader of South America, Brazil has an automobile industry with more than 70 years of experience. Leading car companies such as Volkswagen and General Motors have gathered together to establish a presence. There is a huge gap in local tire demand and a solid blue ocean market.
However, since 2008, Brazil has imposed anti-dumping duties on imported tires from China. In July 2025, it was finalized to impose high tariffs for five years. A review process will also be launched in 2026. The review alone will take 3-6 months.
If you want to enter the Brazilian market through exports, this road has been completely blocked. If you want to win the South American market, the only way out is to build a local factory.
In 2025, Linglong decisively decided to build a factory in Paraná, Brazil, with an annual output of 14.7 million sets of high-performance tires, and at the same time build supporting photovoltaic power stations.
After completion, the products will be available in 13 South American countries, and it should have a bright future.
According to the initial cooperation agreement, Linglong assumed the entire investment of 8.7 billion and provided core production technology, a full set of operational management and mature global sales channels. The Brazilian partner only needed to provide local sales and sales network, entering the business at almost zero cost. The two parties agreed that the Chinese party would hold an absolute controlling share of 70%.
But just before the project was about to be signed, the partners suddenly turned against each other and demanded a substantial increase in shareholding ratio, and even wanted to seize the company’s management rights.
To put it bluntly: China provides money and technology to shoulder all risks, while Brazil does nothing. It not only wants to share a lot of money but also has the final say.
This is not cooperation, it is clearly robbery.
Faced with such unreasonable demands, Linglong’s board of directors unanimously voted to terminate the project on May 27.
What’s even more shocking is that the project is still in the negotiation stage. Construction has not started, equipment has not been purchased, and not even a penny has been actually invested. At most, a little negotiation time and labor costs have been wasted, and we have escaped with no losses at all.
Compared with the past troubles of Chinese companies going overseas, Linglong’s stop loss operation can be called a textbook level operation.
In the past, many Chinese companies’ overseas investments have compromised cooperation terms in the early stage and continued to fall into operational disputes later on: some overseas projects had to compromise on equity control conditions in the early stage of implementation, but in the later stage, local partners continued to make various unreasonable demands, resulting in a long rights protection period and huge comprehensive losses.
Previously, BYD’s Brazilian factory also encountered a temporary inspection by the local labor department due to a misunderstanding about outsourced labor certificate management, and spent a lot of communication time to clarify the misunderstanding.
Once you compromise, you will only be manipulated at all levels and fall into a bottomless pit of oppression.
Linglong decisively withdrew its capital and was admirably sober.
Many people are wondering, Linglong really doesn’t feel bad for throwing away the 8.7 billion big project at a drop of a hat?
The answer is that it doesn’t hurt at all.
There are many domestic mature production bases that are stably supplying the local market; two overseas bases in Thailand and Serbia have achieved stable mass production operations.
The Thai factory is adjacent to the world’s largest rubber production area, and the cost of raw materials is more than 10% lower than in China.
Its products not only supply the Southeast Asian market, but also radiate to Australia and the Middle East. With its cost advantage, it has steadily won regional orders.
Serbia is a candidate country for the European Union. The tires it produces can enter the EU market directly without tariffs, perfectly avoiding European and American trade barriers. Moreover, China and Serbia have a good atmosphere for cooperation and a reliable business environment.
Linglong has already planned to invest 4.6 billion to expand its Serbian base. Compared with being frustrated in Brazil, investing funds in Serbia or upgrading domestic factories is safer, more stable and has a higher return rate.
This divestment incident is also a landmark signal for my country’s manufacturing companies to go overseas and enter deep water areas.
In the past, when we went overseas, we always wanted to compromise and endure unreasonable conditions in order to open up the market, which led many countries to form a fixed routine: first set up trade barriers to force Chinese companies to build local factories, and then rely on local advantages to demand equity and seize control, using the barriers as a tool to manipulate us.
But today is different from the past. Chinese companies have money, technology, and mature globalization experience. They are willing to cooperate sincerely for mutual benefit and win-win results, but they will never accept unequal binding and oppression.
Although the overseas market is huge, it is by no means limited to you.
“Chinese companies can make money when going overseas, but they will never suffer losses; they can cooperate, but they will never suffer.” Linglong’s decisive decision to stop losses is not to show weakness, but to tell the world with actions: Made in China is no longer at the mercy of others.
