The booming Chinese tyre market is to become the most important overseas production base of the Korean tyre major Kumho Tire, if its ongoing aggressive forays, the latest being the launch of its US$220 million wholly-owned radial truck/bus project in the Economic and Technical Development Zone, Nanjing recently, are any indication.

This is the fourth major Chinese project of Kumho, envisaging an annual production of 1.4 million tyres. The groundbreaking ceremony of the proposed plant was held in May last. The first-phase of the project, with an installed capacity of 300,000 tyres a year, is expected to go on stream by June 2008.

It was in 1995, Kumho Tire 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 total passenger radial tyre production capacity of the plant to 12 million units a year.

In July 2006, the second facility, Kumho Tyre (Tianjin) Co., Ltd. went on stream with an investment of US$210 million and a production capacity of 5.25 million passenger radial tyres. The present capacity of has now gone up to 7.75 million a year.

Kumho’s third major facility, Kumho Tire (Changchun) Co., Ltd. with an investment of US$150 million is presently under construction at the High-tech Industrial Development Zone of Changchun. The facility having an installed capacity of 3.15 million passenger car radials is scheduled to commence production in the second half 2007.
 
The plant will be catering to the OE 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 manufacturers in China. Apart from meeting the demand of the Chinese market, 50% of the company’s Chinese production is meant for export.

Speaking at the groundbreaking ceremony of Nanjing truck/bus radials plant, Kumho Tire’s Chief Executive Park Samn-Ku 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% 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% of China’s both retail and OE 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).
 
As part of its aggressive plans in China, the company has also invested US$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 other ones being in the U.S. and the U.K.

For brand building and market promotion, Kumho Tyres (China) Co. 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 the 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 No 3 in tyre R&D by 2015.