INDONESIA: Kenda pursues Indonesian tire factory

The company is looking for a plot of 35 hectares in western Java, where Japan's Bridgestone Corp and South Korea's Hankook Tire Co built tire-manufacturing bases, and Kenda is to start the construction plan after acquiring the property, assistant vice president Huang Shi-chin said.

Kenda is to first spend part of the investment budget on installing equipment for making tires for bicycles and motorcycles, which is expected to take a year, before it expands the factory to make tires for cars, Huang said.

Huang said the company aims to use the factory to generate sales of TBD 10 billion a year and it will try to boost its sales to between TBD 15 billion and TBD 18 billion a year after the factory starts making tires for cars.

Huang said there are 8 million to 10 million bicycles and motorcycles sold each year in Indonesia, alongside about 1 million cars yearly.

Commenting on the second half of this year, Huang said the ongoing antidumping investigations in the US on tires shipped from China posed uncertainties for Kenda's growth.

On 18 July, the US government is to decide whether to impose a tariff upon tires imported from China, including tires manufactured by factories in China owned by foreign companies, he said.

Although tires manufactured in Kenda's factories in China might be subject to the tariff, the company can still ship tires to the US from its factory in Taiwan, making it less affected by the policy, he said.

However, Chinese tire makers might increase their shipments to the US before the tariff is implemented, causing the tire supply in the US to surge temporarily, he said.

Source: Daily "Taipei Times”, Taipei, Taiwan; 25 June 2014
(Syed Rashid Ali, Karachi, Pakistan)