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Kumho Tire's Chinese "ambition"
In 2008, Kumho Tire set a bold target: to capture 20% of the market share in both the retail and OEM sectors, positioning itself as the leading tire company in China. Liu Chengzhe, the managing director and sales head of Nanjing Jinhu Tire Co., Ltd. (a subsidiary of the South Korean Kumho Group), shared these ambitions during an interview with a local newspaper. The goal was part of a broader strategy for the Kumho Group to enter the top five global tire companies by 2010.
Despite the challenges posed by a downturn in the domestic auto market and the OEM sector being hit hard, Kumho remained determined. Liu emphasized that production was not affected, thanks to the group’s global export network. Domestic production capacity was being absorbed through exports, ensuring that expansion plans would continue. By early 2006, the company aimed to reach an annual production capacity of 12 million units, with a new plant under design for future growth.
This ambition came after a difficult period. In 1999, due to the Korean financial crisis, the Kumho Group sold its Tianjin Jinhu Company to Japan's Bridgestone. At the time, the deal was made quickly and without much negotiation, leading to significant losses for the company. Many employees left, and the once-strong North China market was handed over to Bridgestone, forcing Kumho to focus on the southern regions instead.
However, the rapid growth of the Chinese auto market since 2002 provided new opportunities. After some hesitation, Kumho re-entered the market with renewed vigor. In 2002, it established its Beijing office, and by 2003, it officially launched its full-scale operations in the northern market. "Our goal is to catch up with the 'Big Three'—Michelin, Bridgestone, and Goodyear," Liu said. Although Kumho had achieved strong sales figures, reaching nearly 5.4 million units in 2003, its low pricing kept total revenue and profits below those of the industry giants.
With the Chinese tire market booming, many international brands entered the scene. Companies like Michelin, Bridgestone, Goodyear, Hankook, Yokohama, and others were competing fiercely. While the "Big Three" dominated the high-end segment, Kumho positioned itself in the mid-range market, aiming to challenge their dominance.
To boost brand recognition, Kumho introduced the PRIMA line in 2003, tailored for China's challenging road conditions. This product received positive feedback, with sales rising by 70% in just one year. Additionally, Kumho gained credibility by supplying tires to major automakers such as Beijing Jeep, Beijing Hyundai, FAW, Chery, and Shenlong.
In 2004, Kumho launched a comprehensive brand strategy, introducing high-end ECSTA tires, mid-range Fulima, and the KUMHO brand for the growing middle-market. However, the company faced challenges in attracting dealers due to low profit margins. To address this, Kumho focused on strengthening its distribution network, offering better margins and support to retailers.
The company also invested heavily in sports marketing, believing it to be a powerful tool for increasing brand visibility. While avoiding the expensive F1 circuit, Kumho sponsored events like the Paris-Dakar Rally and F3 World Championships, which helped build its reputation and prove the quality of its tires. Looking ahead, the company explored opportunities in Chinese football and basketball, aiming to reach a large audience through long-duration events.
Kumho's efforts paid off, with the establishment of 1,000 Prima Stores across the country. Through personalized customer service, training programs, and strategic marketing, the company continued to grow, showing its commitment to becoming a key player in the Chinese tire market.