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| Kumho Tires, accelerates its penetration of the Chinese market |
2005-09-09 |
Kumho Tires (www.kumhotire.com President & CEO: Sae-Chul Oh) has spurred its initiatives in the Chinese market
by pushing ahead with the plan to construct another plant in Changchun following its precedents in Nanjing and
Tianjin.
On September 1, 2005, President & CEO of Kumho Tires, Sae-Chul Oh, signed an MOU at Hotel Nanju with the China First Automobile Works Group Corporation and Changchun National High-Tech Industries Development Area
Administration Committee regarding the construction of the plant in the presence of Kumho ASIANA GROUP's
chairman (Sam-Koo Park), secretary-general of the Jilin Province (Wing-Kun Wang), governor of the Jilin Province (Min Wang), and chairman of the China First Automobile Works Group Corporation (Zhu Yanfeng).
President Oh said, With our third plant in China following Nanjing and Tianjin, Kumho Tires will secure a solid
foundation to grow into a world-class tire maker as well as to maintain a stable basis as a leading company in the
Chinese market.
Kumho Tires plans to sign a formal contract with China First Automobile Works Group Corporation in October and
obtain all required approvals and licenses to launch the plant construction in the first half of 2006 on a track of land
of approximately 1980 square meters inside the High-Tech Industries Development District in Changchun.
The construction is to be completed by September 2007 with an investment of about 150 million dollars and a
production capacity of 3.15 million units per year. At the plant, state-of-the-art facilities will be installed to produce
UHP tires with the best possible processes and facilities to ensure high-quality products. Most tires produced at the
new plant will be supplied to the China First Automobile Works Group Corporation for OE and a small portion will be
sold in the Chinese market in the northeast region.
First Automobile Works Group (FAW) is China's first automobile manufacturer founded in 1953 and has 54
subsidiaries in the areas of the production of passenger vehicles, commercial vehicles and automobile components.
As the largest automobile company in China, FAW achieved sales of 17 trillion won in 2004 with its total production
volume in 2005 expected to reach about 950,000 units.
The Changchun plant is to be built on a shared capital of 90% from Kumho Tires and 10% from FAW. Once
completed, it will supply tires not only to FAW but also FAW-Volkswagen Automobile (joint venture between China
First Automobile and Volkswagen) so that they will be mounted on such luxury brand as Audi. This is sure to
solidify the business rationale of Kumho Tires in China. In addition, once completed, the Changchun plant is sure to
contribute to Kumho Tires reduction of logistics cost in the northeast region of China and ensure much faster supply of tires.
Nanjing Kumho Tire was completed in 1996 and produces an annual capacity of 3 million units, the most among
Korean tire makers. In April 2005, it expanded its facilities to increase the capacity to produce 12 million units per
year. Nanjing Kumho Tire supplies the southern part of China (south of Yellow River) and ranks first in terms of the
market share for radial tires (20% for passenger cars). The plant has captured the market share of 14% of the
entire Chinese tire market. With 30% of production supplied to the world market, mainly North America and Europe,
the plant plays an important role as the production base for the global market.
Kumho Tires' Tianjin Plant which construction is to be completed next June after it was launched in April 2005 will
cover the northern part of China with the production capacity of 5.25 million units per year. Its third plant in
Changchun will supply the northeastern area of China.
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