The executive is predicting that 2007 will further the company’s success.
“Hankook Tire will supply tires to the German luxury brand Audi this year and our plant in Hungary will go into operation on a trial basis," Cho said. "We plan to become the world’s fifth largest tire maker by 2012.”
That’s a far cry from 1997, when the company was ridden with a debt ratio of more than 400% as the Asian financial crisis hit Korea. In 1998, Cho announced that the Korean market was saturated and that the future lay in China, causing some company insiders to fear that his plans would put the company in peril. Most businesses at the time were tightening their belts to weather the financial crunch.
But Cho pushed to build a plant there. He had concluded that with its fast-growing automobile market, demand for tires would surge in China. He was right. The firm’s Chinese plant posted a profit in 2001, just three years after it was set up. And only two years later, the company was leading the Chinese tire market.
“These days, one out of four Chinese cars runs on Hankook tires,” Cho said. Global automobile giants like GM, Ford and Volkswagen, impressed by the quality and price of the Korean tires, have steadily increased orders. “Ten years ago, we hardly exported any products. Now exports account for 70% of our sales," Cho said. "Audi decided to use Hankook tires this year, because it recognized the quality of our products.”
In 2003 Cho cemented a deal with Michelin, selling a 6% stake of Hankook to the French tire giant. He also set up a network of 100 T-Station tire shops across Korea to provide customers with quality service. Now Hankook is waging a battle at home, fending off threats from cheap Chinese and Southeast Asian brands that hawk their products with slogans like “tires cheaper than shoes.” Hankook is taking the high road, using its T-Station shops to promote its tires as the premium choice.
“We can overcome the challenge of rivals armed with lower prices if our customers come to see that our service is the best, like our products,” Cho said.
