On April 1, Zhongce Rubber (SH603049, stock price 49.55 yuan, market value 43.331 billion yuan) announced that it plans to invest 1.041 billion yuan to build the “Zhongce Vietnam Tire Production Base Project (Phase I)”.
This project was implemented by its wholly-owned subsidiary Haichao Trading Co., Ltd. in Vietnam. It will have an annual output of 5 million semi-steel radial tires after reaching capacity.
This is another Chinese tire giant deploying production capacity in Vietnam, following companies such as Sailun Tire and Guizhou Tire.
The new subsidiary in Vietnam will be 100% directly or indirectly held by Zhongce Rubber.
The project is located in Ho Chi Minh City, Vietnam. It is expected to start construction on July 1, 2026, and the construction period will be 12 months.
In order to meet the construction capital needs of the investment project, the listed company plans to increase its investment in Haichao Trading, a wholly-owned subsidiary in Hong Kong, by no more than US$120 million (equivalent to approximately RMB 825 million).
Currently, the main business of Haichao Trading is the procurement of raw materials and the sale of finished products. Last year, it made a profit of 714,700 yuan, and its total assets as of the end of last year were 2.013 billion yuan.
From the perspective of financial indicators, the project is expected to have an investment return rate of 17.51%. The target market is mainly for the markets of member countries of the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)” and European and other regional markets.
At present, the investment has been reviewed by the company’s board of directors (March 31, 2026) and has not met the shareholders’ meeting review standards. It will still require approval or filing by relevant departments in China and Vietnam.
Zhongce Rubber stated in the announcement that this investment aims to further expand the company’s production and sales scale, improve the company’s overseas production capacity layout, and enhance the company’s competitiveness in overseas markets.
Zhongce Rubber announced: “Vietnam has become a major tire manufacturing and exporting country in the world.” The achievement of this status is closely related to the intensive investment of Chinese tire companies.
According to Donghai Securities tire industry in-depth report data, the United States will import 56.26 million tires, 22.76 million tires, and 7.3 million tires from Thailand, Vietnam, and Cambodia respectively in 2023. The annual production capacity of Chinese tire companies in the three countries is 71 million tires, 30.75 million tires, and 13.05 million tires respectively (only public data), and production capacity is increasing rapidly.
The announcement shows that the rise of Vietnam’s tire manufacturing industry is mainly due to multiple factors.
First of all, it has abundant natural rubber supply resources and has certain advantages in electricity costs, labor costs, shipping costs, etc., which helps companies maintain competitive tire manufacturing costs.
In addition, Vietnam has obvious tire export tariff advantages for some markets.
Chinese tire companies have already begun their deployment in Vietnam.
Sailun Tire As the earliest Chinese tire company to build factories overseas, Sailun (Vietnam) Co., Ltd. was registered and established in March 2012.
Currently, Sailun Tire has established mature overseas production bases in Vietnam and Cambodia.
In addition to tire manufacturing companies, tire equipment companies are also following the pace of customers and entering the Vietnamese market.
Softhold Holdings announced on June 12, 2024 that it planned to invest and build factories in Vietnam and Cambodia.
A wholly-owned subsidiary of Ruankong Co., Ltd. plans to invest in the construction of Ruankong United Technology (Vietnam) Co., Ltd. in Vietnam, with a total investment of approximately 107 million yuan.
However, the rapid development of Vietnam’s tire industry also faces some challenges.
According to a special report on the tire industry by Cinda Securities, tire companies’ overseas bases face environmental compliance risks. For example, a domestic tire company’s Thailand factory was temporarily suspended due to waste issues.
In addition, the intensification of international trade frictions may also affect export trade.
