Hankook Tire Launches New Chinese R&D Centre

Hankook Tire is stepping up efforts to defend its position in the Chinese tyre market by investing in a new local R&D centre, extending production facilities and expanding its sales network. The company announced detailed plans for China its Jiaxing plant on 29 May.

Hankook Tire recently completed the expansion of its production facilities in Jiaxing, enhancing annual capacity to 2.5 million units. As the main production base for the company in China, the Jiaxing plant will undergo further expansion work in the latter half of this year. Once completed by the end of 2006, Hankook Tire will secure total production capacity of 28 million units per year from its Jiaxing and Jiangsu plants in China.

The plans are in response to increasing competition in the Chinese market, with recent moves by global tyre makers including Bridgestone and Michelin to dramatically increase their local manufacturing facilities.

The newly expanded Jiaxing plant 3 is characterised by its horizontal facility technology, a change from the previous vertically-inclined processing arrangement. Head of Hankook Tire Jiaxing plant Park Joong-hwa said: “This facility technology is not only advantageous in terms of logistics because it minimizes the distance between each process, but it will also be very helpful in reducing the costs and schedules of future expansion works.” Park added: “The fully automated facility also ensures uniform quality and drastically reduced manufacturing costs.”

Products manufactured at the expanded Jiaxing plant are to be supplied to local Chinese branches of automakers such as GM and the overseas market. The list of 30 local customers include Shanghai GM, FAW Volkswagen, Nanjing Fiat and Beijing Hyundai. Hankook Tire reports that it is currently the number one OE supplier in China.

The Chinese arm of Hankook Tire also recently opened a new R&D centre. The centre is located on a 43,000 square metre plot near the Jiaxing plant. The company plans to use the centre to develop products optimised for the Chinese market and provide OE to global automakers inside China. Employing 90 employees, the centre brought in some 70 varieties of the latest testing equipment last week including tyre test machines, spectrographs, and fatigue test machines.

Hankook Tire reports that it controlled 25.2 per cent of the Chinese passenger car tyre market as of the end of last year. With plans to further expand facilities, the company aims to increase its market share in the overall tyre market as well. In addition, by extending its retail distribution channels for high performance tyres, the company says it will aggressively pursue new distribution channels into the Chinese west.

Competition is tough inside the Chinese market with all the major players including Michelin, Bridgestone and Goodyear having a local presence.

In 2005 Hankook’s Chinese operations recorded $560 million dollars in sales and 78 million dollars in operating profit.