BIZCHINA / Overseas Investment
Tyre makers compete for Chinese market
By Wang Xin (China Daily)
Updated: 2006-06-09 11:46
The biggest project to be invested in by a business from the Republic of
Korea in Northeast China's Jilin Province has begun construction in the
Changchun High-tech Industrial Development Zone, according to the
province's department of commerce.
With a total investment of US$155.87 million, the project, Kumho Tyres
(Changchun) Co Ltd, is designed with an annual output capacity of 3.15
million car radial tyres, filling the gap for high quality car tyres in
Jilin Province.
Its targeted output capacity is expected to be realized in 2008 when the
company becomes the biggest tyre maker in Northeast China.
Kumho Tyres from the Republic of Korea (ROK) is the investor of the tyre
project currently under construction.
Kumho Tyres, affiliated with Kumho Asiana Group, has assets worth 250
billion yuan (US$31.25 billion), and 5,092 staff.
It notched up US$800 million in sales revenue in 2003, making it the
ninth largest tyre maker in the world.
With global demand for tyres growing and domestic production costs
rising, Kumho Tyres has sped up its overseas expansion.
The company has already established two tyre plants in Nanjing and
Tianjin, which currently produce 12 million and 5.25 million tyres per
year respectively.
The combined output of tyres from the two plants is expected to reach
18.5 million in 2009, while still leaving open the supply of 10.7 million
tyres.
Based on a market research, the demand for Kumho tyres in the Chinese
market is estimated to soon hit 29.2 million.
The research also found that the supply for high-quality radial tyres is
short, while there exists a huge market for that product.
So, establishing a new plant to satisfy market demand became a pressing
issue for Kumho Tyres.
Though the ROK-based company has chalked up impressive market shares in
South China, it did not enter into its venture in Northeast China until
the new tyre project was settled there.
Northeast China is seen as a traditional industrial base and therefore
has won the popularity of investors involved in manufacturing industries
from home and abroad.
A number of cities in the region including Changchun, Harbin, Shenyang
and Jilin City are all comparatively strong in auto making.
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