In 2026

Haiyang Technology Chairman Lu Xincai:

Bolstering Upstream Core Links, Leading Tire "Reinforcement Materials" via Intelligent Manufacturing

By Meng Peijia, China Securities Journal 

A bustling scene unfolds at Haiyang Technology’s Binjiang Plant, where production runs in parallel with construction. A new R&D building has just topped out, new capacity for polyester cord fabric is being steadily commissioned, and the nylon 6 chip production lines operate nonstop. Among these, the highly anticipated 80,000-ton annual polyester high-modulus low-shrinkage industrial yarn project stands out.

Not long ago, Haiyang Technology announced a revision to its previously planned fundraising project: the first phase of the 100,000-ton annual modified polymer new materials project would be replaced with an 80,000-ton annual polyester high-modulus low-shrinkage industrial yarn project. What strategic considerations underpin this shift in resource allocation? “This is a prudent reallocation of company resources based on changes in the industry landscape and our business strengths,” Lu Xincai, Chairman of Haiyang Technology, said in a recent exclusive interview. 

Extending the Industrial Chain Upstream

In recent years, domestic passenger vehicle sales have maintained steady growth, with the explosive rise of new energy vehicles directly driving surging demand for semi-steel radial tires and their core reinforcement material—polyester cord fabric.

To capture this growing market, Haiyang Technology is ramping up construction of an 80,000-ton annual high-performance intelligent polyester cord fabric project, building on its fully operational 45,000-ton annual intelligent polyester cord fabric line. Once all capacity comes online, the company’s consumption of polyester high-modulus low-shrinkage industrial yarn—the key raw material—will surge significantly.

“In the past, we relied entirely on external suppliers for the industrial yarn needed for polyester cord fabric production. As our procurement volume expanded sharply, tight supply and persistently high prices for industrial yarn have increasingly eroded profit margins,” Lu Xincai frankly stated. The company previously sought to build an industrial ecosystem where “suppliers produce yarn, and Haiyang manufactures fabric,” but external suppliers struggled to meet demand during peak industry periods and showed little willingness to expand capacity. “This approach was simply too slow to address our urgent needs.”

Accordingly, Haiyang Technology made the decisive move to redirect fundraising proceeds to the 80,000-ton polyester high-modulus low-shrinkage industrial yarn project. “The plant for this project enjoys convenient transportation and smooth procurement links with upstream polyester chip suppliers. Once operational, our industrial yarn costs will drop substantially, directly boosting profitability,” Lu Xincai explained. 

Beyond direct financial benefits, in-house industrial yarn production serves as a critical “entry ticket” to the core supply chains of top global tire brands. Lu Xincai noted that multinational tire giants such as Michelin and Goodyear impose extremely strict requirements for full-process traceability and supply chain stability during supplier qualification audits. Enterprises lacking upstream raw material self-sufficiency often fail to become core suppliers. “By moving upstream, we aim to secure control over the industrial chain’s core links, directly enhancing our product competitiveness and laying a solid foundation for deepening our presence in high-end overseas supporting markets.” 

Adhering to Steady and Prudent Development

The adjustment to the original fundraising project does not mean Haiyang Technology is abandoning its modified polymer materials business. Instead, the business will continue under its controlling subsidiary, Huaheng New Materials, with expansion shifted to more stable “organic growth” using the subsidiary’s own funds.

Lu Xincai shared that Huaheng New Materials has deep expertise in modified materials and has in recent years focused on developing automotive engineering plastics, successfully qualifying as a supplier for several leading automakers. “The low-end segment of the modified materials industry suffers from overcapacity, while the high-end segment boasts robust demand and strong profitability—but it requires an extremely long cultivation period. A large upfront investment in capacity expansion would lead to heavy depreciation pressure if sales lag,” Lu Xincai said. Based on this assessment, the company decided to let the experienced Huaheng team expand the business gradually, reallocating resources to more pressing priorities.

This keen market insight and agile decision-making are also evident in Haiyang Technology’s nylon chip business.

In recent years, upstream refining enterprises have extended their industrial chains directly into nylon chip production, leveraging vertical integration to drive significant price cuts. Lu Xincai acknowledged that Haiyang Technology lacks a cost advantage in this segment, and competing on scale for conventional chips would be “using our weaknesses against others’ strengths.” By resisting the urge to expand capacity during previous industry booms, the company successfully navigated the industry cycle downturn.

Today, Haiyang Technology has repositioned its nylon chip business to focus on high-end, differentiated products. “We will no longer increase output of ordinary chips; our focus is on high-value-added products,” Lu Xincai emphasized. The company has developed 17 new products certified as provincial-level innovations, with several already in or nearing mass production. Recently, the Haiyang Technology-Sichuan University Polyamide R&D Center was inaugurated, marking deepened collaboration in advanced material synthesis, green manufacturing and differentiated R&D to cultivate high-quality industrial projects. 

Leading the Industry Through Intelligent Manufacturing

While exercising restraint in conventional chips (where it lacks integration advantages), Haiyang Technology has boldly seized opportunities in polyester cord fabric, where it holds leading intelligent manufacturing capabilities.

Inside Haiyang Technology’s intelligent cord fabric workshop, raw yarn is rapidly twisted into threads, with finished spools automatically conveyed to the next process. Hundreds of thread spools feed into a single loom, weaving dense, uniform fabric as needles move at high speed. After dipping and bonding, the fabric becomes finished cord fabric rolls.

The cord fabric industry has long been labeled a traditional manufacturing sector plagued by high labor demand, high energy consumption, intense labor intensity and difficult flue gas treatment—key pain points that prevent small enterprises from making large-scale investments. Years ago, Haiyang Technology took the lead in transforming the industry toward intelligence and green manufacturing, developing and building a fully intelligent production line for cord fabric twisting, weaving and dipping. This has drastically reduced labor needs and energy consumption, while advanced flue gas treatment technology ensures emissions meet strict standards, completely removing barriers to capacity expansion.

“With the completion of the industrial yarn project, the integration and intelligence of our polyester cord fabric production will reach new heights,” Lu Xincai said. Once all planned capacity is fully operational, the company will emerge as a domestic leader in polyester cord fabric.

“Our vision is to lead the industry and achieve sustainable growth. This requires not only scale but also full-process intelligence and R&D innovation to win market trust,” Lu Xincai said. As a veteran enterprise with over 50 years in the cord fabric industry, Haiyang Technology maintains the spirit of “striving, always young” and will continue advancing strongly in polyester cord fabric and nylon materials.

(Reprinted from China Securities Journal)