SEOUL, South Korea—With their domestic markets all but frozen after the 1998 Asian economic crisis, Hankook Tire Co. Ltd. and Kumho Industrial Co. Inc. looked overseas last year to shore up their bottom lines. Increasingly, their export markets are Europe and North America. Traditional export destinations in the Middle East and the Asia/Pacific region are waning, and domestic competition has increased as import barriers have been reduced.
Hankook aims to export $850 million worth of tires this year, while Kumho's export goal is about $795 million, according to industry sources, who put the export share of both companies' total sales in the 70- to 80-percent range.
Each of the three South Korean tire manufacturers—Hankook, Kumho and Woosung Tire Co.—is increasing its exports to the U.S. Trade data from the U.S. Department of Commerce show Korean tire makers dramatically increased their exports to the U.S. last year: Passenger car tires rose 73.3 percent, light truck tires climbed 46 percent and truck/bus tires surged 111.3 percent. The trend has continued through the first five months of 1999.
Assuming that all Korean tires are sold in the replacement market, the Korean tire makers have snared 4.1 percent of the U.S. aftermarket for passenger tires, 3 percent of the light truck market and 7.4 percent of the medium truck tire market.
Seeking to solidify its market presence outside Korea, Hankook is beefing up its overseas advertising budget. The company has increased its budget for overseas ads and marketing expenditures 67 percent this year to $20 million, a company spokesman said. The spending will support its primary brands—Aurora and Hankook—in the hope of accelerating consumer recognition.
Kumho's key brands—Kumho and Marshall—make up 90 percent of the firm's total exports. Exports to the U.S. in the first six months of 1999 have increased more than 10 percent, a spokesman said, without releasing exact figures.
Research and development also plays a role in the companies' drive for brand recognition. Kumho, for example, hopes to draw attention to itself through value-added products such as radial aircraft tires.
Hankook, which has stated its intention to join the big five tire makers, will beef up R&D expenditures next year to 5 percent of sales from 3.5 percent.
The company, which recently broke into the original equipment supply market in the U.S., Europe and Japan, intends to start exporting run-flat tires next year, starting with the U.S.