Recently, Shandong Lutong Tire has completed two rounds of industrial and commercial capital increases. This move has attracted widespread attention in the tire industry.
The company’s registered capital increased from 100 million yuan to 1.026 billion yuan, and the equity structure was also adjusted simultaneously. This series of actions has become a typical case of mixed ownership reform of domestic private tire enterprises, and has fully paved the way for the mixed ownership reform and reorganization of Huaqin Group’s all-steel tire business.
This capital increase will be implemented in an orderly manner in two steps.
On June 10, the registered capital of the company was increased from 100 million yuan to 1.003 billion yuan; just two days later, it was raised again to 1.026 billion yuan on June 12, with a total new investment of 926 million yuan.
The original wholly-owned shareholder Kone Tire still maintains its position as the largest shareholder, with a shareholding ratio of 97.86%; at the same time, two new shareholders, Huaqin Group and Shandong Huaqin Rubber Technology, hold 1.75% and 0.39% of the shares respectively.
The company type was also changed simultaneously to other limited liability companies to adapt to the multi-shareholder structure.
Lutong Tire settled in Yanzhou Huaqin Industrial Park in March this year. It is wholly owned by Tongli Tire, a subsidiary of Huaqin, and is an exclusive all-steel tire operation platform spun off from the group.
The concentration of undertaking documents released by the Shanghai Market Supervision Bureau in April showed that Jining Urban Investment intends to acquire Huaqin’s all-steel tire business, and the entire transaction will be implemented in two steps.
The first step is to establish Lutong Tire to collect all related businesses, and then consolidate the company’s assets through capital increase; in the second step, Jining Urban Investment acquires 58% of Lutong’s equity, and Huaqin Group relies on Tongli Tire to hold the remaining 42% of the equity.
The two rounds of capital increases, new internal shareholders, and changes in corporate types are not simply expansion of capital.
This is actually the completion of the collection and arrangement of internal assets and equity in advance, and is the preparatory work for the reorganization of supporting assets.
After the capital increase is completed, the company has sufficient capital. On the one hand, it can effectively support the technological transformation and expansion of the tire production line, improve production efficiency and product quality; on the other hand, it can simplify the asset evaluation and financing approval process for subsequent equity acquisitions, and finally implement a cooperation model of state-owned assets holding and private equity participation.
Behind this capital increase is the extension of the “Huaqin Model” that is well known in the market.
Huaqin is based on private entities and follows the parallel route of international joint ventures and independent brands.
On the one hand, it joins hands with multinational tire companies to introduce advanced intelligent manufacturing technology to improve its own technical level; on the other hand, it incubates local brands such as Lutong to promote brand development.
At the same time, it simultaneously links local industrial clusters and connects state-owned resources, creating a development path of open cooperation, industrial agglomeration, and diversified superposition of capital.
Unlike most tire companies that have a single idea of expanding production, Huaqin first split its business to establish an independent operating entity, and then introduced diversified capital through capital increase.
With the help of state-owned assets platform, channels such as financing, industrial supporting facilities, and policy support have been broadened, effectively balancing the pressure of manufacturing investment and market expansion.
For the domestic tire industry, it is currently facing the dilemma of overcapacity and fierce low-end competition. The risk of solely relying on its own funds to expand production continues to rise.
Huaqin’s path of splitting sectors, increasing capital step by step, and synergizing state-owned assets provides a feasible plan for private enterprises to revitalize existing production capacity and deepen the development of independent brands.
This also shows that the transformation and upgrading of the tire industry requires the technological manufacturing advantages of private enterprises and the resource advantages of state-owned assets to complement each other, reduce the cost of industry transformation through a mixed ownership model, and promote the steady progress of domestic commercial vehicle tires towards high-end and large-scale production.
