09:15 | 30/11/2015 Economy
Kenda Rubber, Taiwan’s second-largest tire manufacturer, plans to scale up investment in Vietnam to capitalize on low costs and huge market potential as the investment climate in China is deteriorating.
Car tires on sale at a shop (Photo: http://blog.credit.com)
Kenda Rubber plans to increase its investment in Vietnam-based tire manufacturing factory to $10 billion Taiwan dollars ($304 million), the would-biggest for Kenda, Chairman Yang Ying-ming told the Channel News Asia.
The motivation for the move stems from the deterioration of China’s investment climate due to soaring costs and anti-dumping measures imposed on products coming from China, where Kendra has the most output.
“Our tire supply to ASEAN (countries) all comes from our factory in Vietnam,” he said. “It has many advantages, including low labor cost, cheap currency and zero tariff in exports to ASEAN. It’s now in the process of joining the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).”
Kenda’s operation in Vietnam makes up 20% of its overall profit although it accounts for only 10% of the firm’s total revenue. Kenda is not the only Taiwanese company turning to the ASEAN market as the ASEAN Economic Community will come into existence by the end of this year.
According to the Investment Commission, Taiwan’s investment in ASEAN nations so far this year has exceeded $2 billion, jumping 10-fold from 2005.
A number of foreign giant tire makers have chosen Vietnam as their production bases. Outstandingly, Kumho Tires in 2008 invested $200 million to build a factory in Vietnam, which will have a capacity of 3.15 million tires per year./.