EU green law challenges Chinese firms

With the green tire labelling law coming into effect in Europe on Thursday, exporters in China are exposed to substantial challenges. This is because under the new law, half of the tires exported to the EU from China are running the risk of being disqualified.

The labels have seven levels ranging from A to G. But half of Chinese tires exported still cannot meet even the lowest G-level standard.

Professor Qiang Yongchang with Fudan University said, "This is a big influence on our domestic companies since our R&D ability and techniques in tire production are lagging behind. That's why our products sell more in the medium and low-end market, and less in the high-end market."

An industry insider who has worked in the automotive industry for more than 15 years, however, says the label law will not bring devastating impacts to Chinese manufacturers, as some of them have already upgraded their techniques.

Chen Wenkai, president of Gasgoo.com, said, "If there is really a requirement in such important market, Chinese companies can adapt to that quickly. I don't think we need to worry about it too much. Just so it's not a tariff barrier or a quota system, just a matter of improving techniques and qualities, Chinese companies can make the improvements required."

Chen says it may take three to four years for Chinese manufacturers to adapt to the law, which means it could have a short-term impact for some. Currently, China produces one-fourth of the world's tires. Output has been increasing 15% a year, with export volumes growing 40% per year.