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.
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
"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."
Source: Gulf News