Hankook Tire intends to promote the diversification of its business resource portfolio by increasing the number of car tire factories in Chongqing, China. Previously, the Chongqing plant only produced truck and bus tires. This time, Hankook Tire will add a car tire factory. According to analysis of the rapid development of the Chinese market and Hyundai Motor’s potential to build the fourth factory in Chongqing is the main reason.
However, due to the fact that Hyundai’s fourth plant will be built in Chongqing, it is still unresolved. Therefore, Hankook Tire’s plan to add factories is also full of variables. Another expert pointed out that the current top priority for Hankook Tire is not to add factories, but to expand business contacts with vehicle companies and solve price competition with low-priced Chinese products.
The South Korean Financial Supervisory Institute said on the 24th that Hankook Tire has decided to issue a public subscription company bond with a value of US$50 million this year. The funds raised will be used for the construction of the first phase of the Chongqing Tyre Factory in China.
Hankook Tire plans to invest 1.0061 trillion won this year to repair additional factories in China, Hungary, and Indonesia, which is more than twice the previous year's (475 billion won). In the first half of the year, Hankook Tire has invested 304.7 billion won in countries such as Hungary (266.3 billion won) and China (65.5 billion won).
After Hankook Tire has set up factories in four overseas countries such as China, as of 2016, the overseas tire production scale will reach 51.2 million, accounting for 43% of the total output (120 million).
However, before Hankook Tire officially explores overseas markets, there are still some problems that need to be resolved. Hankook Tire's annual trade with vehicle companies accounts for only about 30% of total sales. In order to build a more stable supply and sales relationship and improve the visibility of products, it is necessary to increase the proportion of sales with vehicle companies. Building a fourth factory in China is a very good opportunity.
However, the construction of the fourth plant of Hyundai Motor in Chongqing or Hebei is still unknown. If the modern factory is not built in Chongqing, the additional logistics costs will increase the price of Hankook Tire's products.
In addition, how to compete with Chinese domestic brands is also a major issue for Hankook Tire. Due to the development of low-priced tires produced in China, sales of Hankook Tire in the North American market decreased by 9.8% year-on-year in the second quarter, and sales in the Chinese market decreased by 20.9% year-on-year.
Hankook Tire's previously adopted price policy was conservative. Although major tire companies have turned their business centers into low-priced tires and launched various discount activities, Hankook Tire did not join the price cut in order to produce a satisfactory sales response. In competition.
Professor Kim Bi-soo of Korea Dalin University stated: “How to form a partnership with overseas well-known automobile companies is the key to the success of Hankook Tire. If you can establish trade relations with more well-known companies, Hankook Tire will The image of high-end brands can be established, and price competition will be solved."
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