YHI moves to penetrate new markets in Asia
YHI International's recent deals with two world renowned wheel brands will help the Singapore company penetrate new markets and, more importantly, expand further into the Asian region with a higher brand image.
This is important if YHI is to stand out from the crowd of more than 130 after-market wheel manufacturers in Asia, says group managing director Richard Tay.
Earlier this month, the mainboard-listed company was appointed a licensed manufacturer of alloy wheels for Japan's Enkei Corp, one of biggest producers of original equipment manufacturer rims.
This is the first time Enkei has outsourced production work, under an agreement that will see YHI produce the Enkei Tuning brand of after-market wheels from July.
In March, YHI bought 19.9 per cent of Italian alloy wheel specialist OZ for $3.5 million. The acquisition marked YHI's expansion into Europe, after a joint venture last year with US wheel distributor Pan Mar Corporation dba Konig American extended its network in North America.
YHI distributes and makes tyres and alloy wheels, and has been a long-time distributor for Enkei and OZ. Last year, YHI's seven production lines in Taiwan and China produced 1.25 million alloy rims for the after-market.
It continues to invest heavily in its manufacturing business and by the end of this year, it will have the capacity to expand by another six lines and achieve potential annual production of 2.35 million units.
YHI makes after-market rims for other companies as well as for its own Advanti house brand. As a contract manufacturer, it has carved a niche for itself by providing wheel design and development services for other companies.
So far, this original design manufacturer (ODM) role has given it the edge because it assumes responsibility for the entire supply chain.
But that may not be enough to stave off the competition from Asia's 'sizeable' after-market wheel manufacturers, about three-quarters of whom are Chinese.
'YHI's strength is in design, but other people can also do the same,' says Mr Tay. 'So we have to be outstanding not just in design but also manufacturing quality and quality control. We want to enhance the YHI brand so it can go to the whole world, just like Enkei and OZ.'
Until now, YHI has been producing for 'regional brands' like Ralliart, 5zigen and TSW, among others. But Mr Tay says that unlike these, Enkei and OZ are internationally known 'world-class' brands with stricter quality requirements and standards.
Being appointed by Enkei and being part of OZ will 'testify that YHI is a world-class manufacturer of alloy wheels'. And the halo effect of this 'very high image position will attract more customers worldwide'.
'There will be no doubts about YHI's manufacturing quality,' he says. 'When we go to the world market to look for business, the YHI image will be different. We can then secure future capacity expansion and at better margins. People will pay a few dollars more because of that.'
But buying into OZ involves more than just branding. The move will let OZ expand beyond making niche wheels for ultra exclusive marques like Ferrari, Lamborghini and Aston Martin.
'With YHI, OZ can bring production costs down and go into the middle market,' says Mr Tay. 'So far, we have concentrated on European cars and neglected Japanese cars. But we have deep knowledge of the Japanese car market and the standards required.'
He says YHI, which has been manufacturing after-market alloy wheels since 1996, has expertise in Japanese automotive specifications and standards.
'We will help OZ to penetrate Europe's middle market and at the same time, expand the Asian market which we are in.'
The annual world output of the after-market is estimated at 25-30 million pieces, with Asian manufacturers contributing about three-quarters.
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