Kumho Tires to Raise Overseas Production

Kumho Tires Company plans to expand abroad production to save on costs and better tap the global market. Oh Sae-chul, the CEO of Kumho Tires Co. said manufacturing at overseas plants costs lower than domestic production and the overseas factories are clearly more productive. The world's tenth larges tire maker factory is in Georgia, The Unites States. The goal for this year is to increase annual output by 2.1 million units through the investment. The company will invest $165 million to the factory in the second half of next year. Kumho Tires build a factory in Tianjin, China last year and it can produce 5.25 million units. They are also constructing new factories in Changchun, China and Ho Chi Minh City, Vietnam. Mr. Oh is predicting overseas production would be around 34 million units this year. It is more than half of the company's total annual output. Since, oil and commodity prices raised, the price of tires also will be raise in the coming months. Kumho Tires already increased the price by about 10 percent in the U.S. market this year and the higher prices are not a problem because other global makers also raised the prices.

Opinion.
We had been talked about global marketing in class. There are 2 things to think about first before go aboard. First is market demand like how much do they spend? Second is population, the companies should think about how big is the market. For this reasons, I think Kumho Tires Company choosing U.S. and China for the market is the good idea. It is very risky to globalize. To shrink the risky is having a partnership with a domestic company like Chrysler in U.S. Kumho Tires Company is planning to supply tires to Chrysler, Hyundai, and Kia from their U.S. factory. They have to be careful to expand productions in foreign countries.

Source_ Ko Kyoung-tae, Kumho Tires to Raise Overseas Production, The Korea Herald, 2008-05-08.

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