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Cover Stories Series 2011> Eye On Multinationals> Archive
UPDATED: May 5, 2011 NO. 18 MAY 5, 2011
Tire Maker's Test
Integrity and quality are vital for Kumho Tires to regain the Chinese market

KUMHO VANISHED: A worker is busy making preparations for the 14th Shanghai International Automobile Industry Exhibition, which opened on April 19. Kumho Tires was not as high-profile as it used to be during the exhibition, due to the recent product quality scandal (ZHUANG YI)

Kumho's response

Kumho Tires first responded on its official microblog on the day following the CCTV's broadcast by saying CCTV's accusation was incorrect. But it abandoned its arrogance on March 18 when China's Ministry of Industry and Information Technology said it will probe into the matter. Lee Han Seop, head of Kumho Tires' Chinese subsidiary, publicly apologized to Chinese consumers during a CCTV program on April 21, vowing to recall all of its defective products.

After visiting the Tianjin factory and conducting a thorough investigation into the production process, Kumho Tires said it found that internal production standards were not strictly observed and that the head of the factory and some employees were responsible for negligent quality control.

The company also said it applied for voluntary recall to the relevant authorities and promised to provide their utmost cooperation with the Chinese Government, adding that it will deal with all product-related claims from the customers' perspectives.

However, some consumers said Kumho Tires' dealers are not pursuing the recall actively or reliably. They did not use any equipment in checking tires and they just look at and touch the tires, according to a user who refused to give his name.

"We check the tires according to our experience. There are only two national centers for rubber tire quality inspection in China, one in Beijing and one in Qingdao. And the testing will destroy the tires," said a Kumho Tires staff member.

It is not the first time that Kumho Tires received complaints about the quality of its tires. For some users, their Kumho tires developed bubbles, indicating a separation of the tire tread, which made the tire defective and dangerous to use.

In response, Kumho Tires said the bubbles were the results of owner negligence. What's more, some users' complaints never received responses from Kumho Tires.

Kumho's future

The Kumho scandal has left a space in the market for other tire brands, especially domestic tire makers. Some domestic tire makers, including Giti, Nankang, Linglong and Triangle are vying to win orders from carmakers. During the 2011 Shanghai Auto Show, mainland tire brands, together with Taiwan-based Maxxis, successfully replaced Kumho on some car models. However, South Korea's Hankook is also a serious contender in the domestic tire market and Kumho's status remains secure for now.

The fact is that Kumho Tires ranks as the 10th largest tire manufacturer in the world and it has occupied the greatest market share for China's middle- and low-end cars.

Even though some carmakers clarified their distance from Kumho Tires, it does not mean a permanent break-up, because the other three factories were not found to be problematic.

What eased Kumho Tires' anxieties is that some carmakers remained loyal to the company. Shanghai GM still used Kumho tires on its three-meter-tall Camaro on display in the 2011 Shanghai Auto Show. Shanghai GM also continued to use Kumho tires on its Chevrolet Epica model.

Following the CCTV report, Shanghai GM immediately issued an online statement on the defective tires, saying that the Kumho tires used were produced in Nanjing and their corporate partnership will not be affected.

Kumho Tires' two other major partners, Dongfeng Peugeot and Dongfeng Citroen, also show strong support. Dongfeng Peugeot has claimed that none of its cars have ever used the tires produced in Tianjin and their Kumho tires, produced in Nanjing, were in line with quality requirements.

"As a car producer, it is regrettable to know that our tire supplier was found defective," said He Wenli, Dongfeng Peugeot's marketing manager.

Other models that will continue to use Kumho tires are Chang'an Ford's Focus and Chang'an Suzuki's Swift. With their loyalty, Kumho tires may retain its position in the Chinese market. Consumers may replace their Kumho tires, but for tire manufacturers, replacing Kumho Tires is no easy task.

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