A "fusion" approach to conquer the truck market
What happens if Chinese manufacturing efficiency is combined with Italian technological expertise? In a nutshell, this is the story of Aeolus Tires (listed on the China Stock Exchange whose main shareholder is China National Rubber & Tire Corporation). Four years after signing a truck tire manufacturing licence agreement with Pirelli, the Asian manufacturer is now set to reap the benefits of this qualitative leap also on the European market.
Combine Chinese manufacturing excellence, generally expressed through efficient production models and synergies, and Italian technological expertise, committed to process optimization and the creation of high quality products, and what you get is the beginning of the most recent chapter in the history of Aeolus Tires, one of world’s leading manufacturers of commercial, industrial, agricultural and earthmoving tires.
Founded in 1965 as Henan Tire in Jiaozuo, in the province of Henan, China, where its headquarters and research and development centre are still located, Aeolus (listed on the Shanghai Stock Exchange) has a conspicuous commercial presence in almost 140 countries, including China, of course, as well as the United States and several EU member states. Under the Aeolus and Windpower brands tires are manufactured serving a number of applications: heavy-duty transport, earthmoving and agriculture.
The majority shareholder in Aeolus Tires is China National Rubber & Tire Corporation (CNRC), part of the ChemChina group (China National Chemical Corporation) which, back in 2015 launched a takeover bid to acquire control of Pirelli. On June 28th, 2016 Pirelli Tire signed with Aeolus a licensing agreement that included know-how and technical assistance aimed at the production of Industrial tires, valid until 2030 with automatic renewals every two years, under which the licensee company may develop, produce and sell industrial tires, with the right to sub-licence to its subsidiaries. Furthermore, Pirelli has also, and for the entire duration of the contract, undertaken to provide technical assistance to Aeolus and its subsidiaries (source: Pirelli Annual Report 2017). At the end of 2016, Aeolus acquired 10% of the share capital of Prometeon Tire Group (formerly Pirelli Industrial). "The signing of the truck manufacturing licence agreement with Pirelli has enabled us to significantly improve the performance and quality of our tires - explains Mr. Fu, Chief Commercial Officer Overseas Business of Aeolus Tires -. Thanks to the large investments made over the last four years, our tires have greatly improved in areas such as reliability and even wear, to the point that previously low irregular wear values have been virtually eliminated”. The results of this technological and qualitative evolution are visible in some of the leading products in the Aeolus’ latest tire range. Among these we find the new NEO line, showcased at Autopromotec 2019, the biennial international exhibition of automotive equipment and aftermarket, which was held in Bologna from the 22nd to 26th May this year: "AllRoads" (offered in sizes 285/70 R 19.5 NEO AllRoads D, 315/70 R 22.5 NEO AllRoads D+ and 315/70 R 22.5 Neo AllRoads S, supported by the winter 315/70 R 22.5 NEO Winter D), accounts, on its own, for 75% of the brand’s sales in Europe; in addition, "Construct" (exhibited in size 13 R 22.5 Neo Construct G version), "Urban" and "Fuel" were also on display during the trade fair.
Following the latest technological developments and in compliance with the strict requirements and preferences of European users, the NEO series makes full use of Pirelli’s SATT technology (Spiral Advanced Technology for Truck), which guarantees not only a 25% improvement in mileage and a longer product life, but also greater resistance to wear and retreadability parameters of the original casings equal to those expressed by equivalent products by some of world’s top manufacturers. "Thanks to the advanced technology used in the production of our tires, we offer one of the lowest cost per kilometre ratios in Europe - says our speaker -. We are firmly convinced that we can offer, commercial and industrial vehicle fleets, our main target, a very competitive product. It is no coincidence that our motto is 'Winning by Quality'”.
Several customers in the “old continent” have already been lured by Aeolus Tires' business proposal, as well as the overall quality of the tires, to the point that, still according to Mr. Fu, the brand can now successfully withstand the competition, even in the face of the anti-dumping excise duties recently imposed on truck tires imported into the EU from the People's Republic of China, following Implementing Regulation n° 2018/1579 introduced last October 18 by the European Commission. "Numbers in hand, the European market is clearly appreciating our products and understanding the added value that a company like ours is able to transfer to the customer, thanks to the territorial support of our partners”.
At present, Aeolus Tires' European distribution strategy is centred on maximum expansion, to be achieved through an extensive network of specialised dealers. "At the moment, our idea is to penetrate the different European markets getting closer and closer to the multitude of commercial fleets operating in the continent, with a selective presence - explains the chief commercial officer overseas business of Aeolus Tires -. We have therefore chosen, for each country, a reference partner, with whom we have signed a sales contract". Intergomma, a Tuscany-based company founded in 1967 and specialized in selling and distributing OEM tires for the agricultural, industrial and earthmoving sectors, represents the brand in Italy.
"The choice of each local commercial partner was influenced by a number of crucial conditions, such as proven expertise, widespread presence in the reference market, not to mention sharing our same "philosophy" in approaching the market. It is absolutely essential that the network shares our "desire" to serve the fleets with high level products and services. In return, the support offered by the parent company is nothing short of noteworthy: "we put our know-how at the complete disposal of our partners. Our engineers support our distributors, tire dealers and even customers with advanced training. We also help the network in terms of marketing".
The real challenge for Aeolus Tires, as for other Asian brands, is to obtain due recognition of the value and quality contents of its products on the European market, and particularly in Italy: "Our desire is to make our offers and proposals dependable and trustworthy, and to do this we need to produce concrete results - says Mr. Fu - We are convinced that our competitiveness depends on the continuous improvement of our products, which translates into tangible benefits for the customer, such as cost efficiency, reliability and durability. If we can get all this recognised by the market, and in many European countries this is already the case, the added value can offset the 'duties' established by anti-dumping regulations, maintaining, at the same time, a competitive selling price. For Aeolus this is a fundamental objective”.