Jean Marc FrancoisPresidentMichelin Asia Pacific Pte. Ld.
Good afternoon, ladies and gentlemen,
of course being the president of the car makers supplier, I will not
speak about the development of Chinese car industry and the worldwide
industry. I will concentrate on what's can be done towards very
competitive auto parts industry to sell better the car makers producing
in china.
Being familiar with the tire industry, I propose to give you a view
of the global tire market. And you see that this tire market is worldwide,
consolidated, very much concentrated and in fact 10 tire makers today
manage 80% of the global tire market.
Let's come back to china and what means to the Chinese tire markets.
It is already the biggest truck and bus tire market, maybe surprise, but
it is china that consumes 25% of all tires sold for truck and bus. It is
of course a fast growing market for passenger car tires and soon one of
the biggest worldwide passenger car tire market. As was mentioned by my
colleague, it is a fast changing and very competitive environment. And
we have seen complex laws, regulations and complex approval systems. This
comes to the questions what are the solutions to a competitive tire
industry in china? Of course there is recommendation for competitive raw
material supplier to a competitive and stable energy supply and of course
low manufacturing cost. But it is the case of all industry. By the way,
for us, the tire industry, it has demonstrated that china is really a
low-cost country compared to all other parts of the world, like east Europe
or like south east Asia. Specially the raw materials for tires, like oil
and steel, are much more expensive in china than elsewhere. But besides
these common points wherever all industry and government are looking into
to make china a competitive manufacturing base, we think that the tire
industry will be competitive worldwide if it can develop a competitive
technology. As it exposes to many of you, a tire is a round, black, thick
commodity and maybe not imagine what this small product can add to the
society. The competitive technology means to us that we need to apply into
tire industry the available global best practice and available
technologies and also china, being a new market, we can also maybe
implement first in china some very innovative solution.
to use fuel saving tires. You may not be aware that tires are a factor
in fuel consumption in your car. We are able, of course in our company,
have some of Michelin energy saving technology offering 5-10% fuel savings
for your car. It is the best practice used in US and Europe, but not yet
we developed in china. We are speaking of energy supply changes. There
is a way to use energy needs. We can also implement in china new innovation,
one example could be this one, it is the PAX system where you can run
without air pressure. It means you can puncture in the nights in the small
pressure, you can drive back almost without any problem.
In the truck and bus tires, we can also implement best practice. Radial
tire was developed by Michelin fifty years ago. For the truck and bus in
china, only one quarter of all tires today are radial. It is famous that
radial technology can reduce truck fuel consumption by 10%. You can
imagine how many trucks on the road, how much fuel you can save.
Also in the truck and bus industry, we can use a tire of many times
for truck with the retread technology. It is a way to give a tire several
lives. It is a way to save raw materials. Tire is produced from oil and
rubber, china is large in oil production, there is a way to produce large
bulk of tires in china. To do this, retread is close to not developed in
china. One from ten tires are retread, in usa, one tire is retread two
times. It is the gap you have in china simply to save a lot of raw materials.
And another solution in truck tires is a brand-new innovation we just
launched a few years ago in usa took place on the truck and bus to drive
by one tire. We use one tire to replace two tires. There, again, you save
fuel and you save raw materials.
I want to give this quick example. When we speak of technology of
implementing the best practice, we do not speak of sky-rocketing science.
It is the tehonlogy implemented in Europe and the usa since 20, 30, 40
years, let's use it in China to save fuel, to save raw material and to
improve environment.
Of course to implement this technology, the industry needs strong
research and develop investment. And also we need the right norms and
regulations to support this new technology. Let's focus on the research
and development of investment. Clearly we need to invest a lot in hardware,
I mean test truck and also in software to develop the right tires. And
of course, it is only possible if you have the means and resources, the
people and the money to invest in the very very expensive assets.
If we look today to the tire industry in china, I see today dozens
of tire makers. And you have hundreds of small tire makers. Compared with
others, my next slide will show you that ten companies worldwide today
are managing 80% of the world market. And clearly for me, the technology
in tire industry in china, we need consolidation to allow tire makers to
invest in this new solution.
We have the means to develop technology but of course, to implement
the solutions of the market we need help from the government. Clearly,
competitive techonolgy sometimes need support on the right
non-regulations designed by the government with the support in the
industry. It is clear in all markets, there is a resistance to change.
There is always a need for new products for any new soltion. And of course,
new technology means sometimes a premium price. It may have a higher price
at the beginning. It is clear that we need right norm and regulation to
aid end consumers' perception of the technology benefits. Let's work
closely together between the governments, utilities and the industry to
move towards more bright future. Look at the truck today in china, many
of them are very old-fashioned technology, need a lot of fuel. We need
to move towards more bright future, if it can done, of course the
governments, the truck industry and the auto parts industry to work
closely together.
Let's work together with the industry and authorities to develop
better norms to save raw materials. I mentioned before the technology to
save raw materials.
Let's work together to save fuel. The tire can save 5-10% to your
today's needs. And let's work together to improve saftety and security
in the road. All tires are round and black. But I can tell you the braking
distance of a tire can be completely different, can be sometimes 10 meters,
10 meters can be the life of a person.
We really think that we need in china the cooperation between the
government the authorities and the industry to force the implementation
of new technology. The technologies are variable. Car makers and many
other present here gathered in shanghai in 2004 exchanged memorandum which
allows all car makers to present clean and safer vehicle. There are 150
vehicles that are based on diesel, based on hybrid, based on fuel cell
and based on battery and pollutant control engine, which are ready to go
to the street.
Let's work together with the government to ease development of this
techonology.
We really think that a competitive tire industry will mean a china
with cleaner city, fresh air. We think a competitive tire industry is
needed for a sustainable market.
I thank for your attention.