Nexen Tire signs OE contracts in China
-Annual growth rate estimated at over 200 percent
Korean tire manufacturer, Nexen Tire, has had a growth rate of over 200 percent in China in the last two years, with similar figures forecast for 2011. The positive estimate is sustained by a series of contracts, signed in quick succession, for start-up equipment in the Chinese OE market.
Since the beginning of the year, Nexen tires have been fitted to the ‘Verna’ model range of the Beijing Hyundai Motor Company, a Chinese subsidiary of the Hyundai Motor Company. OE equipment destined to vehicles manufactured by Chinese car manufacturer, Anhui Jianghuai Automobile Co. Ltd (JAC), will start in the second half of the year. JAC has sold approximately 460,000 vehicles in 2010 – mainly on the domestic market.
Nexen Tire could also sign more OE contracts for 2012: from next year, in fact, Nexen products will be fitted to a completely new model from Beijing Hyundai. Dongfeng Yueda Kia, a joint venture among Dongfeng Motor Corporation, Kia Motors and Yueda Group, has signed up, contracting Nexen to supply tires for a forthcoming model. This means that a further four models will be fitted with Nexen tires from 2012.
Nexen’s rapid growth in the Chinese market is due to the continuous development and adaptation of its products to the market’s requirements. Strict quality checks also play a substantial role in the Korean manufacturer’s success. Nexen sold 1.1 million tires in China in 2010.
China, with its population of 1.3 billion, is growing into an extremely attractive market for the entire car industry, with both global tire industry players and local Chinese tire manufacturers competing in the tire segment.
Nexen Tire factory Qingdao in China
Nexen started its activities in China in December 2005, with the foundation of a subsidiary, Qingdao Nexen Yuntae Inc. The factory’s foundations in Qingdao, in the province of Shandong, was laid in May 2006 after five years’ planning. Tires for both cars and light commercial vehicles have been produced there since January 2008.
An ultra-modern research and development centre, based at the 1,653 sq km site, has been built in addition to the production stations. The 1,100 production workers are mainly local, nevertheless a dormitory has been specially built for staff members.
Nexen management is especially proud of the fact that the company posted a profit only three years after production started.
Nexen exported 70 percent of the Qingdao production to more than 130 different countries in 2010. The remaining 30 percent was sold directly in China. Production will be increased the next few years to match growing demand from the domestic market. "Capacity will increase from the current six million units per year to eight million," forecasts Jae Soo Lee, Executive Director.
Moreover, continuous and additional investment is also planned in China all the way to 2017, with Chinese production forecast to reach 20 million units. Nexen’s capacity can hit 60 million tires per year, combining production of the parent plant in Yangsan (Korea) with the new factory in Changnyeong (Korea), which starts production in 2012.