Tire Maker Hwa Fong Plans Aggressive Development in ASEAN & China

Hwa Fong Rubber Inc. Co., Ltd., a major Taiwanese  maker of rubber tires and the local agent for Continental Tire of Germany, recently announced that it would move more aggressively to develop its business in the Association of Southeast Asian Nations (ASEAN) area and China.

These projects include a US$6 million investment by Hwa Fong Rubber (Thailand) Public Co., Ltd. in the installation of a new production line for  motorcycle tires at its second Thai factory. The new line, which will have a daily production capacity of 10,000 motorcycle tires, will go online in the second or third quarter of 2014.

The company's subsidiary in Thailand already operates two factories, one producing bicycle, powered two-wheeler (PTW), and agricultural/industrial rubber and tube tires with an annual capacity of eight million bicycle tires and 7.5 million PTW tires, and the other making all terrain vehicle (ATV) tires with annual capacity of some 750,000 units. In addition to major contract customer Michelin (for bicycle tires), Hwa Fong's Thai factories also supply other international tire brands and bicycle makers, as well as the Thai assembly plants of PTW manufacturers such as Honda, Yamaha, and Suzuki on an original equipment (OE) basis.

With an eye on the lucrative Vietnamese market, in which more than 10 million new PTWs are sold every year, Hwa Fong plans to set up a motorcycle tire factory there with a daily capacity of 30,000 tires sometime after June 2014. The factory will focus on the Vietnamese replacement aftermarket.

Hua Fong's chairperson, Tiffany Su, recently traveled to Ho Chi Minh City to evaluate the project, and her company plans to rent a plot of land for the planned factory.

The company also plans to set up another Chinese factory in the existing plant complex of Hwa Fong Rubber (Suzhou) Co. The cost of the new factory is estimated at more than 200 million renminbi (RMB, or Chinese yuan).

Su reported that her company is also evaluating the feasibility of investing US$40 million to expand the daily production capacity for passenger car radial (PCR) tires at Hwa Fong Suzhou's factory to 10,000 units, from about 4,800 currently.

To provide for the injection of funds from institutional investors in the Middle East, Hwa Fong will release some shares in its Suzhou factory by the end of June, 2014. The fund-raising project will be carried out in two stages, amounting to NT$1 billion (US$33.3 million) each.