SHANGHAI (July 26, 2005) — When John Tseng, president of Goodyear Dalian Tire Co. Ltd., looks at a Goodyear tire, he sees yellow. The same color of yellow as a roll of Kodak film.
“There are lots of similarities between selling film and selling tires,” said the former general manager for digital film and imaging systems for Eastman Kodak Co.'s North Asia operation.
Mr. Tseng took over the reigns at Dalian Tire, the China manufacturing operation for Goodyear, in March and is applying to the tire market lessons he learned at Kodak. By building a network of branded retail outlets and touting technology, Mr. Tseng aims to make Goodyear the best selling replacement tire in China.
Goodyear also aims to make replacement tires the bulk of its sales in China, a major shift. For the last two years, the ratio of sales to manufacturers and replacement tire sales was 1:1. Goodyear wants that to be 3:7.
Chinese tend to replace one or two tires each year. In 2004, 2.4 million cars were sold in China, according to Automotive Resources Asia of Shanghai. The market is forecast to grow by 10 to 15 percent this year.
But the Akron-based tire maker will be chasing France's Group Michelin, which has around 20 percent of China's replacement market, according to market researcher TNS of London.
“Everybody aspires to have Michelin tires,” said Klaus Paur, director of automotive research for TNS China.
Goodyear has about 15 percent of the replacement market, according to TNS. South Korea's Hankook Tire Co. Ltd. also has about 15 percent and Bridgestone Corp.'s share is approximately 9 percent. The rest of the replacement market is split among China's some 300 local tire makers.
“Michelin has done a better job of talking to the consumer,” Mr. Tseng admitted.
Goodyear hopes building a chain of authorized service centers will change that. The company's first store opened in Shanghai in early July. By year-end, Goodyear plans to have 300 centers nationwide.
The centers will offer more than simple tire changes. Their air-conditioned waiting areas will have a shopping corner where bored customers can buy accessories like air fresheners for their cars. They won't, however, have many chairs.
“We don't want you to sit!” Mr. Tseng joked. “We want you to walk around” and buy things.
Goodyear will use press interviews and events like the Shanghai store opening as its main advertising vehicles for the first two years, he added. The main goal in China's market of first-time buyers: education. Safety will be one theme. For example, when is it appropriate to use snow tires?
Technology is another point Goodyear will stress. It recently announced it would manufacture what it's dubbing “Run-On-Flat” tires in Dalian for the China market and for export, for example. The tire maker said it plans to invest $18 million to develop the run-on-flat production capability as part of a $120 million expansion announced a few months ago.
“When you move up to high-end tires,” Mr. Tseng said, “you can use technology to differentiate.”
Events can be “extremely effective” at building brand loyalty, according to Christopher Millward, CEO of Firebrands, a Beijing-based marketing consultancy. “There is nothing that can substitute for direct interaction with the consumer,” he said.
But he warned that Chinese consumers are becoming very savvy about press coverage that comes across as an “advertorial.”
Goodyear might be better served if it could get its tires on more models in China. TNS said some 70 percent of Chinese consumers replace their tires with their previously used brand.
Still, Chinese consumers are becoming more sophisticated and discerning, Mr. Paur said.
And Mr. Tseng has a good track record. Kodak has more than 50 percent of China's film market.