Kumho Consolidating in China

(Rubber Asia/sg) The aggressive forays of Korean tyre major Kumho into China, carried out with a view to establishing the country as its major overseas production base, will go a long way towards realising the company’s vision to emerge as the world’s 5th largest tyre maker by 2015. The booming Chinese tyre market is to become the most important overseas production base for the Kumho Tire Company, if its ongoing activities, the latest being the recent launch of its US$220 million wholly-owned radial truck/bus project in the Nanjing Economic and Technical Development Zone, are any indication. This is the Korean’s fourth major Chinese project, and the company hopes to ultimately produce 1.4 million tyres there annually. The groundbreaking ceremony for the proposed plant was held in May, and the first phase of the project, with an installed capacity of 300,000 tyres per year, is expected to go on stream by June 2008.

Great strides

It was in 1995 that the Kumho Tire Company built its first joint venture tyre plant in Nanjing, named Kumho Tyre (Nanjing) Co., Ltd. The project’s second-phase has also been commissioned, taking the plant’s total passenger radial tyre production capacity to 12 million units a year. In July 2006, the second facility, Kumho Tyre (Tianjin) Co., Ltd. went on stream with an investment of $210 million and a production capacity of 5.25 million passenger car radials. The present capacity has now gone up to 7.75 million units a year. Kumho’s third major facility, the $150 million Kumho Tire (Changchun) Co., Ltd. plant, is presently under construction in Changchun’s high-tech Industrial Development Zone. The 3.15 million PCR capacity facility is scheduled to commence production in the second half 2007. The plant will cater for the OEM demands of China’s FAW Car Co., Ltd. Once this facility is commissioned, the total production capacity of Kumho Tire in China is estimated to touch 25 million tyres, making the company the largest tyre manufacturer in the country. Apart from meeting Chinese market demand, 50 per cent of the company’s Chinese production is earmarked for export.

Aggressive plans

Speaking at the groundbreaking ceremony for the Nanjing truck/bus radials plant, Kumho Tire’s chief executive, Park SamnKu, made it clear that the company would “aggressively pursue the Chinese tyre market through an export market diversification strategy”. With the Chinese vehicle market growing at around 10 per cent each year, Kumho’s plans are obviously to aggressively expand in the country both in the OE and replacement segments.
It may be recalled that in February this year, Kim Chang Nyun, general manager of Kumho (China), Sales, stated that by 2008 the company planned to capture at least 20 per cent of both China’s retail and OEM tyre markets. In fact, when the new Nanjing facility commences production by the end of next year, the Korean tyre major’s global production is estimated to touch 64 million units a year, divided amongst its facilities in China (4), Vietnam (1) and Korea (3).

R&D and marketing

As part of its proactive plans in China, the company also invested $36 million last year to set up Kumho’s China Technical Center (KCTC) in Tianjin. Located in Tianjin Economic and Technical Development Zone, this is the company’s third overseas R & D centre, the others being in the US and the UK.
For brand building and market promotion, Kumho Tyres (China) Co., Ltd was established in Shanghai last year. Indeed, the idea was to further consolidate its presence in the Chinese market. Meanwhile, the company chose the 12th Shanghai International Automobile Exhibition in April this year to showcase its own run-flat tyre and the company’s first aromatic tyre to Chinese customers. Kumho’s Chinese forays are certain to play a major role in realising the company’s plans to emerge as the World’s fifth largest tyre maker and world’s number three in tyre R&D by 2015.