BEIJING—Tire makers in China aren´t worried about anti-monopoly legislation now being debated in China´s legislature because the market is too fragmented, said Eric Jugier, chairman of Michelin (China) Investment Co.
"There are more than 300 major tire makers in China," Jugier said. "So we don´t think any anti-monopoly legislature will have an impact on the tire industry because there is so much competition."
In any case, the law is still in draft form, with many gaps to be filled, observers said.
"The key point is how the law will define monopolization," said Xiong Weihua, chief secretary of the China Rubber Industry.
Victor Gu, a senior associate in the Shanghai, China, office of law firm Boss & Young, said, "Key terms, like dominant market share, are not defined yet. And how do you define a market? Is it for a specific product or for the category?"
For example, Michelin holds around 24 percent of the passenger replacement market. But the tire market also includes commercial replacement tires, passenger and commercial wholesale tires and countless other subdivisions.
Any agreement on such definitions will be hard to arrive at because China´s Ministry of Commerce, State Administration of Industry and Commerce, and National Development and Reform Commission all are arguing over who has the main jurisdiction over the law, Gu said.
Though it was aimed initially at preventing foreign dominance, that has changed as Chinese companies also have taken significant market share in some industries, Gu said. "Now, Beijing is looking into the possibility that some domestic companies may have monopoly power in the future," he said.
Take Aeolus Tire Co. Ltd., in north China´s Henan province. It produces 4 million tires a year for agriculture and construction trucks. Aeolus holds more than 20 percent of the construction truck tire market and also exports, said Li Hong, investor relations manager for Aeolus.
He hasn´t studied the specifics of the anti-monopoly law, but said foreign tire makers are not a special threat.
"Since China entered (the World Trade Organization), the market here has become a world market," Li said. "Everyone has his opportunity, both the Chinese tire companies and the overseas companies like Michelin."
Anti-monopoly legislation likely will get passed eventually in China, though draft laws can take half a dozen years to reach a final form.
Jugier is sanguine about the prospect. "We find it logical, part of the transition to a market economy," he said. "We will respect and comply with the law."