South Korean tire maker Hankook will soon start a feasibility study on a Middle East and Africa distribution center in the Jebel Ali Free Zone. These markets generated revenues of $72 million last year, and it is forecast that these would total $81 million in 2001.

"The need for a distribution facility came up during our meetings here with our partners in the region. We will shortly start a feasibility on it, and then take it from there," said Choong Hwan Cho, president and chief executive.

"Depending on the country, we have a market share of 7 to 8 per cent in these markets. We need to grow it further as well as raise our brand image." A production line is not contemplated at the moment, but Cho added, "Eventually we will have to consider having one provided the laws of the land are favorable.

"The Middle East is an obvious location and could fit in well with our plants in South Korea and China. But such a decision will take time. "For instance, in Iran we have so many restrictions on imports. We need to study how we can enter, whether it should be a technical alliance or through some other form. The Middle East was for many years a major market for us, more so than Europe or the U.S. Our immediate task is to focus more on expanding the business."

In the UAE, where it is represented by Al Dobowi, Hankook has a share of 6-7 per cent, and in Saudi Arabia it is over 10 per cent. The tire industry in the region is worth $1 billion annually. Just recently, Goodyear set up a regional hub in the Jebel Ali Free Zone. Other makers such as Bridgestone and Pirelli are already here.

The world's tenth largest tire maker, Hankook rolls out 40 million tires a year. Last year turnover was $1.1 billion, of which exports accounted for over $584 million. "My aim is to be the fifth largest tire maker in the world by 2004-05. In quality terms, we are already there with the industry leaders.

"For 2001 we expect a further improvement in our business as the South Korean economy is set to get stronger. The tough and serious period is nearly behind us. Another factor that will favor us are the exchange rates, especially in improving our returns from Europe. This will see overseas sales contributing 60 per cent of turnover compared to 55 per cent last year."

On whether South Korea's recent efforts to open up its industries to overseas participation will have an impact, Cho said: "The automakers are getting together. We have to study the matter very seriously. But there has been no decision on any alignments."

Saudia-Online.com
Source: Gulf News 

  
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